PSU Real Estate Report: Portland Multifamily Continues to Perform
In its 3rd Quarter 2008 Report, the PSU Center for Real Estate calls the multi-family market “one of the strongest performing real estate classes in Portland.” The report says that after years of minimal rent growth, rents have increased by an average of 6% in the last 30 months, and vacancy rates have dropped since 2003 to a low of 3.3%. Median CAP rates have dropped from a high of 8.30% in 2002 to a media of 6.05% in 2007. This is reflective of the average price per unit. Sale prices for properties constructed after 1990 jumped 40% from 2006-2007 to an average of about $111,000 per unit. Pre-1990 building sales appreciated about 18% from 2006-2007 with an average sale of nearly $80,000 per unit.
The report indicates “multi-family brokers expect continued low vacancies and rent increases for 2008.” Troubles may be on the horizon though for high-end rentals. NW Portland rents per square foot have dropped from $1.14 in Oct 2007 to $1.09 in Spring, 2008. These areas have seen a number of new condo projects enter the market in the last five years and some unsold condos are expected to enter the market as rentals. In addition, downtown and close-in Portland will see a total of 2,100 luxury rentals coming on the market prior to the end of 2009.