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5 MLK stands a muscular 17 stories on a full block at the Burnside bridgehead, making the audacious statement that business can be done just as well in Portland’s close-in Eastside as it can across the river in downtown.

Designed by Chicago’s GREC Architects with nods to neighbors such as the looming Yard building, 5 MLK was a $110 million bet by The Green Cities Co. on Portland’s once-soaring commercial real estate market. The building is stuffed with amenities for office tenants, including high-tech air circulation that can be segregated from residential units, private outdoor terraces and a sprawling gym.

What 5 MLK does not have is an office tenant. The gleaming new building has 120,400 square feet of newly constructed Class-A office space 鈥� every bit of it vacant. For now, the owners are missing out on about $4 million a year that the office space on floors two through six would bring when fully leased.

The tower is one of many new office buildings that have run headlong into a global pandemic, an unforeseeable event that has frozen commercial real estate. How projects like 5 MLK bounce back from the pandemic will have a significant impact on Portland’s overall economic recovery.

鈥淲e have a large inventory of space (in Portland),鈥� said Kelly Saito, one of four managing partners at The Green Cities Co., which formerly was the investment arm of local developer Gerding Edlen. 鈥淭here were new deliveries before us which maybe paved the way for establishing the newest generation of new buildings within the city.鈥�

Many projects to renovate existing buildings have made some older products more competitive with new office space.

鈥淥ver the same period of time, we had a number of the existing (Class) A-B buildings downtown that have been repositioned, renovated, had amenities put in,鈥� Saito said. 鈥淪o on top of the new construction, there’s a fair amount of inventory of existing space that’s been renovated or is being renovated.鈥�

Since the pandemic emerged a year ago, there has been very little leasing activity in Portland as office tenants waited to make any major decisions. 5 MLK received its first temporary certificate of occupancy in September.

(5 MLK, a mixed-use building, also has 220 apartments that last week were 16 percent leased as well as 14,000 square feet of retail space. An underground garage has approximately 158 parking spaces.)

Total office vacancy in Portland rose to 15.3 percent in 2020, up from 12.3 percent a year earlier and the highest mark since 2010, according to JLL. Average asking rates slipped slightly to $33.61 per square foot.

Saito said asking rents at 5 MLK are in the 鈥渕id-$30s鈥� per square foot on a triple-net basis. Apex Real Estate Partners is representing the space.

Before the pandemic, developers largely agreed that the dream of the 2020s was alive in Portland. In-migration boomed in recent years as Seattle and Silicon Valley tech companies relocated or expanded in the more affordable Silicon Forest. That changed in 2020, when net migration fell to about half of its 2016-17 peak, according to the Oregon Office of Economic Analysis.

Commercial real estate experts are watching for any signs of the market emerging from the pandemic. The effects of the pandemic are hard to overstate: Actual physical occupancy of U.S. offices fell to 17.6 percent on average, according to JLL, as workers stayed home in droves.

Companies such as Facebook have signed major leases in cities such as New York and Chicago, while also rolling out accommodating work-from-home policies. That’s drawn questions about how resilient the office market will be in 2021 and years to come.

It’s not yet clear what the new normal looks like, Saito said.

鈥淐learly, there’s downward pressure in general given both inventory and where demand has fallen to,鈥� he said. 鈥淎nd demand has diminished in the short term, for sure. That’s directly related to working from home. There’s no question that when things return to normal, that normal will be different to some extent 鈥� and there’s a lot of projections being made about what that might look like.鈥�

While questions remain about the future of office space, the sector may be buoyed by a broad economic recovery. Many economists are forecasting a strong rebound as the U.S. emerges from pandemic-related shutdowns in an atmosphere of low interest rates and pent-up consumer savings. Wall Street titan Goldman Sachs, for example, earlier this month raised its forecast for U.S. GDP growth to 6.8 percent in 2021.

That should trickle down to office demand, said Ryan Severino, JLL’s chief economist.

鈥淎s the economy bounces back, you should see a commensurate change in demand as well,鈥� he said during a Feb. 11 webinar.

Physical occupancy should also come back to near pre-pandemic levels, Severino said.

鈥淲e reasonably expect that by the end of the year, the majority (of) people would be back in an office space,鈥� he said. 鈥淩emote work is going to expand, but we don’t see this as being the death knell for office and the demand for office space. Employees do want to be in an office.鈥