The Rose City Rallies: Portland’s Return to Multifamily Relevance (7/23/25)
Why Portland Deserves a Fresh Look in 2025
by Aaron Kirk Douglas, Director of Market Intelligence
Despite recent headlines, Portland is quietly emerging as one of the strongest multifamily investment plays on the West Coast. It will be transitioning from a housing recession to recovery in the coming months. It’s a rally that heralds Portland’s return to multifamily relevance.
Here’s why:
Tightest Supply in the Nation
- Portland has the lowest ratio of units under construction to absorption among U.S. metros with more than 60k units.
- Construction starts are at a 15-year low, down 90% from the 5-year average
- Supply crunch coming in 2026-2027
- Upward rent pressure ahead
Portland & Oregon Face a Chronic Shortage of Housing Units
Oregon’s severe housing shortage necessitates the construction of 29,500 new homes annually from 2024 to 2044.
Oregon Housing Construction
Statewide housing permits dropped from more than 20,000 in 2022 to 14,270 in 2024 and forecast at 13,281 for 2025*.
Portland Metro Construction Outlook – Lowest Level Since 2010
In the past 12 months:
- 2024 Portland metro’s deliveries in buildings of 5+ units have totaled 5,900 units
- During that period, 5,100 units were absorbed.
- An overhang of 1,500 units remains.
- 3,000 units are currently under construction (Q3 2025).
- Permit applications for buildings with 5+ units have fallen to an annual rate of 1,329 for 2025 (forecast with current data through May.)
- Groundbreaking over the past 3 quarters totals well under 1,000 units, easily the slowest pace of construction in the past decade.
· Report: “Portland, Ore. Has Worst Housing Crisis Outlook – Here’s Why” – LendingTree.com.
Vacancy
- The vacancies for properties with 5+ units in Portland are currently between 6-7.5% (Multifamily NW/CoStar)
For those with a long view, this is a rare moment to plant a flag in one of the West Coast’s most structurally constrained markets.
Rents: Most Affordable Major City on the West Coast
Per Square Foot Comparables
- Portland: $1.85-$2.10 PSF
- Seattle: $2.72-$3.30
- Los Angeles: $3.43
- San Francisco: $4.70-$5.20
Rent Forecast for the Portland MSA
CoStar forecasts annual positive rent growth between 2% and 3% from 2026 through 2030.
Rent Control Impact on Construction
- Seen as a protective measure for tenants, but
- Discourages new construction
- Washington state’s new rent control is very similar, but includes attorney general enforcement and hefty fines
Existing Assets Undervalued with Major Upside
- Portland’s average sale price per unit has dropped to approximately $150,553 in Q2 2025, a 42.75% decrease from the 2022 peak pricing of $263,000.
- Combine that with high replacement costs, and you’ve got a compelling buy-low opportunity with a major upside.
Per Unit replacement costs:
- $369k garden
- $438k mid-rise
- $657k high-rise
Favorable Risk-Return Profile
- NIMBY pushback on development
- Investors are avoiding new developments because of cost overruns and rent control
- Opportunities for renovation and repositioning abound in older stock
Comparable Tax Advantages
- Oregon has no real estate excise or transfer taxes like Washington or California
- Property taxes do not reset on sale
World-Class Livability
With over 37,000 acres of green space within the city, Portland continues to attract people seeking a lifestyle, beauty, and year-round easy access to beaches and mountains.
Infrastructure
- The Portland International Airport is wrapping up an eye-popping $2B expansion. The Washington Post recently named PDX the nation’s #1 airport among more than 450 U.S. airports. Travel + Leisure ranked PDX #2 and Conde Nast included it in its list of “The World’s Most Beautiful Airports for 2025.”
Sportswear: Strategic Cuts, But Steady
Nike, with over 11,000 employees, has announced layoffs in its tech division. There is no indication of broader layoffs at stores, distribution, or corporate headquarters. Meanwhile, Columbia Sportswear (~2,500 Portland metro employees) and Adidas (~1,600 local workers) have not had layoffs in over 18 months, despite concerns over tariffs.
Tech: Reductions and Strategic Restructuring
Intel’s $36B investment in Hillsboro is underway, despite plans for layoffs throughout its global workforce. Completion of Intel’s D1X and D1D fabrication plants is part of its long-term roadmap. Current staffing levels are being reduced as part of a worldwide restructuring. After layoffs, Intel will still employ 17,721 in Oregon and SW Washington, nearly all in the Portland metro area.
Growing Tech & Data Center Presence
STACK Infrastructure, a developer and operator of hyperscale-grade data centers, has made Hillsboro a flagship U.S. hub. The company operates three campuses with 250 megawatts of critical IT capacity across 93 acres. Designed for AI, cloud, and sustainable operations. The location provides direct access to the Bay Area and trans-Pacific cables, offering low latency. The developer has access to affordable, renewable power and offers fast-scaling opportunities, making Portland a durable tech hub that complements investments like Intel’s fab expansion. Oregon ranks 14th in the nation for data center employment.
Daimler Truck Manufacturing
- Since 1947, Daimler’s HQ and assembly plant have operated on Swan Island, producing Freightliner and Western Star models, among others.
- Employment: 4,500+
- Cutting-edge autonomous electric truck innovation
- The company has more than 200 engineers working on self-driving technologies.
Wage Growth (With Challenges)
- Tech, advanced manufacturing, and logistics pay $85- $180k+ annually.
- Remote job workers are relocating from high-cost cities, bringing imported income, keeping Class A units competitive.
- CoStar reports that studio rents average $1,110, one-bedroom units average $1,550, and two-bedroom units average $1,680. A rent burden of 50% remains for many single earners living in unsubsidized studios, but it is below 30% among dual earners living in 1- to 3-bedroom households.
- In Oregon, the statewide rent-to-income ratio is approximately 33%.
Both rent per square foot and wages have risen ~30% over the past decade, suggesting income has broadly kept pace with rent inflation. However, the current ratio still favors property investors, especially given Portland’s relative affordability compared to peers.
Barriers to Housing Development
- Minuscule expansions to the area’s urban growth boundary
- Portland recently waived the high system development charges, which typically add 40% to housing entitlement costs, for the next 5,000 new units or the next three years, whichever comes first
- Slow permitting and zoning processes
- Cautious, not bold, elected leadership
- Government reliance on bonds, tax increment financing, and grants limits housing scale and creates unequal access to housing
The Bottom Line: Portland is in recovery mode. Current fundamentals point to a strong rebound in the near term. For those with a long view, this is a rare moment to plant a flag in one of the West Coast’s most structurally constrained markets.
*Data through May 2025 annualized
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