Caution and Optimism for Portland Commercial Real Estate Market

October 21, 2009, PORTLAND, OR –Colliers International-Portland released its third quarter 2009 reports for Greater Portland’s office and industrial markets. A year after the financial sector’s collapse, a mix of caution and optimism prevails for Greater Portland’s commercial real estate market, which continues to outshine many other US cities. Highlights of the reports include:

Office

· Portland’s overall office vacancy reached 11.1 percent in the third quarter, the highest vacancy rate since 3Q’04.

· Citywide absorption, or change in occupied space, totals negative 798,836 square feet YTD and is likely to exceed 1 million by year end.

· Office rental rates have remained relatively flat, averaging $20.32 per square foot market-wide. Many tenants are making a “flight to quality,” leaving Class B/B+ buildings in favor of Class A buildings where average rents have dropped slightly to $24.75.

· The third quarter saw an uptick of interest and activity among tenants, with government and medical sectors helping buoy market activity. An increase in lease rollovers in 2010, paired with the upcoming $134 million renovation of the 303,000 square foot Edith Green/Wendall Wyatt Federal Building, should boost leasing activity next year.

· The largest recorded sale of the quarter was the 4400 Building in the Vancouver Mall submarket, which captured $14.4 million.

The largest hurdle to office market recovery remains the labor market. However, the Portland office market is still outperforming most of the country.

Industrial

· Portland’s industrial market recorded a vacancy rate of 8.3 percent in the third quarter, up just 0.4 percent from the previous quarter.

· Net absorption for the quarter dipped to negative 776,352 square feet, making the total year-to-date negative 2,173,339 square feet.

· The majority of lease transactions were renewals, the largest of which were Bunzl Distribution’s 127,420 square foot renewal at Jennifer Distribution Center in Clackamas and Aaron Rents’ 97,625 square foot distribution hub renewal at the Rivergate Logistics Center.

· Rents averaged $0.47 per square foot blended (which includes industrial and office space) across the market.

· The largest sale of the quarter was Roadway Express, Inc.’s disposition of a 72,000 square foot distribution facility in Clackamas for $7.1 million to GI Trucking Company. The former company is liquidating.

Portland’s industrial market is faring well, although perhaps not as well as the statistics seem to indicate. When occupied-but-available-for-lease space is accounted for, the market’s vacancy jumps to 12.2 percent, or 5.3 million square feet. Additionally, rental rate contractions of 20-30 percent are prevalent in some submarkets, although concessions such as free rent and tenant improvement allowances are more common.

Access the reports here: http://tinyurl.com/yhzgknp

Colliers Macaulay Nicolls Inc. (CMN) operating as Colliers International is a leading global real estate services company that provides a full range of services to real estate users, owners and investors worldwide. Colliers operates in 294 offices in 61 countries. Services include brokerage, property management, hotel investment sales and consulting, corporate services, valuation, consulting and appraisal services, mortgage banking and research. Colliers is committed to sustainable practices for business and the environment. We take a global leadership role by offering professional education, minimizing our environmental impact, and helping our clients implement sustainable practices in their property and business. Colliers International is a worldwide affiliation of independently owned and operated companies. Locally, Colliers professionals serve clients throughout the greater Portland area. Find out more at www.colliers.com/portland.

For further information please contact:

Eve Alexander, Marketing & Communications Manager

Tel: 503.499.0070

Email: http://mailto:eve.alexander@colliers.com