Why Portland? Portland CRE Trends and Regional Market Overview - - PowerPoint PPT Presentation

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Why Portland? Portland CRE Trends and Regional Market Overview - - PowerPoint PPT Presentation

Feb 29, 2024 106 likes •323 views

Why Portland? Portland CRE Trends and Regional Market Overview Portland Why all the hype? Healthiest Economy Best Place to Live in US #1 #1 Bloomberg - Economic Evaluation of Money magazine 2015 States 2016 Top Moving US City for

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SLIDE 1

Portland CRE Trends and Regional Market Overview

Why Portland?

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SLIDE 2

Portland – Why all the hype?

#1 #1 #1 #1 #1 #1 #1

#3

Overall real estate prospects – ULI Emerging Trends in Real Estate 2017

#1

Healthiest Economy

Bloomberg - Economic Evaluation of States 2016

Top Moving Destination

United Van Lines National Movers Study 2013-2015

Destination for migrating workers from SF

LinkedIn 2017

Food & Drink Capital of America

The telegraph 2016

Best Place to Live in US

Money magazine 2015

US City for Quality of Life

Monocle 2015

Best Food City in America

Washington Post - 2016

Best Airport

Travel + Leisure – America’s Best Airports 2013-2016

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SLIDE 3
  • 2%
  • 2%
0% 0% 0% 1% 1% 1% 1% 1% 2% 2% 2% 3% 3% 3% 3% 3% 3% 4% 4% 4% 4% 4% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 6% 6% 6% 6% 7% 7% 7% 7% 8% 8% 8% 8% 9% 9% 14% Detroit San Jose Cleveland Baltimore Oklahoma City Pittsburgh Albuquerque Columbus Memphis Tucson Omaha Kansas City Fort Worth Louisville Indianapolis Honolulu Tulsa
  • St. Louis
Irvine San Antonio Nashville Orlando Las Vegas Milwaukee Charlotte Philadelphia Houston New York Tampa Chicago Washington DC Los Angeles Denver Salt Lake City Dallas El Paso Minneapolis Paradise, NV Jacksonville Seattle Sacramento San Diego Austin Atlanta Phoenix Raleigh Boston San Francisco Portland Miami

Portland job growth stands out

The Portland economy is among the fastest growing in the US

10%

job growth

America’s fastest-growing cities 2017 – Forbes

GMP growth 2016

#2 #1 #4 #6 #5 #9 #3 #10 #7 #8

Employment growth by US City

2013-2015

A point in time Sustained growth

Source: BLS Source: Forbes, Axiometrics
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SLIDE 4 1% 4% 5% 6% 9% 10% 11% 11% 12% 12% 12% 12% 12% 13% 13% 13% 14% 14% 15% 15% 16% 16% 16% 17% 17% 18% 18% 20% 20% 21% 21% 21% 21% 22% 22% 22% 23% 23% 23% 23% 24% 26% 27% 28% 28% 28% 29% 34% 34% 37% Albuquerque Plano Virginia Beach Memphis Louisville Long Beach Sacramento San Antonio Jersey City Indianapolis Arlington Kansas City Scottsdale Los Angeles Chicago Omaha Minneapolis Milwaukee Phoenix Fort Worth Colorado Springs Oakland Las Vegas New York San Francisco Oklahoma City Houston Raleigh Boston San Diego Dallas Atlanta El Paso Charlotte Columbus San Jose Tampa Nashville Seattle Fremont New Orleans Jacksonville Portland Baltimore Irvine Philadelphia Washington DC Denver Miami Austin
  • 5%
0% 1% 1% 1% 2% 2% 2% 2% 3% 3% 3% 3% 3% 3% 4% 4% 5% 5% 5% 5% 5% 6% 7% 7% 7% 7% 7% 7% 7% 7% 8% 8% 8% 8% 8% 8% 9% 9% 10% 10% 10% 11% 11% 12% 12% 12% 12% 13% 14% Detroit Baltimore Memphis Milwaukee Chicago Wichita Tucson Albuquerque Long Beach Philadelphia Omaha Tulsa Louisville Virginia Beach Kansas City Indianapolis New York El Paso Los Angeles Fresno Sacramento Jacksonville Arlington Las Vegas San Diego Oakland Mesa Minneapolis San Francisco San Jose Boston Columbus Phoenix Portland Nashville Dallas Oklahoma City Colorado Springs Houston Atlanta Miami San Antonio Raleigh Washington DC Fort Worth Charlotte New Orleans Seattle Denver Austin

