“Big Pink,” the iconic office tower in downtown Portland, is for sale.

Brokerage JLL recently published a listing for the 42-story skyscraper. Completed in 1973, U.S. Bancorp Tower, which is better known by its rose-shaded nickname, is Portland’s largest commercial building, spanning 1.15 million square feet.

It’s also the city’s second-tallest building, behind only the Wells Fargo Center.

“Portland will never see another building like U.S. Bancorp Tower, considering the asset’s extraordinary scale and the complete absence of new development planned in the urban core for the foreseeable future,” JLL’s listing states.

Last fall, U.S. Bank said it would exit the tower and move most of its employees who were based there to Gresham amid a broader pullback in office occupancy in downtown Portland.

The building previously was purchased by Seatle-based Unico Properties and its ownership group for $372.5 million in 2015.

Large-scale commercial buildings in Portland resold since the COVID-19 pandemic have done so at massive discounts.

Montgomery Park sold for $33 million in 2024 after fetching $255 million in 2019. Block 1 in the Pearl District‘s Brewery Blocks sold last year for $21 million after it was valued at $44.76 million in a 2007 transaction.

U.S. Bancorp Tower’s current ownership has invested $18 million in capital improvements for the building since 2016, according to JLL.

Big Pink is 45.7 percent occupied, according to JLL. The building also offers 999 parking spaces and Portland City Grill, a luxurious restaurant on the 30th floor.

Another Portland tower, the 30-story PacWest Center, was also recently listed for sale.

Unico Properties has a large portfolio of more than 20 properties in the Portland area, including the Moda Tower, Galleria building and Sixth + Main.

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Portland office vacancies rose in the third quarter as deliveries of new space outpaced demand, according to a report released Monday.

Vacancies rose to 9.9 percent during the third quarter, according to Jones Lang LaSalle. That was up by 0.9 percent from a year ago.

“Basically what you started seeing coming through last quarter is this frontal wave of construction we all know is going on right now,” said Tim Harrison, a senior research analyst at JLL‘s Portland office.

Average rents slipped to $28.22 per square foot, down 9 cents compared to the second quarter. Harrison said rent growth will continue to moderate because of new supply coming online. “We’re going to start seeing (rent growth) come down to more sustainable levels, more normalized levels,” he said.

That’s in keeping with national trends, Harrison said. As the economic expansion continues, more projects that were conceived a few years ago are being delivered.

New construction is already being factored into current asking prices for leases, Harrison said.

Year to date, the Portland office market has absorbed 339,845 square feet of space, according to JLL. Preleasing remained strong for projects such as Under Armour‘s build-to-suit transformation of a former YMCA in Southwest Portland.

Nearly 1.7 million square feet of office space is under construction.

Several projects are expected to come to market in the fourth quarter of 2017, including the first of two six-story Field Office buildings in Northwest Portland, Menashe Properties‘ six-story building at Southwest 12th Avenue and Morrison Street in the West End, the Heartline office building in the Pearl District and the Leland James office rehabilitation project in Slabtown.

“We’ve got a construction pipeline that is still pretty full, even after the current construction starts to deliver,” Harrison said.

Some projects have been approved by the Portland Design Commission but have not seen construction start. Two include a 10-story proposal at the site of the Ancient Order of United Workmen Temple at Southwest Third Avenue and Taylor Street, and the sprawling Press Blocks project in Goose Hollow.

“There’s a number of projects proposed and just sort of waiting,” Harrison said.

Demand should continue to drive absorption even after more projects open for leasing, Harrison said.

“We had a really strong third quarter in terms of demand,” he said. “Things are still pretty positive for the Portland office market.”

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More office space was built in Portland in 2016 than any year previous, with plenty more to come this year.

Local projects delivered a record-breaking 1.18 million square feet of office space last year, according to an analysis by Jones Lang LaSalle.

For the first time in six years, supply outpaced demand. Still, demand for Portland office space remained strong.

“We’re just about 86 percent leased at delivery, which is pretty phenomenal considering all of the new square footage that came to market,” said Tim Harrison, a research analyst at JLL.

Portland’s office vacancy rate was only 9.4 percent in the fourth quarter, making it the fifth-tightest market in the nation, behind only Nashville, Tennessee (6.2 percent); Salt Lake City, Utah (7.7 percent); San Francisco (8.2 percent) and Seattle-Bellevue, Washington (9.2 percent).

