Average Rental Rate
12-Month Rent Growth
SF Under Construction
SE Close-In lies directly east of the Willamette River, bound by Stark Street to the north and Southeast Holgate Boulevard to the south. Historically, the area was characterized by industrial buildings and low-slung, utilitarian office assets.
As the CBD became more difficult to develop over the years, builders looked east across the river as a natural alternative. Affluent, well-educated renters have moved into the neighborhood, representing a potential workforce for local offices. Substantial luxury apartment construction followed, creating more synergy to go along with a bustling nightlife and restaurant scene. In turn, a substantial amount of creative office space has delivered in recent years, generally via redevelopment of older, existing properties.
Vacancies have swung widely as speculative office developments come on line, and the gap between SE Close-In and larger metro vacancies has widened in recent quarters. The current vacancy rate is 15.8%, compared with the metro average of 12.3%. Annual net absorption of -15,000 SF illustrates the difficulties landlords are having securing tenants, as remote work policies remain somewhat entrenched.
Businesses struggling to solidify return-to-work plans, as well as more supply hitting the market in the near term will continue to place upward pressure on vacancies. Large lease deals haven't completely dried up, however. MWA Architects signed for 9,000 SF at the reconfigured Washington High School in 22Q3, while Liquid Wire took an entire 7,400-SF building off Ladd Street in 22Q4. The local manufacturer is known for its craft in moldable electronics that include sensors and microprocessors and serves a wide range of industries, from aerospace to automotive.
While office rents overall are essentially in line with the average in the Portland market, rents for the submarket's most prominent office slice do run at somewhat of a premium. Space rated 3 Star in SE Close-In goes for about $30.00/SF gross, compared to $28.00/SF in the metro.
Rents in the submarket grew by a moderate 2.5% year over year as of 2023Q2, which was about the same as the annualized average growth rate over the past three years.
No significant leasing activity was reported this quarter.