Portland demographics are enviable

27%

job growth

Population growth by US City

2010-2015

Growth of college graduates of working age by US City

2013-2015

Sustained growth Sought-sfter demo

8%

population growth

US Avg

Source: BLS Source: BLS
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SLIDE 5

Median HH income growth by US City

2010-2015

Workers moving where income buys more

Portland is a net attractor of talent

Where SF workers are moving - Portland

LinkedIn 2017

  • 10%
  • 8%
  • 7%
  • 6%
  • 5%
  • 4%
  • 4%
  • 3%
  • 3%
  • 2%
  • 1%
0% 1% 1% 1% 2% 2% 3% 3% 3% 4% 4% 4% 4% 4% 5% 5% 5% 5% 5% 6% 6% 7% 7% 8% 8% 8% 9% 10% 10% 10% 10% 11% 11% 14% 18% 18% 19% 21% 23% Las Vegas Memphis Detroit Albuquerque New Orleans Tucson Virginia Beach Fresno Jacksonville Long Beach Indianapolis Charlotte Wichita Miami Mesa Los Angeles Cleveland Sacramento San Antonio Colorado Springs Dallas San Diego Chicago Tulsa Houston Milwaukee Raleigh New York Columbus Phoenix Baltimore Oklahoma City Fort Worth Boston Omaha Minneapolis Kansas City Louisville San Jose Oakland Philadelphia Nashville Atlanta El Paso Washington DC San Francisco Denver Portland Austin Seattle

19%

Income growth

7 times US growth

Source: US Census
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SLIDE 6

Affordability keeps Portland a winner for net migration

Portland has what millenials want…

  • 4%

Portland

3% Seattle 22% Boston 24% 20% San Diego 7% LosAngeles 23% 61% San Jose San Francisco New York

Cost of Doing Business The cost of doing business in Portland is 4% lower than the national average. Low cost of living Cost of living index, national average = 100.0 164.0

San Francisco

156.1

San Jose

132.3

San Diego

132.5

Boston

185.8

NewYork

121.4

Seattle

111.3

Portland

136.4

Los Angeles

Relative affordability

Source: US Census Source: 2016 data, ULI, Bureau of Economic Analysis
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SLIDE 7

Multifamily fundamentals among strongest in US

Portland has what millenials want…

2.2

Housing permits have not kept up with population growth

4.0

SSC

1,029 units

CBD

1,241 units

East

1,981 units

NW

1,013 units

MF construction activity concentrated in urban areas

Source: Housing Bureau Source: Housing Bureau
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SLIDE 8

Strong rent growth - maintaining comparative affordability

Portland has what millenials want…

Vacancy remains low, rent growth among highest in US

10%

43.5% 29.9% 37.2% 35.5% 23.2% 22.7% 32.0% 10% 15% 20% 25% 30% 35% 40% 45% 50% 4Q96 4Q97 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 Los Angeles Oakland Silicon Valley San Francisco Seattle Portland San Diego

Despite rising costs, Portland remains affordable

Source: Axiometrics Source: YARDI
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SLIDE 9

Portland has the most diverse economy on the West Coast

Portland economic clusters drive growth Software Clean Tech Athletic & Outdoor Industry Advanced Manufacturing Diversity of regional economy

Index measures how closely a region’s economy resembles that of the whole U.S., with a score of 1.0 representing an exact match to the U.S. economy

Source: JLL Research, Moody’s Analytics

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80

Source: JLL Research
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Portland’s office market observations

Portland has what millenials want…

1 2 3

Tech firms have been driving demand in the office market

Tech makes up between 25-30% of all leasing

13.6% 19.3% 30.6% 26.7% 27.4% 26.4%

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2011 2012 2013 2014 2015 2016

Thousands

Tech Other Finance Govt Health Care Insurance Law Mfg Other Svcs PBS

Construction has surged with virtually all activity in urban core

2016 marked 1st year in 6 where supply exceeded demand

Rents far exceed previous cyclical peaks

Overall rents were up 13% in 2016

Tech leasing has doubled since 2011, now stable

Source: JLL Research
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SLIDE 11

Portland office market one of tightest on West Coast

Still remains one of the most affordable

Portland has what millenials want…

$23.76 $27.13 $27.56 $31.44 $32.12 $32.51 $34.90 $38.27 $41.62 $47.88 $58.02 $73.65

13.2% 15.1% 9.4% 12.9% 11.3% 12.5% 9.2% 14.6% 7.3% 12.4% 10.7% 8.2% $0 $10 $20 $30 $40 $50 $60 $70 $80 0% 2% 4% 6% 8% 10% 12% 14% 16% Ave asking rents Vacancy

Source: JLL Research
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SLIDE 12

Construction concentrated in Urban markets – mixed-use

Top Leases of 2016 show increasing size

ARK P

Field Office 299,056 s.f. $29.00-$32.00 NNN p.s.f. Macy’s Building 158,500 s.f. $35.00-$37.000 NNN p.s.f. Broadway Tower 171,067 s.f. $31.50-$35.50 NNN p.s.f. TowneStorage 108,750 s.f. $31.00-$33.00 NNN p.s.f.

