The following reflects Portland office market conditions as of Q3 2026.
MARKET DRIVERS
The first half of 2026 showed early signs of improvement in the market and that momentum carried into the second half of the year. Direct vacancy fell to 15.1%, its second decline of 2026 and the largest drop since 2Q22, a sign the market may be finding its footing after several years of sustained upward pressure. Despite this progress, availability remains elevated at 18.1%, highlighting the amount of space that remains on the market and the gradual nature of the recovery.
Net absorption totaled positive 215K SF for 3Q, bringing the YTD total to 393K SF. Two of the first three quarters of 2026 have now recorded occupancy gains, a notable shift following several years of annual occupancy losses. Leasing activity also improved YOY, although demand remains selective. Higher-quality space continues to capture a greater share of activity, with Class A properties accounting for nearly half of quarterly leasing and the majority of YTD absorption.
ECONOMIC REVIEW
The Portland-Vancouver-Hillsboro MSA unemployment rate stood at 4.9% in July, versus 5.2% for Oregon and 4.1% nationally. Population growth remains subdued as affordability challenges and slower in-migration weigh on regional growth. Slower job creation and broader economic uncertainty also continue to temper near-term growth prospects.
NEAR-TERM OUTLOOK
Portland’s office market appears to be moving toward greater stability, supported by positive year-to-date absorption and a second decline in vacancy during 2026. However, elevated availability and continued pressure on asking rents indicate that the recovery remains gradual rather than broad-based. Performance is expected to remain uneven by location and building quality, with well-located, higher-quality properties better positioned to capture demand. Limited new construction should help prevent additional supply pressure, while a sustained recovery will depend on continued leasing activity, job growth and greater consistency in occupier demand.
Frequently Asked Questions
What is the office vacancy rate in Portland in Q3 2026?
The direct office vacancy rate in Portland was 15.1% in Q3 2026, down from 15.3% in Q2 2026 and 15.2% in Q3 2025, according to Kidder Mathews research. It was the second quarterly decline of 2026 and the largest drop since 2Q22. The total vacancy rate was 16.1%.
Which Portland office submarkets have the highest and lowest vacancy rates in Q3 2026?
SW Close-In had the highest direct office vacancy rate in Portland in Q3 2026 at 35.4%, followed by Pearl District/Chinatown at 29.9% and the Downtown group at 28.0%, according to Kidder Mathews research. Rivergate (0.0%), St. Johns/Central Vancouver (0.9%), and Hazel Dell/Salmon Creek (1.4%) had the lowest rates. Suburban submarkets combined recorded 9.4% direct vacancy.
What is the office availability rate in Portland in Q3 2026?
The office availability rate in Portland was 18.1% in Q3 2026, up from 17.8% in Q2 2026 and down 10 basis points from 18.2% in Q3 2025, according to Kidder Mathews research. Availability remains elevated, highlighting the amount of space that remains on the market. Downtown availability was 31.8%, compared with 12.0% in the suburban submarkets.
What are average office asking rents in Portland in Q3 2026?
Average office asking rents in Portland were $28.92 per square foot per year (full service gross) in Q3 2026, down 4.0% from $30.12 in Q3 2025 and down from $29.16 in Q2 2026, according to Kidder Mathews research. Submarket rental rates ranged from $15.00 in Hayden Island/Swan Island to $43.32 in Kruse Way. The Downtown rate was $27.36 and the suburban rate was $29.88.
How much office space was leased in Portland in Q3 2026?
Office leasing activity in Portland totaled 825,342 SF in Q3 2026, according to Kidder Mathews research. Year-to-date leasing reached 2,656,591 SF, up 13.0% from 2,351,432 SF in the same period of 2025. Demand remains selective, with Class A properties accounting for nearly half of quarterly leasing.
What was office net absorption in Portland in Q3 2026?
Portland office net absorption was positive 214,993 SF in Q3 2026, bringing the year-to-date total to 392,662 SF, according to Kidder Mathews research. Net absorption measures the change in occupied space, so a positive figure means more space was occupied than vacated. By comparison, year-to-date net absorption in 2025 was negative 1,287,746 SF, and two of the first three quarters of 2026 have recorded occupancy gains.
How are Class A, B, and C offices performing in Portland in Q3 2026?
