2018 Office Market Overview
Overall vacancy for Suburban and Downtown Portland decreased from 6.4% Mid Year to 5.35% Year End 2018, with a total positive absorption of 109,844 SF. Vacancy was down in each submarket since Mid Year 2018 (Class A & B Downtown and Class A & B Suburban). The Class A downtown market had the lowest vacancy at 2.2%, which is down two percentage points compared to Year End 2017.
These consistently low vacancy rates have increased average asking rents for Downtown Class A space to $26.37/SF MG, 12.02% above the 5 year average and Class A Suburban asking rents to $20.59/SF MG or 12.27% above the 5 year average. The Class B Downtown and suburban markets are experiencing increases of 19.43% and 12.61%, respectively over 5 year averages. This upward pressure on rents and the consistently low vacancy rates are part of the reason for the new construction downtown.
2019 Office Market Outlook
Demand for large amounts of Class A space Downtown has created the opportunity for developers to land quality National credit Tenants on the Eastern Waterfront. These Tenants, though National, have had a significant presence in the Greater Portland area for many years.
This is very positive organic growth and will help attract other quality businesses to Greater Portland. Vets First Choice will be occupying 160,000 SF at 12 Mountfort Street in June 2020, 100 Fore Street – 80,000 SF of office/retail space will be ready for occupancy in Q1 2020, 80,000 SF is under LOI. Portland Foreside is marketing to Tenants for 90,000 SF of office/retail space. Approximately 30,000 SF is under LOI, with an expected occupancy date of 2022.
With 418,000 SF of Class A Office vacancy coming to the Suburban market by 2019, it will bring many new options to the previously tight submarket and therefore a downward pressure on rents, especially for larger blocks of space.
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