What's going on? It has been all over the news! Portland has one of the tightest rental markets in the nation. The past few years, limited construction took place in the Portland Metro area and the apartment market and renters are feeling the effects. Even with conservative adjustments by MMHA, the vacancy rate is expected to remain below 5.0% in 2012 and rents are trending upward. As a result, the anticipated increase in apartment construction is well underway.
What's going up? Approximately 3,093 market rate apartments in 25 different complexes are currently leasing up or under construction with leasing beginning in Q3 and Q4 of 2012 and into 2013. The largest number of units under construction are located in the suburban westside markets followed by the close-in Portland submarket on both east and west sides. A total 538 income restricted units in six different complexes are in development. The majority of the income restricted units are located in the South Waterfront. Reach Community Development is building Grays Landing, a 209-unit complex under construction on Block 49 with an expected completion date in the fourth quarter of 2012. The remaining income restricted units are found in North Portland, Vancouver and Close-in Portland.
What's coming up? Another 6,548 market rate units are planned for 2013 and beyond; permits have been pulled or properties are undergoing development review for 52 different properties. Similar to the apartments currently under construction, the majority of development is taking place in the suburban westside submarkets followed by the close-in, urban east and westside submarkets. An additional 512 planned units are income-restricted. These complexes are smaller with an average size of 51 units among 10 different complexes.
Announced prospective units include 4,180 units in 26 new apartment communities and 164 additional low-income units.
What's it mean? Not all of the above-referenced apartment projects will likely be built. Still, new construction is clearly on the uptick in the Portland/Vancouver metro apartment market and it looks like this is a trend we can expect to continue. The end result for multifamily owners is increased competition for tenants as newer properties are added to existing inventory.
Resources for this report include: Daily Journal of Commerce, Portland Business Journal, Oregonlive.com, City Permit Offices and HFO Research.