MARKET DRIVERS
Asking rents remain in the mid-$0.80s to low-$0.90s PSF NNN range, though increased concession activity is putting pressure on effective rents. Newly delivered assets continue to outperform, achieving rents above $1.00 PSF NNN, while elevated sublease availability tempers rent growth by introducing lower-cost alternatives. Vacancy and availability reached 15-year highs in Q1, rising to 6.5% and 10.9%, respectively, driven in part by weakness in the small-bay segment under 50,000 SF, where vacancy has more than doubled after a period of outperformance.
Occupiers are reassessing space needs amid economic uncertainty, softening demand for large-format space and increasing decommitments. Leasing remains focused on newer properties, particularly in Vancouver’s south and west submarkets, supported by cross-border access, highway connectivity, and tax advantages.
ECONOMIC REVIEW
As of December 2025, the most recent available unemployment rate for the Portland-Vancouver-Hillsboro MSA was 4.9%, up from 4.1% at the same time last year. This compares to 5.2% for the state of Oregon and 4.4% nationally.
The manufacturing labor sector within the Portland-Vancouver-Hillsboro MSA decreased by 4.3% YOY to 114.7k jobs, losing 5,100 jobs in the past year whereas the Trade, Transportation, and Utilities sector remained unchanged YOY at 228.4k jobs.
NEAR-TERM OUTLOOK
Industrial market conditions in Portland remain soft, with elevated vacancy levels reflecting a sustained imbalance between supply deliveries and leasing velocity. Ongoing supply additions are expected to limit vacancy compression until at least 2027.
Absorption is expected to remain uneven, with stronger submarkets better positioned to backfill new space, while broader market availability remains elevated. A more meaningful recovery in leasing will depend in part on improved population growth trends and improving labor markets, which are influencing occupier willingness to expand.
1Q 2026 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 Climbs to 15-Year High: Direct vacancy increased to 6.5% in 1Q 2026, up 160 basis points year-over-year, driven by weakness in small-bay and select large-format segments.
- Net Absorption Remains Negative: Total net absorption posted -872,345 SF in 1Q 2026, reflecting continued tenant downsizing and delayed expansion decisions.
- Asking Rents Edge Lower: Average asking lease rates declined to $0.87 PSF NNN, as increased concession activity and sublease availability pressure effective rents despite stronger pricing in new developments.
- Leasing Activity Improves Year-Over-Year: Leasing volume reached 2.5 MSF in 1Q 2026, a 31% increase year-over-year, led by newer assets in select submarkets such as Vancouver and the East Columbia Corridor.
- Limited Vacancy Relief Near-Term: With 260,000 SF delivered in 1Q and additional supply underway, vacancy compression is not expected until at least 2027, particularly in broader and commodity-driven submarkets.
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