Class A offices led the Portland office market in Q3 2026 with positive net absorption of 270,699 SF, while Class B recorded negative 1,527 SF and Class C negative 54,179 SF, according to Kidder Mathews research. Direct vacancy was 21.4% for Class A, 13.3% for Class B, and 8.6% for Class C. Average asking rents were $34.68, $27.12, and $21.12 per square foot, respectively.
How much office space is under construction in Portland in Q3 2026?
Portland’s office construction pipeline is limited, with 0 SF of new deliveries reported as of Q3 2026, according to Kidder Mathews research. Two significant projects are under construction: Workshop Blocks B at SE Water Ave in SE Close-In (120,000 SF, owned by Prosper Portland, delivering 3Q 2027) and One Pacific at Pacific Rim Park in Camas/Washougal (40,000 SF, owned by Hawes Group, delivering 1Q 2027). Limited new construction should help prevent additional supply pressure.
What was the largest office sale in Portland in Q3 2026?
The largest office sale in Portland in Q3 2026 was 11000 SW Stratus St – Creekside Corporate Park in the 217 Corridor/Beaverton submarket, a 63,992 SF property that sold for $17,281,195, or $270.05 per SF, according to Kidder Mathews research. The Oregon Clinic bought the property from Meriwether Ptnrs. Office sale volume totaled 738,215 SF in the quarter and 3,058,870 SF year to date, down 11.7% from 3,465,577 SF in the same period of 2025.
What were the largest office lease transactions in Portland in Q3 2026?
The largest office lease in Portland in Q3 2026 was a 55,295 SF transaction at 18110 SE 34th St (The VIC) in the Cascade Park submarket in August 2026, according to Kidder Mathews research. The landlord was Rabina Properties/New Blueprint Partners and the tenant was undisclosed. A second 32,652 SF lease at the same property and a 31,000 SF lease at 12000 SE 82nd Ave in Clackamas/Milwaukie (landlord GGP, tenant Movement) were also recorded in August 2026.
How is the economy affecting the Portland office market in Q3 2026?
The Portland-Vancouver-Hillsboro MSA unemployment rate stood at 4.9% in July, compared with 5.2% for Oregon and 4.1% nationally, according to the U.S. Bureau of Labor Statistics. Population growth remains subdued as affordability challenges and slower in-migration weigh on regional growth. Slower job creation and broader economic uncertainty also continue to temper near-term growth prospects.
What is the outlook for the Portland office market after Q3 2026?
Kidder Mathews research expects the Portland office market to move toward greater stability, supported by positive year-to-date absorption and a second decline in vacancy during 2026. Elevated availability and continued pressure on asking rents indicate that the recovery remains gradual rather than broad-based. Performance is expected to remain uneven by location and building quality, with well-located, higher-quality properties better positioned to capture demand.
Last updated: Q3 2026. Data source: Kidder Mathews Research, CoStar, U.S. Bureau of Labor Statistics. Compiled by the Kidder Mathews Research Group.
Q3 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.
- Direct Vacancy Rate: Direct vacancy fell to 15.1% in Q3 2026 from 15.3% in Q2 2026 and 15.2% in Q3 2025, the second decline of 2026. The total vacancy rate was 16.1%.
- Availability Rate: Availability stood at 18.1%, up from 17.8% in Q2 2026 and down 10 basis points from 18.2% in Q3 2025.
- Net Absorption: Net absorption was positive 214,993 SF in Q3 2026, bringing the year-to-date total to 392,662 SF versus negative 1,287,746 SF in the same period of 2025.
- Leasing Activity: Leasing totaled 825,342 SF in Q3 2026 and 2,656,591 SF year to date, up 13.0% from 2,351,432 SF a year earlier.
- Asking Rents: The average asking rent was $28.92 per SF per year (full service gross), down 4.0% from $30.12 in Q3 2025.
- Sale Activity: Sale volume totaled 738,215 SF in Q3 2026 and 3,058,870 SF year to date, down 11.7% year over year. The largest sale was 11000 SW Stratus St – Creekside Corporate Park at $17,281,195 ($270.05 per SF).
- Construction: New deliveries totaled 0 SF, with two significant projects under construction: 120,000 SF at SE Water Ave in SE Close-In and 40,000 SF at Pacific Rim Park in Camas/Washougal.
