MARKET DRIVERS
Leasing momentum weakened further in Q4, reaching its lowest level in nearly two decades and contributing to upward pressure on marketwide vacancy. Asking rents remain largely stable in the mid 0.80s to low $0.90s PSF NNN range, though more aggressive concession packages continue weighing on effective rates. Newly delivered product outperforms with rents holding above $1.00 PSF NNN. Vacancy and availability both reached 15-year highs, with vacancy at 6.1% and availability at 10.1%, driven in part by record-high sublease inventory.
Economic uncertainty has led occupiers to reassess space needs, reducing demand for larger blocks and increasing space decommitments, with leasing activity increasingly concentrated in newer, more efficient properties. Industrial sales activity improved in Q4, totaling 2.55M SF and pushing year-end volume up 27.2% Speculative construction has slowed modestly, though steady deliveries amid weakened demand may continue to place upward pressure in coming quarters.
ECONOMIC REVIEW
As of September 2025, the unemployment rate for the Portland-Vancouver-Hillsboro MSA was 4.9%, up from 4.1% at the same time last year. This is compared to 5.2% for the state of Oregon and 4.4% for the nation.
The manufacturing labor sector within the Portland-Vancouver-Hillsboro MSA decreased by 5.6% YOY to 116.5k jobs, losing 6,900 jobs in the past year whereas the Trade, Transportation, and Utilities sector fell to 219K jobs YOY, losing 2,400 jobs.
NEAR-TERM OUTLOOK
Portland’s industrial market is undergoing a period of recalibration after weaker tenant demand over the past two years has driven a sharp increase in industrial vacancy across the region, marking the fastest expansion in 15 years. With leasing activity remaining subdued, vacancy may continue to trend higher into 2026 as the market works through this adjustment phase. Limited near-term construction is expected to curb oversupply risks, even as demand has softened from recent peaks. Continued economic headwinds suggest market conditions will remain steady but restrained in the near term, with growth likely to remain gradual.
4Q 2025 Portland Industrial Market: Key Data Points
Explore our full Portland industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy Rate Climbs: Direct vacancy rose to 6.1%, up 110 basis points year-over-year.
- Asking Lease Rates Hold Firm: Average asking rent reached $0.90 PSF NNN, a 7.1% increase YOY.
- Leasing Activity Slows: Quarterly leasing totaled 1.63M SF, contributing to a 12% annual decline.
- Net Absorption Turns Negative: Q4 posted -593K SF, despite 486K SF positive absorption for the year.
- Sales Volume Surges: Industrial sales reached 2.55M SF in Q4, pushing annual volume up 27.2% YOY.
- New Deliveries Add Supply: 927K SF delivered in Q4, sustaining upward pressure on vacancy.
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