Rent growth was strong in 2016. Rents jumped 13 percent to $27.56 per square foot in the Portland-metro area. In the Central Business District, rents grew to $33.48 per square foot.

“We’re seeing increased competition in delivery and new construction,” said Jake Lancaster, JLL managing director.

Overall, the office market experienced a “flight to quality,” according to JLL. Some rents for newly constructed office space pushed above $40 per square foot, according to the firm.

As new product arrives, owners of older properties are looking to compete by updating their spaces. KOIN Tower received major renovations last year, and in 2017 more are expected for other properties – including PacWest Center, CDK Plaza, Congress Center and the Meier and Frank Building (the space being vacated by Macy’s).

Meanwhile, tenants looking to expand are facing difficulty finding leases for fewer than three or four years, said Eric Turner, executive vice president at JLL.

“Most of these choices are top of the market in terms of rental rate, and they also carry the weight of a long-term lease,” he said.

Total office inventory was 59.8 million square feet at year’s end, according to JLL. Net absorption was 634,000 square feet in 2016.

Much more office space is due for arrival. Approximately 1.4 million square feet of office space is under construction, according to JLL.

Besides downtown, additional office space is expected to open in the Central Eastside, such as Killian Pacific’s second building near the Oregon Museum of Science and Industry for online bank Simple. And eventually, Zidell Yards in the South Waterfront District could bring 1.5 million square feet of office space.

Executives are increasingly considering their office space a tool to enhance productivity and employee recruitment and retention, Turner said. As companies focus more on their office space, planning becomes increasingly important, he added.

“We’re sitting with executives yearly and charting out where is the intersection of office space and growth,” he said. “Everybody is analyzing how they use office space a lot more than they used to.”

Many office developments are trending away from private offices in favor of more space for meeting and collaboration.

“The trend is definitely moving toward less private offices – less me space, more we space,” Turner said.

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Portland has become a hotbed of small startups and technology firms, causing office vacancy rates in the Central Business District to fall to about 10 percent, according to data recently released by Jones Lang LaSalle.

That trend led commercial real estate broker Alex Hughes and his business partner Jeff Arthur to think of creative ways to provide office space to burgeoning companies.

“We were thinking about doing something more traditional,” Hughes said. “We started looking for long-term tenants, but everyone was requesting short-term leases.”

Hughes and Arthur approached the owner of the former General Electric building, at 1355 N.W. Everett St., and told him about their vision of creating a collective office space with a mix of small and medium-size private offices and common areas for tenants to share.

“He told us to put our money where our mouth is,” Hughes said.

The building is being renovated to include about 22,000 square feet of flexible office space with 60 private offices and 50 desks in the common areas. The space, called , is scheduled to open in mid-November, Hughes said.

Tenants pay a monthly membership fee to gain access to the building. Member businesses are provided fully furnished offices, lounge areas, a conference room, a private rental space and an on-site “community manager” to make reservations, take calls and act as a receptionist.

“It will be us taking care of all the logistics and mechanics so members can focus on doing their work,” Hughes said.

CENTRL Office’s location in the Pearl District should draw a mix of tenants that work well together, Hughes said. Tenants could range from attorneys and accountants to design firms and tech companies.

“We’re trying to curate a mix of tenants who can work well together,” he said. “We’re not going to focus on having tenants from just one industry.”

As of early October, CENTRL Office had signed agreements with eight companies – a total of 30 to 40 people, Hughes said.

Brad Malsin of Beam Development said his company saw the need to offer short-term leases to startups. That allows them room to grow and drops the amount of square footage needed by over half, he said.

“In a traditional office setting one worker needs between 200 and 250 square feet of space,” he said. “With this type of office space one worker only needs about 80 square feet.”

Malsin said startups find the flexibility in leasing options attractive because they can grow and contract based on the amount of their production.

“We tell people if they sign a lease we’ll let them out of it to allow for growth,” he said. “If they need more space we’ll move them to a different setting, and pay for (the move).”

, another Portland cooperative office space, was started in 2011 by Alex Linsker. He previously opened two similar spaces in New York City and felt a similar space would work well in Portland.

“The people who work here love being around other people,” he said. “About half of our members are self-employed, and this is a way to be out of the house and working.”

When Mozilla opened its Portland office last year, it first rented space from Collective Agency, Linsker said. Of its tenants, about half work remotely for companies while the other half are based in Portland.

A little over half of the 5,000-square-foot office space is common space, with conference rooms of varying size available to tenants.

He calls the atmosphere at Collective Agency “energizing yet grounding” and says tenants often work together.