Submarket Statistics
| Submarket | Total Inventory (SF) |
Direct Vacancy Rate |
Total Vacancy Rate |
3Q26 Total Net Absorption (SF) |
YTD Total Net Absorption (SF) |
3Q26 Leasing Activity (SF) |
YTD Total Leasing Activity (SF) |
Total Rental Rate |
|---|
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Total Net Absorption (SF) | YTD Total Net Absorption (SF) | 3Q26 Leasing Activity (SF) | YTD Total Leasing Activity (SF) | Total Rental Rate |
|---|---|---|---|---|---|---|---|---|
| CBD | 29,484,261 | 27.8% | 29.6% | -25,450 | 74,935 | 166,090 | 691,353 | $27.24 |
| Pearl District/Chinatown | 3,370,757 | 29.9% | 29.9% | -19,071 | 23,985 | 24,241 | 61,911 | $34.32 |
| Downtown | 32,855,018 | 28.0% | 29.7% | -44,521 | 98,920 | 190,331 | 753,264 | $27.36 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Total Net Absorption (SF) | YTD Total Net Absorption (SF) | 3Q26 Leasing Activity (SF) | YTD Total Leasing Activity (SF) | Total Rental Rate |
|---|---|---|---|---|---|---|---|---|
| 217 Corridor/Beaverton | 2,587,121 | 16.7% | 18.0% | -10,990 | 27,750 | 20,838 | 92,201 | $26.28 |
| Airport Way | 1,080,923 | 16.4% | 16.8% | -19,240 | -40,890 | 0 | 10,605 | $20.04 |
| Barbur Blvd/Capitol Hwy | 1,434,541 | 8.8% | 8.8% | -10,033 | -24,440 | 5,458 | 19,704 | $20.04 |
| Camas/Washougal | 1,548,395 | 6.7% | 6.7% | -7,162 | -55,720 | 0 | 4,550 | $31.32 |
| Cascade Park | 3,295,647 | 10.2% | 10.3% | 18,360 | 33,690 | 87,947 | 153,573 | $29.52 |
| CBD/West Vancouver | 3,543,820 | 5.4% | 7.5% | 13,399 | 112,374 | 57,101 | 264,960 | $30.60 |
| Clackamas/Milwaukie | 3,297,402 | 5.2% | 5.4% | 25,061 | 46,409 | 47,132 | 119,207 | $27.24 |
| East Columbia Corridor | 1,091,421 | 3.1% | 3.1% | -655 | -5,299 | 135 | 357 | $30.24 |
| Gateway | 2,227,611 | 3.8% | 3.9% | 1,485 | 7,662 | 13,386 | 22,398 | $25.68 |
| Gresham | 1,219,111 | 3.9% | 3.9% | 7,553 | 13,273 | 2,654 | 10,335 | $22.80 |
| Guilds Lake | 521,533 | 6.3% | 6.3% | 4,500 | 410 | 8,503 | 8,503 | $22.56 |
| Hayden Island/Swan Island | 2,044,026 | 1.6% | 1.6% | -2,194 | -8,801 | 832 | 2,332 | $15.00 |
| Hazel Dell/Salmon Creek | 927,904 | 1.4% | 1.4% | -1,947 | -2,835 | 400 | 7,815 | $30.12 |
| Johns Landing | 1,936,772 | 14.2% | 15.9% | -10,929 | -25,753 | 19,533 | 49,318 | $24.84 |
| Kruse Way | 2,820,270 | 18.1% | 18.7% | 61,459 | 49,216 | 128,410 | 219,655 | $43.32 |
| Lake Oswego/West Linn | 1,094,678 | 7.3% | 7.3% | 25,667 | 10,429 | 10,484 | 35,886 | $33.84 |
| Lloyd District | 5,642,990 | 12.7% | 13.8% | 15,886 | 63,186 | 39,652 | 76,868 | $29.64 |
| Mall 205 | 873,239 | 8.9% | 8.9% | 2,947 | -15,975 | 18,856 | 41,748 | $20.52 |
| NE Close-In | 1,802,963 | 3.5% | 4.3% | 4,097 | 1,998 | 5,426 | 17,003 | $28.56 |
| North Beaverton | 2,867,320 | 9.2% | 9.4% | 18,508 | -21,838 | 14,884 | 55,191 | $32.40 |
| Orchards | 879,312 | 3.8% | 3.8% | -1,140 | 7,563 | 0 | 5,615 | $25.20 |
| Oregon City | 969,993 | 6.3% | 6.6% | -169 | -16,426 | 2,627 | 14,580 | $24.60 |
| Rivergate | 93,661 | 0.0% | 0.0% | 0 | 0 | 0 | 0 | — |
| SE Close-In | 3,376,741 | 15.6% | 17.0% | 44,559 | 69,743 | 28,414 | 121,863 | $27.72 |
| Sherwood | 156,274 | 6.1% | 6.1% | 915 | -2,585 | 915 | 1,160 | $39.60 |
