All rents are at all-time highs for Portland, and office demand is on the rise.
Two recent studies show that Portland's office sector is the new most popular real estate — and not just to rent, but to build.
Portland developers have officially made the switch: between January and June, they've invested $121,492,482 more in building new office space than during the same time period during 2016.
Based on issued commercial permits from January to June 2016, total new construction of office space valuations add up to $35,309,155, including seven different developments.
So far over the same time period during 2017, that number equals $156,801,637 and included 10 separate developments.
These numbers don't even include office renovations — and rehabs make very popular open-concept offices these days, such as 38 Davis, the Oregonian building downtown, the Ford Building in the Eastside Industrial District and PIA Agency's new Chinatown location.
Top five buy market
According to Ten-X Research, Portland is in the top five "buy" markets for office space next to Oakland, Sacramento, Dallas and Atlanta. The top "sell" markets for office space are Memphis, Baltimore, Houston, Fort Worth and suburban Maryland.
Ten-X is a nationally leading online real estate digital marketplace, parent company to Ten-X Homes, Ten-X Commercial and Auction.com. The Irvine- and Silicon Valley-based company has sold 292,000 residential and commercial properties totaling nearly $48 billion.
In late July, Ten-X Commercial released its latest U.S. Office Market Outlook, showing that the office sector's recovery is still slow in 2017 overall.
Ten-X reports Portland has experienced four straight years of population growth and an unemployment rate well below the national average. Rising demand for office space limited the impact of a busy supply pipeline, with office vacancies declining to the mid-12 percent range.
The top five "buy" markets are located mostly in the west, boosted by growing population and strong employment that keeps rents high.
In the report, limited job creation suppresses companies' need to add or expand across much of the country as the labor market reaches full employment. Washington County has a 3.3 unemployment rate, which is considered to be full employment, and is the lowest rate since the 1990s.
"While we're seeing tepid growth nationally, office investors have to be aware of cyclical risks associated with subdued job growth. It is noteworthy that our analysis resulted in downgrades in 17 regions, and an upgrade to only one," Ten-X Chief Economist Peter Muoio said in a release. "That said, a number of economically vibrant metro areas around America are seeing high levels of absorption and present buyers with strong investment opportunities."
According to Ten-X, Portland's professional business services sector has cooled significantly, but the city's economic expansion is supported by booming construction and financial services sectors.
Portland has also seen four straight years of population growth (at the top of the nation's charts, no less) and an unemployment rate below the national average, which was 4.3 percent this May.
Rising demand for office space limits the impact of a busy supply pipeline, with office vacancies declining to 12 percent, according to the study.
Prime office costs rise
Commercial Real Estate Services (CBRE) also reports prime office costs are rising, and blames the change on technology in its latest Global Prime Office Occupancy Costs report.
Los Angeles-based CBRE is one of the world's largest commercial real estate services and investment firms, based on 2016 revenue.
The report notes that technology is the biggest catalyst of change in the workplace today, as mobile devices, virtual networks, videoconferencing and cloud storage have created a seamless transition from the physical workplace of the 20th century to the virtual workplace of the 21st century. Companies increasingly are using sophisticated technology offerings as a way to attract and retain talent in a competitive hiring environment.
"Technology continues to transform how we all work and play and the rate of change and impact of technology shows no sign of abating," said Ajay Malhotra, vice president of technology and media practice at CBRE's Portland office. "It is essential to not only stay abreast of the changes but also determine how to effectively integrate them into your workplace to ensure maximum impact for productivity as well as talent retention and recruitment."
According to CBRE's research, occupiers of office space use tech to manage occupancy patterns in a sophisticated way, creating an environment that maximizes employee efficiency.
"One of the coolest things we see organizations doing today is thinking about the opportunity to connect people more effectively," says Lenny Beaudoin, leader of CBRE's global workplace practice. "A building is inherently a social network, and predictive technology can be used to connect people working on similar projects, connect people to space and connect people to services that help them make more efficient use of their time."
Expanding to Portland
The rush for office space and expansions extends to the PIA Agency, a filmmaking advertising agency which just leased up its new Portland location in the New Market Theater building, and is currently renovating two floors.
The PIA Agency is a women-owned, WBENC-certified and ethnically diverse leader in creative branded content, with clients including Hewlett Packard, Pepsi, Pixar, Disney, Microsoft and Sony.
The agency employs a staff of 50 in San Diego and San Francisco, and plans to employ 40 more creative, technical and account staff over the next year in its new office here. They are currently actively recruiting — one of the agency's first hires is Marie Murphy, an award-winning creative director who worked most recently at Razorfish.
Founded by Cheryl and Cliff Pia in 1997, the agency was named one of the top 50 fastest-growing women-owned companies in the U.S. by the Women Presidents' Organization, and named one of the 2017 fastest-growing 150 private companies by the San Diego Business Journal.
"The PIA Agency is thrilled to open its creative office in The New Market Theater," said Cheryl Pia, CEO.
Its new lease in the New Market Theater building, located in Old Town Chinatown, occupies 9,380 square feet over two floors at 115 S.W. Ash St. The interior design is by Portland-based Fluent Design.
Pia said the firm is planning to consolidate its two California offices into one larger space over the next few years. According to Pia, it's easier to recruit creative talent to Portland than to San Deigo — and they are interviewing people from all over the U.S.
"We are always looking for world-class creative and technical talent to support the work we do for our clients," Pia said. "Portland is renowned for its independent spirit, talented workforce and outstanding quality of life and we are looking forward to being a part of this community."
The renovation is expected to be complete in September.