Wednesday, June 3, 2009

Portland office vacancy rate projected to hit 20%

From the DCJ:

He calls himself an optimist but his predictions are grim. Raymond Torto, global chief economist at CB Richard Ellis , believes 2009 will be the worst year ever for commercial real estate in the U.S., both for leasing and property values.

But it won’t be the worst year for Portland, which typically lags behind the rest of the nation in regard to economic indicators, according to Torto. He said that Portland is projected to reach its peak vacancy rate of 21.5 percent in the second quarter of 2012. If that holds true, it would be the second-highest vacancy rate in the city’s history, one-fifth of a percentage point below the high reached in the first quarter of 1986.

Torto attributed the long lag primarily to new office space entering the Portland market.

“Oregon has dug itself into a hole (economically),” Torto said. “It translates to less demand for real estate.”

On Wednesday, Torto relayed his research to Portland’s real estate professionals during a conference at the Hilton Executive Tower hotel.

Torto warned that the region is perhaps worse off than the rest of the nation.

His findings for Oregon served as a gut check for real estate professionals.

“We’re all expecting doom and gloom,” said Jacquline Ritchie, vice president of business development for Wells Fargo, who listened to Torto’s presentation. “We got it.”

But Torto isn’t bereft of optimism, even if it’s tempered. He told real estate professionals that a rebound will be quick and decisive.

“When the market does turn, it will do so very quickly,” he said.