Major urban development underway 101,400 82,140 78,000 58,000 53,793 50,000 47,788 45,617 45,313

Source: JLL Research
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SLIDE 13

Office sales – volumes elevated, cap rates all-time low

Increased liquidity Relative value Core Assets Value-add Assets

$377 $142 $123 $50 $364 $601 $702 $1,826 $518 $180 $200 $282 $247 $437 $638 $1,076 $928 $257 9.5% 8.3% 7.4% 6.9%6.6% 5.9% 6.8% 7.2% 8.7% 6.5% 7.7% 7.0% 6.6% 5.6% 4.8% 5.4% 0% 2% 4% 6% 8% 10% $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 17 Millions Volume in $M CBD Core Cap Rates

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SLIDE 14

High water mark and avg price per SF – CBD Core assets Re Rece cent nt no notable le sale le CBD BD - Cla lass A

1320 Broadway Buyer: Credit Suisse Seller: URG/Clarion Price p.s.f.: $541 Price: $95,000,000 Cap rate: 4.9%

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SLIDE 15

Portland’s industrial market observations

1 2 3

Development takes center stage, both BTS and spec

Bigger projects in more remote locations to accommodate larger tenants

Portland population growth driving demand for distribution

Increase in same day/last mile distribution has pushed demand to new areas

Rents far exceed previous cyclical peaks

Rents are up 11.8% YOY reaching new high- water mark for Portland

24,854 21,706 24,748 23,095 25,761 35,146 38,227

11 7 12 13 12 20 18

15,000 20,000 25,000 30,000 35,000 40,000 45,000 2010 2011 2012 2013 2014 2015 2016 5 10 15 20 Avg Size Lease # of leases > 100K

Industrial tenants getting bigger and more of them

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SLIDE 16

Portland Industrial market vacancy at a 25-year low

Despite surging construction pipeline, vacancy remains at cyclical low

Portland has what millenials want…

6.7% 8.1% 10.0% 11.6% 8.8% 8.6% 6.8% 5.9% 6.7% 9.1% 9.2% 8.6% 7.4% 5.6% 4.8% 3.8% 3.4% 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 0% 2% 4% 6% 8% 10% 12% 14% Construction Vacancy

Source: JLL Research
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SLIDE 17

Construction moving farther afield, bigger projects

Top leases of 2016 show increasing size

Majestic Brookwood 441,280 s.f. Amazon Subaru 600,000 s.f. BTS for Subaru I-5 Logistics Center 1,676,800 s.f. Vista Logistics Park 733,232 s.f.

NORTH

Industrial development getting larger and in new locales 303,360 234,960 210,000 205,303 190,600 175,100 162,240 157,038 154,648

Portland CBD Hillsboro Beaverton Gresham Wilsonville Vancouver WA
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SLIDE 18

Industrial sales – cap rates all-time low

Portfolio Sales Limited availability Owner/users lose

$172 $199 $454 $377 $84 $40 $28 $32 $173 $103 $320 $732 $591 $28 8.9% 7.7% 7.9% 6.8% 7.0% 9.5% 9.2% 10.7% 7.1% 6.8% 7.1% 6.2% 6.1% 4% 5% 6% 7% 8% 9% 10% 11% 12% $- $100 $200 $300 $400 $500 $600 $700 $800 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 17 Volume in $M Avg Cap Rate

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SLIDE 19

Diversity of population – need more diverse for tech hiring Future of Portland…

1 2 3

Housing affordability – can’t lose that advantage Regulatory issues – inclusionary zoning and

  • ther costs
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SLIDE 20

Buzz Ellis – JLL Buzz.ellis@am.jll.com Patricia Raicht – JLL Patricia.Raicht@am.jll.com Twitter @PatriciaRaicht

Thank you

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SLIDE 21

Projects

Urban Development + Partners

Slate – 75 residential units 39,795 SF commercial space Delivered Oct 2016

Specht

ICDC 492,554 SF warehouse & distribution space Delivered 2015

Capstone Partners

Grant Park Village – 378 residential units 48,000 SF commercial space Delivered Oct 2016 – Phase II May 2018