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Vacancy rates for a couple of key commercial real estate sectors in downtown Portland remain high while suburban areas such as Beaverton and Hillsboro are seeing growth, one industry expert shared during a CREW Portland market forecast last week.

John Chang, senior vice president and national director of research and advisory sales at Marcus & Millichap in Phoenix, presented an economic and commercial real estate outlook for the region. Then he joined Portland State University President Ann Cudd, OMSI President and CEO Erin Graham, and Urban Renaissance Group Vice President of Development Krista Bailey for a panel discussion.

In his keynote, Chang discussed national trends and shared insights on the stability of the commercial real estate industry. He provided context for the Portland region.

鈥淩elative to last year, Portland鈥檚 been making great progress in cleaning up the city and bringing back some of its energy and revitalizing itself,鈥� Chang said in an interview with the 91视频 following the Jan. 12 event.

In downtown, the vacancy rates for both multifamily properties and offices remain very high, Chang said. Portland in fact ranks no. 3 among 41 major U.S. cities for highest vacancies in both categories, he said.

The Portland-metro region鈥檚 suburban cities, however, had the sixth-lowest office vacancy rate among those 41 studied. Cities such as Hillsboro, Beaverton, Aloha, Lake Oswego and even Vancouver, Washington, are experiencing job growth and job creation, while downtown Portland continues to face headwinds.

鈥淗istorically, Portland has had a very strong downtown,鈥� Chang said. 鈥淥ver the last few years, really since the pandemic and as we鈥檝e gone through some of the policy changes that have affected Oregon and Portland specifically, the downtown areas have really struggled.鈥�

Essentially, a lot of the office users in the downtown area are moving to suburban areas. Reasons for this include ease of operation and shorter commutes for employees.

Panelists discussed OMSI鈥檚 34-acre master plan, the Lloyd Center redevelopment, and the possible renovation of Keller Auditorium or construction of a new performing arts facility. Portland鈥檚 government needs to be active to drive these projects forward, Chang said. With the city preparing to transition to a new form of government in 2025, and voters set to elect a new mayor (Mayor Ted Wheeler announced he will not seek a third term), Portland is in position to reinvigorate its inner core and strengthen its position, he added.

Chang also discussed why some parties are hesitant to invest capital in Portland, stating that national news outlets have focused on homelessness and drug abuse. The city needs to take control of the narrative and reposition its brand, he said.

鈥淚 think there鈥檚 a real opportunity to be aggressive in pursuing growth opportunities for the city that will be very attractive to capital all over the country,鈥� he said.

On a national scale, the commercial real estate market over the past 18 months has been battling headwinds such as high interest rates, labor shortages and high costs of materials. There has also been a slower transactional climate. In 2024, because of the potential for a soft landing for the economy and a lower inflation rate, it is likely that the Federal Reserve will begin to taper interest rates, Chang said.

鈥淚f there is a soft landing, it can offer a strengthened sentiment for the demand for real estate,鈥� he said.