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The multifamily market in Portland, Oregon, appears robust heading into the second half of 2024, with population growth and a large pool of millennial and Generation Z renters supporting steady apartment demand.
“Portland stands out due to its vibrant cultural scene, sustainable development initiatives and a robust tech sector driving employment growth. Neighborhood diversity, from urban cores to suburban settings, offers varied investment opportunities catering to different renter demographics,” said Sara Rosumny, Client Manager at Chase.
Portland real estate trends show vacancies at 6.3% for all multifamily properties in the first quarter and rising slightly to 6.4% by the end of the year, according to Moody’s CRE. However, vacancies for Class B and C properties were lower at 5% in the first quarter of 2024.
Moody’s CRE forecasts effective rents will grow 0.8% year over year in 2024 and average 3.3% over the next five years, exceeding the 2.9% growth expected nationwide.
Portland has a lower cost of living than other major cities, which is driving population growth, said David Caputo, Data Scientist at Moody’s CRE. Compared with the U.S. as a whole, the Portland multifamily market also has a larger share of residents between ages 20 and 34, and working-age residents are more likely to hold a college degree.
“Having a growing population and workforce that is both young and educated presents significant opportunities for the multifamily sector,” Caputo said.
Keeping up with renter preferences
“There’s been a noticeable shift toward amenities like fitness centers, outdoor recreational areas and co-working spaces—particularly given the trend toward remote and hybrid work,” Rosumny said.
While renovations require investment, reconfiguring spaces to offer amenities that meet current renters’ needs can help attract renters and enhance a property’s value, she said.
Don’t forget to consider neighborhood trends.
“Portland’s Pearl District, in close proximity to employers and amenities, tends to see sustained demand for higher-end rentals,” Rosumny said.
Keep an eye on supply growth
The Portland metro area is expected to gain 5,831 apartment units in 2024 and 2025, according to Moody’s CRE. That will expand its inventory 3.8% from 2023.
Vancouver, Washington, which borders Portland, has seen some significant growth, with 2,305 new units built since 2021 along with revitalized waterfront and downtown areas, Rosumny said. Only Portland’s Northwest submarket has gained more new units, according to Moody’s CRE.
Vacancies, however, are forecast to be relatively stable, according to Moody’s CRE, suggesting there’s demand to meet the new supply.
“Portland stands out due to its vibrant cultural scene, sustainable development initiatives, and a robust tech sector driving employment growth. Neighborhood diversity, from urban cores to suburban settings, offers varied investment opportunities catering to different renter demographics.”
Sara Rosumny
Client Manager
Elevated interest rates
The Federal Reserve has held interest rates steady in an effort to bring inflation back to its 2% target, and the timeline for reductions is uncertain.
The recent increase in interest rates has moderated Portland multifamily cap rates slightly, but it hasn’t significantly dampened property values due to strong demand, Rosumny said.
In the meantime, investors seeking or refinancing apartment loans may want to explore options that offer flexibility if interest rates decline. Prepayment options that make refinancing feasible could potentially allow for cost savings and stronger cash flow, Rosumny said.
Focus on operations
Between elevated interest rates and inflation, it’s worth exploring opportunities to strengthen business operations, Rosumny said.
Investing in energy-efficient upgrades is one strategy for cutting operational costs. Property management technology, such as tools for handling renter inquiries and maintenance requests, can also help.
“These solutions have the potential to streamline operations and improve residents’ satisfaction,” Rosumny said.
Whether you’re ready for financing or looking to streamline operations, reach out to our local Portland commercial real estate team.
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for disclosures and disclaimers related to this content.
