Rents jump - downtown PDX is most expensive

It's interesting to note what the rental rates are for the most popular and most expensive parts of the Metro area, and that is Downtown Portland, followed by NW Portland and Inner SE and NE Portland.  Lake Oswego ranks lower on the rent scale but has been second to the highest in vacancy rates in the area - a very curious combination, which can only be explained by property owners overvaluing their properties and unwilling to lower rent in order to achieve higher occupancy rates.

Patrick Kessi is finishing an apartment, Cathedral Apartments in St. John's, that he is quoted as saying will rent at about $2 per square foot which is higher than the downtown average of $1.93 per square foot.  Average metro area rent is $1.16 per square foot.  Since the apartment complex in St. John's is not finished yet (end of the year expected completion date), actual rental rates will be determined when the market is tested.

What will Lake Oswego's rent structure be?  What constitutes "high end" in this suburban market?    For rental markets where homes are not purchased for long-term ownership, price often matters more than location, and rents have to reflect what the market says, not what the marketing promises.  Obviously, rental housing is a hot commodity now and more units are being built - until the market is oversupplied with product or the economy hits another snag.

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Portland Bizjournal 

Jul 3, 2014

Rents jumped 11 percent last year and are expected to keep rising

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Image courtesy Wood Partners LLC

Portland tenants are being served a double dose of financial pressure, with rents and property taxes continuing to rise.

According to the Barry Apartment Report, a publication covering financial trends relating to Portland apartments, the increased demand is due to major employers such as Intel, Nike, Kaiser'sWestside hospital and Daimler Trucks taking on more employees.

New construction projects, including the Collaborative Life Sciences Building at Portland's South Waterfront, Trimet's Portand-Milwaukie Light Rail project and the re-start of Park Avenue West have also created jobs.

Alli Pyrah

Staff Reporter-Portland Business Journal

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Average rents in the Portland area rose 11 percent last year and are expected to continue to escalate, according to a report by commercial real estate firm Kidder Mathews.

The average rent is now $1.16 per sq ft, with downtown Portland reaching an average $1.93 per sq ft.

"Rental rates are expected to continue to escalate over the next year, though the general consensus based on market participant interviews is that there is not a lot of room for additional rental rate growth," said the report. It predicted that continued growth in net operating income (NOI) will come at least in part from putting bill-back programs in place and eliminating tenant incentive concessions.

Property taxes have also continued to rise, particularly in Multnomah County, but the cost of gas and electricity has remained fairly constant.