| St. Johns/Central Vancouver | 1,463,845 | 0.9% | 1.2% | 982 | 7,741 | 6,946 | 14,526 | $32.76 |
| Sunset Corridor/Hillsboro | 15,811,985 | 6.4% | 6.7% | -205 | 27,862 | 17,150 | 95,806 | $27.60 |
| SW Close-In | 786,181 | 35.4% | 35.4% | 26,341 | 14,290 | 106 | 65,664 | $19.08 |
| Sylvan/Hillsdale | 816,008 | 12.9% | 12.9% | 2,012 | -5,271 | 7,855 | 13,001 | $24.60 |
| Tigard | 4,683,669 | 16.6% | 18.3% | 20,934 | -46,455 | 30,195 | 236,341 | $31.56 |
| Tualatin | 1,268,679 | 11.9% | 12.9% | 41,728 | 75,339 | 28,516 | 46,003 | $27.96 |
| Vancouver Mall | 853,529 | 10.1% | 11.5% | -1,805 | 23,085 | 10,687 | 40,503 | $21.60 |
| Wilsonville | 1,297,671 | 13.1% | 14.3% | -10,410 | -25,990 | 19,969 | 36,056 | $27.00 |
| Suburban | 74,315,235 | 9.4% | 10.0% | 259,514 | 293,742 | 635,011 | 1,903,327 | $29.88 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Total Net Absorption (SF) | YTD Total Net Absorption (SF) | 3Q26 Leasing Activity (SF) | YTD Total Leasing Activity (SF) | Total Rental Rate |
|---|---|---|---|---|---|---|---|---|
| Total | 107,170,253 | 15.1% | 16.1% | 214,993 | 392,662 | 825,342 | 2,656,591 | $28.92 |
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | 3Q26 Total Net Absorption (SF) | YTD Total Net Absorption (SF) | 3Q26 Leasing Activity (SF) | YTD Total Leasing Activity (SF) | Total Rental Rate |
|---|---|---|---|---|---|---|---|---|
| Class A | 34,733,160 | 21.4% | 23.2% | 270,699 | 341,677 | 354,550 | 1,216,200 | $34.68 |
| Class B | 53,475,279 | 13.3% | 14.1% | -1,527 | 38,520 | 328,049 | 1,139,609 | $27.12 |
| Class C | 18,321,402 | 8.6% | 8.7% | -54,179 | 12,465 | 79,091 | 237,130 | $21.12 |
Significant Sale Transactions 3Q26
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| 11000 SW Stratus St – Creekside Corporate Park | 217 Corridor/Beaverton | 63,992 | $17,281,195 | $270.05 | The Oregon Clinic | Meriwether Ptnrs. |
| 1905 NW 169th Pl – Twin Oaks Plaza | Sunset Corridor/Hillsboro | 18,000 | $4,100,000 | $227.78 | Westside Behavior Therapy | Graham Leggett |
| 14300 SE First St – Belcher-Vancouver Building | Cascade Park | 20,904 | $3,535,000 | $169.11 | 5 Cedars, LLC | Judy Belcher |
Significant Lease Transactions 3Q26
| Property | Submarket | SF | Transaction Date | Landlord | Tenant |
|---|---|---|---|---|---|
| 18110 SE 34th St – The VIC | Cascade Park | 55,295 | August 2026 | Rabina Properties/New Blueprint Partners | Undisclosed |
| 18110 SE 34th St – The VIC | Cascade Park | 32,652 | August 2026 | Rabina Properties/New Blueprint Partners | Undisclosed |
| 12000 SE 82nd Ave | Clackamas/Milwaukie | 31,000 | August 2026 | GGP | Movement |
Significant Under Construction
| Property | Address | Submarket | SF | Owner | Delivery Date |
|---|---|---|---|---|---|
| SE Water Ave – Workshop Blocks B | SE Water Ave | SE Close-In | 120,000 | Prosper Portland | 3Q 2027 |
| Pacific Rim Park – One Pacific | 5470 NW Pacific Rim | Camas/Washougal | 40,000 | Hawes Group | 1Q 2027 |
Data as of Q3 2026. Source: Kidder Mathews Research, CoStar, U.S. Bureau of Labor Statistics. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
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