Portland Office Market Report

The following reflects Portland office market conditions as of Q2 2026.

MARKET DRIVERS

Office market fundamentals in the Portland-Vancouver-Hillsboro area remained relatively soft through the first half of 2026, though early signs of stabilization have emerged. Direct vacancy held essentially flat quarter-over-quarter at 15.3%, suggesting the pace of market decline may be beginning to slow after an extended period of volatility. The availability rate closed 2Q26 at 17.7%, with sublease space and underutilized tenant space continuing to add to overall supply. Leasing activity was relatively subdued, and the market recorded a moderate negative net absorption figure of -29,025 SF for the quarter. Year-to-date net absorption, however, reached a positive 173,519 SF, a marked improvement over the negative trends that have persisted since 2020, pointing to a gradual return of tenant activity — particularly among users seeking smaller, high-quality space to meet near-term occupancy needs. This trend is especially pronounced in suburban Portland.

ECONOMIC REVIEW

As of May 2026, the Portland-Vancouver-Hillsboro MSA unemployment rate stood at 4.7%, up slightly from 4.6% a year earlier. By comparison, unemployment measured 5.2% statewide in Oregon and 4.2% nationally. Population growth in the region continues at a more measured pace, as in-migration is increasingly offset by affordability challenges. While Portland remains attractive over the long term, near-term growth is being tempered by broader economic uncertainty and slower job creation.

NEAR-TERM OUTLOOK

The Portland office market is expected to remain tenant favorable in the near term, though 2Q26 activity suggests conditions may be gradually moving toward equilibrium. Stabilizing vacancy levels and positive year-to-date absorption are encouraging signs, but a sustained recovery will depend on stronger, more consistent leasing activity alongside broader economic improvement. Rental rate pressure is expected to persist, particularly for commodity office space, while well-located, high-quality properties should continue to outperform the broader market. With very little new construction in the pipeline and ongoing discussion around adaptive reuse of existing office stock, future supply growth is expected to remain limited.

Frequently Asked Questions

What is the office vacancy rate in Portland for Q2 2026?

Portland’s direct office vacancy rate was 15.3% in Q2 2026, essentially unchanged from 15.3% in Q1 2026 and up 20 basis points year-over-year from 15.1% in Q2 2025, according to Kidder Mathews research. Total vacancy, which includes sublease space, stood at 16.3% market-wide.

What is the office availability rate in Portland?

The total availability rate in the Portland office market was 17.7% in Q2 2026, down slightly from 17.9% in the prior quarter and down 40 basis points year-over-year from 18.1% in Q2 2025 (Data source: CoStar). Sublease space and underutilized tenant space continue to contribute to elevated availability.

What are average office asking rents in Portland?

The average asking lease rate across the Portland office market was $29.16 PSF FSG in Q2 2026, a 2.4% decrease from $29.88 PSF FSG a year earlier, according to Kidder Mathews research. Rates vary widely by submarket, ranging from $43.44 PSF in Kruse Way to $14.64 PSF in Hayden Island/Swan Island.

How much office leasing activity occurred in Portland in Q2 2026?

Portland office leasing activity totaled 878,688 SF in Q2 2026. Year-to-date leasing activity reached 1,672,732 SF, an 11.8% increase over the 1,496,816 SF recorded over the same period in 2025 (Data source: CoStar).

What is net absorption for the Portland office market in Q2 2026?

Portland recorded negative net absorption of -29,025 SF in Q2 2026, meaning slightly more office space was vacated than newly occupied during the quarter. However, year-to-date net absorption was a positive 173,519 SF, a significant improvement over the -1,378,896 SF recorded year-to-date in 2025, according to Kidder Mathews research.

Is there new office construction underway in Portland?

New office construction in Portland is minimal, with 0 SF of new deliveries recorded in Q2 2026. According to Kidder Mathews research, very little new construction is in the pipeline, and ongoing discussions around adaptive reuse of existing office buildings are expected to keep future supply growth limited.

What was the largest office sale in Portland in Q2 2026?

The largest office sale in Q2 2026 was the 200 Market Building in the CBD submarket, a 417,956-SF property that sold for $70,000,000 ($167.48 per SF). The buyer was 200 Market Propco, LLC and the seller was 200 Market Associates, LP (Data source: CoStar).

What was the largest office lease signed in Portland in Q2 2026?

The largest office lease signed in Q2 2026 was a 101,000-SF lease at 200 Market in the CBD submarket, signed in April 2026 by tenant Cambia Health Solutions with landlord Melvin Mark Companies, according to Kidder Mathews research.

How much office sales volume occurred in Portland in Q2 2026?

Portland office sales volume totaled 1,177,469 SF in Q2 2026. Year-to-date sales volume reached 2,247,648 SF, a 73.8% increase over the 1,293,606 SF sold over the same period in 2025 (Data source: CoStar).

What is the market outlook for Portland office space?

The Portland office market is expected to remain tenant-favorable in the near term, according to Kidder Mathews research, though Q2 2026 activity suggests conditions may be gradually moving toward equilibrium. A sustained recovery is expected to depend on stronger, more consistent leasing activity and continued economic improvement, with well-located, high-quality properties outperforming the broader market.

How does Portland’s unemployment rate compare to the region and the nation?

The Portland-Vancouver-Hillsboro MSA reported an unemployment rate of 4.7% as of May 2026, up slightly from 4.6% a year earlier. That compares to 5.2% statewide in Oregon and 4.2% nationally, according to Kidder Mathews research.

Last updated: Q2 2026. Data source: CoStar, EDD. Compiled by the Kidder Mathews Research Group.

Q2 2026 Portland Office Market: Key Data Points

Explore our full Portland office market review for deeper insights into leasing trends, sale activity, and submarket performance.

• Vacancy Rates Stabilize: Portland’s direct office vacancy rate remained at 15.3% in Q2 2026, essentially unchanged from the previous quarter, suggesting market conditions may be beginning to stabilize.
• Positive Absorption Returns: Year-to-date net absorption reached 173,519 SF, a significant improvement from the -1.4M SF recorded during the same period last year, marking one of the market’s strongest recovery indicators.
• Leasing Activity Increases: Office leasing activity totaled 1.7M SF YTD, an 11.8% increase year-over-year, reflecting growing tenant demand, particularly for smaller, high-quality spaces.
• Availability Rate Declines: The overall availability rate fell to 17.7%, down 40 basis points year-over-year, indicating a gradual reduction in available office space across the market.
• Asking Rents Continue to Adjust: Average asking lease rates declined to $29.16 PSF FSG, a 2.4% decrease year-over-year, as landlords remain competitive to attract tenants.
• Investment Activity Rebounds: Office sales volume climbed to 2.2M SF YTD, a 73.8% increase year-over-year, signaling renewed investor interest despite ongoing market challenges.

Submarket Statistics

Significant Sale Transactions 2Q 2026

Significant Lease Transactions 2Q 2026