Portland’s Economic Landscape:Implications for CRE Investors
Portland is not a consensus market right now.
Markets look different depending on where you sit. From our vantage point — underwriting land, pricing construction in real time, navigating entitlement timelines, and forecasting lease-up 24 to 36 months out — the picture is more nuanced than the headlines suggest.
Development is a forward-looking business. The question is not what Portland looks like today. It’s what supply and demand will look like when new projects deliver.
Over the past several years, the city has transitioned from one of the most desirable markets in the country to one facing measurable economic headwinds. For investors, operators, and long-term stakeholders, the question is no longer how we got here — it’s where we are now, and what happens next.
The Current State of Portland’s Economy
The near-term data is challenging.
Portland has lost approximately 8,800 jobs this year alone — ranking fourth among major U.S. metros for total job losses.
Quarterly exports have fallen nearly 40%, declining from $10 billion to roughly $6.4 billion.
Building permits — one of the clearest leading indicators of future development activity — have effectively stalled.
The natural question is: how did a city that ranked among the top five places to live less than a decade ago arrive at this point?
Migration patterns provide part of the answer. Higher-income households have increasingly relocated to adjacent markets such as Clark County and Washington County, drawn by more favorable tax structures, perceived school quality, and overall stability.
Capital and households tend to move toward clarity, safety, and economic efficiency. At present, Portland is competing not just nationally — but against its own surrounding submarkets.
And in almost all cases, it is losing that competition.
A Shift in the Narrative: From Safety to Policy
Three to four years ago, public safety was widely viewed as the primary driver of business and resident outflows.
Today, the data tells a more nuanced story:
In-person crime is down 25% since 2022
Auto theft is down 50%
Property crime is down 30%
Shootings have declined 40%
Homicides are down 35%
Downtown foot traffic has increased 30%
The city is not perfect — no major metropolitan area is. But safety no longer appears to be the dominant economic constraint.
Increasingly, the conversation has shifted toward policy.
Portland carries the highest effective business tax burden in the country and the second-highest top marginal income tax rate, behind only New York City. Approximately half of the city’s workforce is employed by small businesses — operators who often cannot absorb layered tax and regulatory pressures while remaining competitive.
The economic divergence is striking. While Portland-area jobs are down roughly 7%, neighboring Clark County employment is up 16%. This is not a regional slowdown — it is concentrated within Multnomah County.
State leadership has articulated a strategy focused on business formation, job growth, infrastructure investment, workforce development, and permitting reform. The intent is clear.
Execution, however, remains the open question.
For investors, that distinction matters.
Housing: Short-Term Softness vs. Long-Term Scarcity
While economic headlines appear negative, the housing data tells a different long-term story.
By 2035, Portland is projected to need approximately 360,000 housing units — roughly 55,000 more than exist today. That equates to demand for approximately 5,500 new units annually.
Current production is closer to 1,500 units per year.
At this moment, only 117 units are under construction.
Even factoring in migration headwinds, the structural supply shortfall is severe. Research platforms project occupancy tightening toward 95%-97 by 2030, with annual rent growth returning to the 4%–5% range by 2029.
In other words, the supply pipeline is collapsing just as long-term demand remains intact.
Why Institutional Capital Is Returning
In 2025, five multifamily transactions in Multnomah County closed at pricing above $300,000 per unit. These were stabilized assets — not distressed sales.
Several institutional buyers acquired these properties with negative leverage, meaning their cost of capital exceeded their going-in cap rate.
Why accept negative leverage?
Because they are underwriting the future rent curve.
The supply wave from 2023–2025 is being absorbed. Meanwhile, permitting activity has stalled and new construction starts have fallen materially. By 2027, Portland will have virtually no new supply entering the market.
The institutional strategy is straightforward:
Enter now, even with compressed near-term cash flow
Capture rent growth over the next three to five years
Refinance into positive leverage as rates stabilize
Exit into a re-rated environment driven by organic rent growth
Markets like Phoenix, Austin, San Antonio, Jacksonville, and Denver have experienced rent declines exceeding 17% year-over-year due to oversupply. Portland, by contrast, has remained relatively flat — and has seen units under construction decline by nearly 99%.
Scarcity is quietly building into the system.
Our Approach: Discipline Over Optimism
Conviction does not eliminate uncertainty.
From our vantage point — underwriting land, pricing construction in real time, navigating entitlements, and forecasting lease-up 24–36 months out — the reality is more nuanced than the headlines.
Policy direction is encouraging. But timing and execution remain variables.
We do not underwrite accelerated rent growth.
We do not assume rapid lease-up velocity.
We do not depend on policy-driven tailwinds.
Instead, we build optionality into:
Entry basis
Unit mix and design flexibility
Phasing strategy
Capital structure
Exit timing
If growth outperforms, returns expand.
If growth remains measured, the asset still performs.
At this stage of the cycle, success is not about optimism. It is about margin of safety.
The Bottom Line
What we see today is a market experiencing short-term softness alongside long-term structural supply constraints — a dynamic that creates both risk and opportunity.
For disciplined investors, this is not a moment for blind enthusiasm — nor is it a moment for retreat.
It is a moment for precision.
As long-term participants in this community, we are focused on execution, risk management, and positioning for the next phase of the cycle — wherever and whenever it arrives.