The Portland Metro area, like much of the United States, has experienced historical levels of demand for industrial warehouse and distribution space. The sharp uptick in industrial performance results from a perfect storm of demand fundamentals. Firstly, most industrial users remained open throughout Covid, as there’s no online substitute for physical product creation and fulfillment. Further, Covid supercharged the direct to consumer e-commerce world, which relies heavily on warehouse space for storage, and distribution. Logistics users providers need to service the increased warehouse demand, which in turn requires more space for vehicle parking, storage, and repair. Combine those fundamentals with increased money supply, historically low-interest rates, and sustained levels of consumer spending, you have an industrial market like a freight train that has left the station with no end of the tracks in sight.
Portland’s industrial inventory is underbuilt relative to demand with net absorption exceeding net supply by 1.3M in the 4Q21 alone. Developers and users are competing to absorb the already-constrained land supply in the market. Due to rigorous growth boundary restrictions, the Portland Metro’s finite supply of land is exerting upward pressure on land pricing, building pricing, and lease rates.
As manufacturing has been the number one economic driver for Oregon’s economy, the Covid effect on industrial product has been a catalyst for the commercial real estate industry. In 2021, Macadam Forbes closed 15.50% of the total number of land sales in the Portland Metro market which represents 20.00% of the total acreage transacted in the marketplace throughout 2021.
Today, Macadam Forbes is currently listing hundreds of acres of industrial land with the prospect of delivering state-of-the-art industrial space over the next two years. Many of the demand fundamentals are here to stay, and given its position relative to major west coast markets and its inventory scarcity, the Portland Metro’s industrial markets have a bright future.