Oregon is back and stronger than ever. Statewide, unemployment is 4.5%, its lowest on record as the labor force increased by 82,246 year over year. Oregon’s population increased by 51,135 people last year (1.3%) and should be surpassed when updated figures are announced later this year.
Every major metropolitan area in the state has year-over-year increases in employed and decreases in unemployment rates. In the Portland MSA, unemployment is 4.2% and new jobs since March 2015 total 65,228. In Salem, unemployment is 4.6%; in the Eugene MSA, unemployment is 4.9%; and, in the Medford MSA, unemployment is 5.1%. In the Bend-Redmond MSA, unemployment is 4.8%, with growth in the labor force of 8.44%.
The residential real estate statistics for the Portland market also continue to amaze. The City’s median 2015 sale price of $340,000 is up 45% since 2011 (Portland Monthly, Apr ‘16) with a 9.0% year-over-year increase (Mar ‘16). Between February 2015 and February 2016, building permits were issued for 14,334 new residential units, including 7,770 single family homes in the Portland MSA (U.S. Census). Multifamily housing units under construction in the metro area total 7,125. Despite this steady pace, the Portland MSA continues to suffer a housing shortage of 4,000 residential units.
In addition, office vacancy is 7.6% (Q1, ‘16) and over 4,200 hotel rooms are planned and under construction.
The retail market is also stronger than we have ever seen, with retail vacancy at 4.4% (Q1 ‘16). New projects are announced and leased by opening day at rates ranging from $35 to $40 per square foot for shop space. Witness the Market of Choice anchored Timberland Town Center which opened in January 2015 and is 94% leased. Also, the Fred Meyer anchored, 191,793 square foot Happy Valley Crossroads is currently 91% leased with occupancy projected to occur by Fall 2016. Rents are $35.00 to $40.00 per square foot with pads over $50.00. Future tenants include Chipotle Mexican Grill, Umpqua Bank, and Hop Jack’s Restaurant.
The story is urban as well, as demonstrated by every major district in Portland. North Williams, NW 23rd Avenue, the Burnside Bridgehead, and the Lloyd District are undergoing development with small shop space – 1,500 to 2,000 square feet – for lease at $40.00 per square foot. The 4th & Harrison development near Portland State University in Downtown will bring 424 new residential units and 38,000 square feet of additional retail space to serve this growing neighborhood.
These strong figures are also evident across the state. From fast casual tenants filling up space along Commercial Street in Salem to the recent remodel of Gateway Mall in Eugene-Springfield with several new-to-market tenants. Developers are investing to rehab existing product and constructing new ground-up shopping centers throughout the state.
In Medford, the 179,870 square foot Phase II of Northgate Marketplace is under
construction and will be anchored by Dick’s Sporting Goods, Field & Stream Shops, HomeGoods, Carters, and RAM Restaurant & Brewery.
But, as we all high-five each other about the incredible market we enjoy, we need to stop and look at the 1.6 million square feet of available “big box” retail space in the Portland metro area, mostly resulting from vacated grocery (Safeway, Albertsons, and Walmart Neighborhood Market) and office suppliers downsizing. Additional boxes will become available as The Sports Authority moves through bankruptcy and Walgreens acquisition of Rite-Aid results in numerous sites becoming available.
Employers such as Nike, Adidas, Under Armour, InDinero, and Vacasa are creating new jobs; the housing market is booming; and, thousands of hotel rooms are under construction in the Portland metro area. These facts coupled with a thriving retail market help us remain optimistic as we ride this current wave of success.