Q1 2025 - Portland Office Market Report

As spring breathes new life into the season, Portland’s office market is still sprouting its first signs of recovery. While many of the city’s largest employers have yet to fully return to in-office work, the lingering effects of declining occupancy stretch into the second quarter of 2025. However, like the promise of warmer days, labor market growth is on the horizon, with office-dependent sectors projected to grow 3.7% through 2029, outpacing the national average.

Despite this budding optimism, the path to recovery remains slow and uneven. In 2024, absorption rates retreated for three of four quarters, resulting in 910,000 SF of space lost. High quality buildings are seeing growth, but it’s not a blossoming expansion—just a reshuffling as companies downsize into more efficient spaces.

Still, there’s a glimmer of hope as the supply pipeline withers. New construction has slowed to a near halt, with only 0.43% of existing inventory under development. This is like a garden taking a pause, letting the market rest and catch its breath.
The vacancy rate continues to climb, reaching 14.24% by Q2 2025, with the central business district absorbing much of the decline. However, as the supply of new space shrinks, we may begin to see some signs of stabilization in the coming months.

Rents have risen 2.5% over the past year, though still below the decade average. Suburban areas, especially on the Washington side of the Columbia River, are like resilient flowers in a drought, holding steady due to limited construction and a more favorable tax environment.

As vacancies continue to grow, rent prices may dip into the negative in the coming quarters. But the forecast isn’t all cloudy—there’s potential for growth if the labor market shifts and companies start rethinking their office needs. Just as spring holds the promise of change, Portland’s office market may yet bloom into a more stable and vibrant future.