The Portland apartment market was resilient in early 2023. But can that continue if the economy enters a recession later this year? Victor Calanog, Ph.D., Commercial Real Estate Economist, shares his take, citing data from Moody's Analytics CRE.
Strong Q1 for Portland multifamily, but rocky outlook ahead
Apartment metrics for Portland held steady in Q1 2023, with vacancies remaining tight at 5.2%. Rent growth also remained in positive territory, with asking rents rising 0.6% and effective rents rising 0.4%. That is remarkable given how so many other markets and the national average posted rent declines for the period, Calanog say.
Multifamily investors might want to prepare for a volatile near term: Recession probabilities for the U.S. remain uncomfortably high. Portland apartment performance metrics might have remained resilient in the early part of 2023, but few sectors will escape unscathed if the economy does tip over into a recession and not merely a slowdown.
Submarket to watch: Milwaukie/Oregon City
At a time of slow or even negative growth and a pullback in economic activity, it’s important to look closely at local neighborhoods.
The Milwaukie/Oregon City submarket, for example, had the lowest vacancy level in the first quarter at 2.3%. Its vacancy rate is projected to be 2.7% by the end of 2024, and with that kind of baseline trend, it might end up being more resilient than other places, Calanog says.
Portland has a bit of a head start, given its relatively sterling performance in the first quarter of 2023.
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