Portland Commercial Office Space for Rent

Q4 2025

Portland Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Portland commercial real estate (CRE) market in late 2025 is establishing a "firmer floor" under fundamentals, with supply constraints beginning to support a recovery [1]. The Office sector continues to face challenges with vacancy hitting record highs, though sales activity has picked up as investors target value-add opportunities [3]. Industrial markets are stabilizing after a period of cooling, with net absorption turning positive and leasing activity remaining steady [5, 6]. Retail is resilient, with vacancy rising slightly but asking rents climbing over 6% year-over-year [7]. Multifamily is the standout performer for stability, with occupancy holding above national averages and the construction pipeline shrinking to cycle lows [1, 2].

TenantBase Proprietary Data [12] highlights the distribution of active tenant demand over the last 90 days (181 total deals):

  • Warehouse dominated market activity with 48.07% of all searches [12].
  • Retail/Storefront was the second most active sector at 44.20% [12].
  • Office accounted for 8.29% of total search volume [12].

Office Market

Market Overview Portland's office market is navigating a deep correction, with vacancy rates reaching new peaks. However, the market is seeing a slight increase in sales volume as pricing resets attract opportunistic capital [3].

  • Vacancy & Availability: The direct vacancy rate climbed to 15.2% in Q3 2025, a record high, while total availability sits at 18.7% [3]. Downtown Portland accounts for over half of the market's vacant space [4].
  • Net Absorption: The market recorded negative net absorption of (22,000) SF in Q3, continuing a multi-quarter trend of contraction [4].
  • Rental Rates: Despite high vacancy, average asking rents rose 6.4% year-over-year to $30.00 per SF (Full Service), driven by premium space listings [3, 4].
  • Market Drivers: Leasing activity fell to 641,000 SF, a near-record low [3]. However, office sales volume rebounded to 1.7 million SF, up 7.8% year-over-year [4].

TenantBase Activity [12]

  • Demand Share: Office accounted for 8.29% of total search volume [12].
  • Lease Term Preference: Demand is heavily skewed toward short-term flexibility [12]:
    • Less than one year: 38.46% of deals [12].
    • 2-3 Years: 30.77% of deals [12].
    • 3-5 Years: 15.38% of deals [12].
  • Size Requirements: Tenants seeking short-term leases are looking for small footprints. The average lower SF required for a Less than one year term is 500 SF, compared to 2,750 SF for a 2-3 Years term [12].

Industrial & Warehouse Market

Market Overview The Portland industrial market is stabilizing, with net absorption turning positive for the first time in several quarters, supported by a diverse tenant base [5, 6].

  • Vacancy & Rent: Vacancy rose to 5.7% - 6.9% depending on the report, marking a 13-year high due to recent deliveries [5, 6]. Asking rents reached a record high of $0.90 per SF (NNN), up 7.1% year-over-year [5].
  • Demand & Supply: Net absorption rebounded to positive 153,000 SF to 730,600 SF in Q3, reversing prior losses [5, 6].
  • Construction: The construction pipeline has contracted significantly, with 3.5 million SF underway—down nearly 50% year-over-year—which will help tighten the market in 2026 [5].
  • Leasing Highlights: Deal volume is lower than pre-pandemic averages, but the flex and warehouse segments showed renewed strength in the third quarter [6].

TenantBase Activity [12]

  • Demand Share: Warehouse accounted for 48.07% of total search volume [12].
  • Lease Term Preference: Demand is concentrated in the 1-2 year range [12]:
    • 1-2 Years: 43.90% of deals [12].
    • Less than one year: 19.51% of deals [12].
    • 3-5 Years: 17.07% of deals [12].
  • Size Requirements: The average lower SF required for a 1-2 Years term is 3,357 SF, while 3-5 Years term requirements average 2,125 SF [12].

Retail Market

Market Overview Portland's retail sector remains resilient, with asking rents climbing despite a modest increase in vacancy [7].

  • Vacancy & Availability: The retail vacancy rate rose slightly to 4.4% - 4.7% in Q3 2025 [7, 8]. Availability remains tight in high-demand corridors [8].
  • Net Absorption: The market posted positive net absorption of 10,000 SF in Q3, a significant improvement from negative figures earlier in the year [8].
  • Rental Rates: Average asking rents increased to $1.98 per SF (NNN), a 6.2% rise from Q3 2024, reflecting landlord confidence [7].
  • Construction: The construction pipeline contracted by 40.8% year-over-year, limiting new supply and supporting occupancy levels [7].

TenantBase Activity [12]

  • Demand Share: Retail/Storefront activity was strong, accounting for 44.20% of all search volume [12].
  • Lease Term Preference: Retail tenants show a balanced appetite for terms [12]:
    • 1-2 Years: 25.00% of deals [12].
    • 5+ Years: 22.50% of deals [12].
    • Less than one year: 20.00% of deals [12].
  • Top Locations: Tenant interest is highest in Portland (23 deals), followed by Beaverton (11 deals) and Vancouver (7 deals) [12].

Multifamily Market

Market Overview The multifamily market is finding a solid floor, with demand absorbing the tapering supply wave and occupancy rates stabilizing above national averages [1, 2].

  • Vacancy & Occupancy: Vacancy stabilized at 7.3% - 8.7%, while stabilized occupancy held strong at 94.1% - 95.3% [1, 10].
  • Rents: Average rents dipped slightly by 0.4% - 1.0% year-over-year to roughly $1,770 - $1,867 per unit [2, 11]. However, discounting is fading as the market tightens [1].
  • Construction: The pipeline has declined for six straight quarters to approximately 2,026 units, the lowest level of the current cycle [1, 10].
  • Demand: Absorption was strong, with 1,264 units absorbed in Q3 alone, outpacing the historical quarterly average [1, 10].

2026 Outlook

Looking ahead to 2026, the Portland market is positioned for a gradual recovery as supply pressures ease.

  • Multifamily Rebound: With the construction pipeline at cycle lows, vacancy is expected to compress further, supporting a return to positive rent growth in 2026 [1, 10].
  • Industrial Tightening: The sharp reduction in new industrial starts will allow demand to catch up with supply, likely stabilizing vacancy and supporting rent growth [5].
  • Investment Climate: While challenges remain in the office sector, the overall market is expected to benefit from improved capital conditions and a "firmer floor" under fundamentals [1, 11].

Sources

  1. MMG Real Estate Advisors: Portland Q3 2025 Market Report
  2. CBRE: Q3 2025 Portland Multifamily Figures Report
  3. Kidder Mathews: Portland Office Market Report Q3 2025
  4. Kidder Mathews: Portland Office Market Research Q3 2025 PDF
  5. Kidder Mathews: Portland Industrial Market Report Q3 2025
  6. Norris & Stevens: Industrial Market Report Q3 2025
  7. Kidder Mathews: Portland Retail Market Report Q3 2025
  8. CBRE: Portland Retail Figures Q3 2025
  9. Cosign: Portland Metro Multifamily Market Report Q3 2025
  10. Norris & Stevens: Multi-family Market Report Q3 2025
  11. Kidder Mathews: Portland Multifamily Market Report Q3 2025
  12. TenantBase Proprietary Market Data (Portland - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.