Portland's downtown has snagged an undesirable top spot as the nation's leader in empty office spaces, according to a recent analysis by Colliers. With vacancy rates soaring to 30.2% at the end of 2023, this marks the central business district, including areas like downtown, Old Town, and the Pearl District, as having the most considerable amount of unoccupied commercial real estate among the 50 largest downtown markets. OregonLive reported on these figures which have notably risen from a 26.6% rate a year prior, excluding the Lloyd District.

In response to this growing issue, city officials have been attempting to more aggressively attract companies to the downtown core. Last September saw the introduction of a business tax incentive meant to encourage downtown office leases, a measure which City Hall has since expanded to additional areas earlier this year. These incentives were highlighted in a report by KGW.

However, the challenge extends beyond mere vacancy rates. Colliers published findings earlier this month, showing that the office real estate market could see a dim future through at least 2025. The research indicates that the completion of The Offices at 11W and Block 216 last year, which represented the last of the pre-pandemic speculative office construction downtown, may slow down the development pipeline but won't necessarily quickly correct the imbalance between supply and demand. A significant 57% of leasing activity in 2023 occurred outside the central city, as pointed out by KOIN.

Portland's office market dynamics are further complicated by shifting work habits in the wake of the pandemic. Despite a decline in people working from home compared to the 2020 peak, the sustained preference for remote work has contributed to the downtown doldrums. Mayor Ted Wheeler last November pressed for central city employers to require at least a 20-hour in-person work week, aiming to boost downtown vitality, "to more effectively address the city’s need for an active workforce and subsequent economic activity," as noted by KOIN.

With over 4.2 million square feet of office leases set to expire in the next five years and predictions that tenants will likely downsize rather than renew, 2023 stands to likely not be the last down year for downtown Portland's office market. It's clear that city officials, alongside real estate experts, are grappling with ways to revitalize the urban core and make it desirable once more for businesses and their employees.