Portland Q1 2025: Vacancy High, Leasing Strategy Shifts

Portland’s office market continues to face economic and workplace headwinds, but a sense of adjustment is emerging. After a short-lived rebound in late 2024, the first quarter of 2025 brought renewed signs of softening—yet also growing clarity around what’s next. Organizations are downsizing, hybrid work is solidifying, and decision-makers are now focusing more on flexibility, efficiency, and tenant experience than square footage alone. The narrative is shifting from crisis to recalibration. 

Vacancy & Availability: Highs Persist, but Pace Slows 

• Metro-wide vacancy reached 24.9%, up from 24.4% in Q4 and 22.5% year-over-year, according to Colliers—marking one of the highest rates since the pandemic. 

• The CBD continues to bear the brunt of vacancy, while suburban submarkets like Clark County (8.3%) and Sunset Corridor (14.4%) remain more resilient. 

• Net absorption came in at -435K SF, a reversal from Q4’s modest gains, per Colliers. Cushman reported a similar trend with -415K SF absorbed, suggesting the retrenchment is widespread. 

  
  

Takeaway: While vacancy is still trending upward, the rate of increase is slowing compared to previous quarters. Submarkets like Clark County and the Sunset Corridor show that not all parts of the metro are equally affected, and suburban stability is helping to temper overall negative absorption. The market may be entering a new, more stable phase of long-term adjustment, with future leasing activity increasingly driven by smaller, hybrid-oriented companies seeking flexibility, value, and connectivity. 

Leasing Activity: Volume Shrinks, Strategy Shifts 

• According to Kidder Mathews, Q1 leasing activity totaled 582K SF, down 37% year-over-year and marking the lowest quarterly total since Q3 2020. 

• High-profile leases included PwC’s 14K SF at 11W, Arc’teryx’s 15K SF lease at Leland James. 

  
  

Takeaway: Leasing activity continues to reflect a cautious, cost-conscious approach by occupiers. Rather than expanding, many companies are consolidating and renegotiating leases within their existing footprint. The “blend-and-extend” strategy is becoming a defining feature of today’s market, especially in Class A buildings where landlords are open to structuring more flexible, tenant-favorable deals.  

Rental Rates: Resilient but Under Pressure 

• Metro asking rents averaged $32.02/SF full service gross, according to Colliers. 

• JLL reports that face rates remain stable, but landlords are increasingly using TI allowances and free rent concessions as tools to close deals. 

• CBRE notes that while asking rents across most submarkets have remained relatively stable, landlords are offering larger concession packages to attract tenants. Some Class B spaces have begun to reduce asking rates to stay competitive. 

Takeaway: Asking rents have proven sticky, especially in Class A buildings, where landlords remain hesitant to reduce face rates in order to preserve asset value. Instead of cutting base rent, many are offering increased tenant improvement packages, free rent periods, and flexible lease terms to entice or retain occupiers.  

Submarket Focus: Suburban Stability vs. Urban Strain 

• The Lloyd District was a rare bright spot, posting +142K SF of total net absorption. 

• The CBD saw another steep decline, with 478K SF returned to the market. JLL notes that tenants are vacating larger blocks while seeking smaller, better-located alternatives. 

Takeaway: Tenants are migrating towards suburban locations with strong amenities, easier commutes, and lower occupancy costs are increasingly preferred, reflecting a broader trend across secondary markets nationally. Downtown continues to lag, facing higher vacancy rates, slower leasing velocity, and a more difficult path to recovery. Meanwhile, suburban zones like Clark County and the Sunset Corridor have demonstrated resilience, benefiting from smaller tenant footprints, newer product offerings, and occupier demand for hybrid-friendly, lifestyle-focused workplaces. 

Outlook: A Rebalancing Market 

Portland’s office market remains in reset mode. Leasing activity is modest, vacancy rates are elevated, and new construction is effectively paused. Expect a market defined by consolidation, incentives, and a rethinking of space as experience.