Quick Fact – November 2018 – Are Apartment rent going to drop, as newly constructed apartments enter the Portland market?
By: Clifford A. Hockley, President Bluestone and Hockley Real Estate Services, Executive Director, SVN | Bluestone and Hockley
Most residential Landlords in the Portland, Oregon marketplace are more concerned about regulation by City of Portland Commissioner Eudaley’s Rental Services Commission and the Portland Housing Bureau than they are facing the rising apartment vacancy rate.
Are they looking in the wrong direction? Fannie Mae’s research team is thumping the drum that the Portland Metro marketplace will find itself overbuilt by potentially 1,500 units a year in 2019 and 2020, as deliveries of new apartments come into the marketplace.
Commissioner Eudaly and tenant advocates should be happy, because rents will be probably be adjusted downward and landlords will use aggressive concessions to fill their vacant units. Developers will do what they can to keep their rent levels at proforma levels, so they can get permanent financing in place. This should bode well for tenants in Portland in the next 12 months.
Too many units?
According to Fannie Mae analysts, the cumulative effect of the rapid growth of housing stock will cause rent increases to slow substantially. Costar confirms that the “amount of new inventory in the pipeline is formidable.” As of September 2018, Costar counted approximately 11,000 units under construction. Expected demand for 2018 is estimated at a robust 6,600 units (CoStar) of which 4,100 have already been delivered as of September 2018. In the last 12 months, the Portland Metro marketplace absorbed 7,237 units, which is extraordinary.
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