“People like the variety,” he said. “Having others around helps creativity. I’ve saved myself several days’ worth of work just by asking someone else here a question I would have had to find the answer to on my own.”

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Halfway through 2011, the Portland-metropolitan area office market remains in a holding pattern.

The Portland office market vacancy rate held steady at 14.4 percent through the second quarter of 2011, according to , marking the third consecutive quarter the rate has hovered around 14 percent.

Portland’s Central Business District submarket vacancy rate dropped slightly – 10 basis points – over the last quarter to 9.5 percent, while the suburban office vacancy rate saw a 20 basis point uptick to 18.2 percent over the same time period.

Rental rates have stabilized for the most part across the entire city. The CBD saw asking Class A rates drop $0.60 per square foot this quarter, but that is primarily due to the most expensive Class A spaces already being leased, leaving only the cheaper product on the market, according to the Grubb & Ellis report.

Conversely, Class A office space in the Washington Square/Kruse Way submarket edged up slightly even though 94,000 square feet of space came back on the market throughout the quarter. The reason rent rose is because the 120,000-square-foot space occupied by Northwest Evaluation Association, a premium space, came back on the market, the report said.

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The office vacancy rate in Portland’s central business increased slightly in the first quarter of 2010, sitting at 12.82 percent at the end of March.

According to a , the central business district had 38,742 square feet of negative absorption, which is a drop in the bucket considering there is nearly 15 million square feet of inventory in the district. The number is somewhat distorted as all of the negative absorption came from the building at 1881 S.W. Naito Parkway being placed back on the market as Vestas, its current tenant, gets ready to move into its new digs in the Pearl District.

The downtown office market vacancy rate barely moved over the past year as there was very little activity other than some reshuffling within the district. Class A space in the district has also remained at a near standstill, sitting at 8.45 percent at the end of the first quarter.

Major lease transactions in the central business district during the first quarter of 2011 include Wells Fargo Advisors leasing 25,439 square feet at the KOIN Center and 14,200 square feet of space being leased by Bullard Law Firm at the 200 Market Building.

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Why is the Portland office market attractive to outside investors?

• 9.4 percent office vacancy in the Central Business District
  While Portland’s suburban office submarkets have been battered by the economy, the downtown core has vacancy comparable to cores in Washington, D.C., New York City and San Francisco.
• 7.1 percent Class A office vacancy in the Central Business District.
  Even with an asking price $6 per square foot higher than Class B space, the best product in town is still the most desired.
• Presently, only 195,458 square feet of office space are under construction in the Central Business District.
  A tight urban growth boundary, strict zoning codes and a lack of traditional financing are inhibiting development of new projects.
• 17.8 percent office vacancy in the suburban submarkets.
  When the economy first went sour a few years ago, many Portland businesses moved from suburban office buildings to downtown towers because of declining lease rates.

In 2010 the Portland multifamily real estate market bucked the national trend and attracted out-of-town institutional investors.

2011 could yield similar results for Portland’s office market.

, a real estate investment trust, this week entered into an agreement with to purchase the First & Main building in downtown. The 16-story, 364,735-square-foot office tower, completed last year, sold for $129 million, or $353.68 per square foot – a record for Portland office space. The building, certified Leadership in Energy and Environmental Design platinum, sold in less than two months for a price well more than the $100 million figure floating around when it hit the market.

“This is yet more evidence that the Portland real estate market is attractive to outside investors,” said Dr. Gerard Mildner, director of Portland State University’s Center for Real Estate. “The new owners don’t have to worry about the market being overbuilt, and the building is leased up with what I assume are low-maintenance tenants, so I can see why the building would get a lot of interest.”

The office portion of the building is completely leased up by multiple federal agencies and one nonprofit organization. Lease negotiations are under way for the 20,000 square feet of ground-floor retail space.

Last year, – a 188-unit apartment complex on North Mississippi Avenue – sold for $38.75 million to of Texas, an institutional investor that saw benefits in the Portland market.

According to Jeff Borlaug, executive vice president and director of brokerage with the Portland office of NAI Norris, Beggs & Simpson, the sale of First & Main – much like the sale of Tupelo Alley – is the result of pent-up demand for trophy products outperforming the competition. Investors have held onto money for the last few years waiting for investments with solid returns, and both office and multifamily products can provide that, he said.

“We have a sub-10 percent office vacancy rate in Portland, which is an anomaly,” Borlaug said. “That is going to attract people to Portland, and once they are looking, a building like First & Main is a pretty easy sell.”

