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Rents continued to rise throughout Oregon and in Vancouver, Washington, this year amid broadly positive signs for the multifamily sector, according to a new regional multifamily report.

Older and cheaper apartments were especially in demand, while a steady supply of downtown Portland multifamily projects created some softness among Class A properties.

Rents for Portland studio apartments grew 1.1 percent during the past six months to $1,183 per month. One-bedroom apartment rents rose just under 2 percent, to $1,293.

The data is from Multifamily NW‘s semiannual Apartment Report. The fall 2019 edition was released Tuesday.

鈥淥verall the market’s still looking very strong,鈥� said Greg Frick, partner at HFO Investment Real Estate in Portland. Frick also served on the Apartment Report committee. 鈥淭here’s still a low vacancy rate. All of the new construction, we’re absorbing that. Sure it’s a little slower than the last couple of years, but there’s not a lot in the pipeline behind that.鈥�

Vacancies in the Portland-metro area fell to 4.42 percent, down from 4.96 percent six months earlier.

New housing regulations in Oregon are beginning to impact the multifamily market in Oregon and Southwest Washington, according to the report.

鈥淣ew construction is slowing, and investors are losing confidence, as the political climate continues to be very challenging for landlords,鈥� wrote Craig McConachie, president and principal broker at C&R Real Estate Services in Portland.

Oregon’s rent restrictions and high prices have led to renewed interest in Vancouver, the report states. A state law has capped rent increases at 9.9 percent in 2020 for apartments that are at least 15 years old. Newer buildings are exempt from the rent cap.

Some investors are sitting on the sidelines, brokers said.

鈥淢ost of the investors that I speak with are telling me they think things are overpriced,鈥� said Gary Winkler, a Keller Williams-affiliated multifamily broker based in Lake Oswego.

鈥淭ransaction volume is continuing to slow down,鈥� he said. 鈥淚’m seeing a lot more stuff on the market, just sitting.鈥�

Vacancies vary by submarket. But the ongoing building boom has led to a surplus of new, high-priced apartment units in downtown and surrounding neighborhoods.

鈥淐lass A stuff downtown is getting competitive,鈥� Winkler said. 鈥淭here’s a lot of studios left they’re trying to lease up at different buildings.鈥�

Rent spiked 32 percent in Lake Oswego, but the report stated that’s due largely to one new building. The report does not identify the building, but the description fits that of The Windward, PHK Development‘s 200-unit mixed-use building.

Rents were highest in downtown Portland, Northwest Portland and Lake Oswego. Among Portland’s close-in suburbs, Beaverton and Milwaukie both had tight markets, with vacancy rates near 3.5 percent.

Larger apartments have proved popular, with a vacancy rate of 3.7 percent in the Portland-metro area. Studio apartments had the highest vacancy rate at 5 percent.