MARKET DRIVERS
Average asking lease rates fell year-over-year (YOY) and quarter-over-quarter (QOQ); dropping $0.03 and $0.04 respectively to $0.84 this quarter. These drops are following the recent trend of net effective rates lowering due to increased tenant improvement allowances and free rent.
Direct vacancy rates grew 170 basis points (bps) YOY from 3.0% to 4.7% in 3Q 2024. This is the highest rate recorded since 2014. Total availability rates also increased by 170 bps YOY from 7.7% in 3Q 2024, which is also the highest since 2014.
Leasing activity decreased 11.1% YOY from 2.2M SF to 1.9M SF in 3Q 2024. This is an improvement from last quarter, but cumulatively, there has been a 26.1% dip in activity when comparing the first three quarters of 2023 and 2024.
Industrial sale activity increased from 996.9k SF in 3Q 2023 to 1.5M SF this quarter, and sales are up 16.8% cumulatively for the year.
Deliveries have reached 1.8M SF for industrial space in 2024, with another 2.3M SF of industrial space under construction.
ECONOMIC REVIEW
In April, the Manufacturing sector within the Portland-Vancouver-Hillsboro MSA increased by 0.2% YOY to 125.1k jobs, and the Trade, Transportation, and Utilities sector fell by 0.5% to 223.0k jobs.
The statewide unemployment rate in Oregon fell to 4.0% while the Portland-Vancouver-Hillsboro MSA reported 4.4%, up from 3.6% last quarter.
NEAR-TERM OUTLOOK
Direct vacancy and total availability increased QOQ to 4.5% and 7.6% respectively.
Net absorption posted its first positive quarter in a year at 113.1k SF. The reason for an increase in vacancies despite this positive quarter is due to new deliveries, which is a trend that could continue due to the high quantity of quality properties in the construction pipeline.
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