Portland, in fact, has one of the lowest office vacancy rates in the country. Depending on the report, the Central Business District vacancy rate ranges from 9.4 percent to 11.8 percent, and the city ranks in the top five markets nationally. For Class A product, like First & Main, the vacancy rate drops to 7.1 percent.

Mildner expects owners of other quality office buildings to jump into the market and at least test the level of interest. This happened in the multifamily market after the sale of Tupelo Alley, when the Ladd Tower, and all were sold to institutional investors.

“People for years have been talking about the cash on the sidelines, so once a deal gets done and signs start to point to the economy improving, investors will be eager to invest,” he said.

Once a few of the large, high-quality buildings begin to move, Borlaug expects construction to start on new office towers. , a 19-story office building in Northeast Portland, is being pitched by the , and a 12-story project in Northwest Portland is being pitched by developers Bob Naito and Jim Winkler.

But Borlaug believes 26-story Park Avenue West, which stalled in April 2009 because of a lack of financing, will be the next office tower to go up.

“First & Main is catalytic and it will pave the way for one of these other projects to get out of the ground,” Borlaug said. “The building was fortunate with the leases it got, but there is no doubt that it has opened the doors for other projects and I think Park Avenue West is next up to bat.”

Rumors have swirled for the last two months that , the firm developing Park Avenue West, has found the necessary tenants and financing to move forward with the project, but nothing has been set in stone. Vanessa Sturgeon, president of TMT Development, said there is nothing new to report on the project since the sale of First & Main.

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Office square footage under construction plunged this past year in Portland-metro suburbs, falling to about 308,000 in the fourth quarter last year from nearly 756,000 a year earlier, according to a report on the metro area’s real estate markets.

The total office vacancy rate in the suburbs, meanwhile, climbed to nearly 21 percent from 16 percent over that same period,  released Monday by NAI Norris, Beggs & Simpson, a Portland-based commercial real estate firm.

“Demand is still low in the suburbs,” the report said, and added that most tenant activity is from businesses trading space and not new ones moving in. In addition, as rates have fallen in Portland’s Central Business District, tenants have left the suburbs for downtown.

“But the suburban markets may have reached bottom, and 2010 should see a modest recovery,” the report said.

Kevin VandenBrink, a principal with Portland-based commercial real estate firm Macadam Forbes, said there is presently little, if any, speculative development in the suburbs.

He also said the Central Business District has generally fared better than suburban markets, in part because companies’ younger employees want to work downtown.

“It’s been almost a bit of a lifestyle change, and now (companies) can afford to make that change,” he said.

However, he said there are a lot of people who live outside Portland and don’t want or need to work there, and some businesses want to leave the city and Multnomah County, to save money on taxes.

Macadam Forbes is trying to lease out a refurbished, four-story office building with approximately 98,000 square feet, near the intersection of interstates 5 and 217 in Tigard.

The building has been on the market for more than a year.

“We’ve had a lot of interest,” VandenBrink said.

Some suburban areas have been hit harder than others. On Kruse Way, several mortgage, residential real estate and title companies have either moved or folded, said Bob Stutte, president of Norris & Stevens, a Portland-based brokerage and property management firm.

According to the NAI Norris, Beggs & Simpson report, Kruse Way had a vacancy rate of nearly 23 percent in the fourth quarter last year, compared to 14.6 percent a year earlier. Nothing was under construction in the fourth quarter, compared to approximately 108,000 square feet being built a year before.

Stutte said suburban office space still draws a lot of interest, but it’s coming from smaller companies seeking shorter leases. Asked if it’s now easy to drive down prices, he said with a laugh, “It depends on the broker you have working for you.”

The suburbs weren’t the only areas hurting late last year.

Square footage under construction in Portland’s city center fell to roughly 830,000 in the fourth quarter from 1.3 million a year earlier. The total office vacancy rate there climbed to nearly 12 percent from 9.25 percent.

The NAI Norris, Beggs & Simpson report said the quarter generally “ended with some optimism,” as consumer confidence and December retail sales rose. The Portland-metro area’s industrial and retail vacancy rates also decreased.

“There was some good news on a number of economic fronts,” said the report, “tempered with the understanding that recovery will take time.”

The report defined the suburbs as including Interstate-5 South, central Beaverton and Sunset Corridor, among other areas, and excluding Vancouver, Wash. “Central City” was defined as encompassing the Central Business District, Lloyd District and Central East side and Northwest.

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