| | | Portland office market sets historic vacancy rate in Q3
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Overlook of Portland downtown, Oregon
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By Sara Edwards – Commercial Real Estate reporter, Portland Business Journal
Oct 3, 2025
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Story Highlights
- Portland's office vacancy rate hit record high of 26.6%.
- Negative absorption of 306,000 square feet occurred in Q3 2025.
- Class B buildings led leasing with 327,000 square feet leased.
The Portland office market saw its highest ever office vacancy rate in the third quarter of the year.
A quarterly report from Colliers said the market’s vacancy rate rose to 26.6%, up 0.7% from the previous quarter’s rate of 25.9%. The third quarter last year reported a vacancy rate of 24.1%.
“This marks the highest vacancy rate on record for the metro, driven by persistent negative absorption and a mismatch between tenant demand and available space,” the report said.
It’s the fifth consecutive quarter that the vacancy rate increased. The increase is driven by the continued vacancy in the central business district, which has a 36.3% vacancy rate, and the perimeter, which posted a vacancy rate of 30.6%.
The office market saw a negative absorption of roughly 306,000 square feet of office space in 2025’s third quarter. It’s a slight improvement from the 328,000 square feet of negative absorption from last quarter.
Only two submarkets in the metro saw positive absorption this quarter. The I-5 South submarket saw around 78,000 square feet of absorption and Clark County saw around 31,000 square feet.
The largest negative absorption happened downtown as tenants continue to relocate to the suburbs or to Vancouver.
Leasing also fell this quarter, with volume nearing 655,000 square feet, down more than 125,000 square feet from the previous quarter. However, the number of leasing deals only slightly declined by seven transactions in the third quarter to 162 deals with the average lease encompassing 4,041 square feet of office space.
One of the major leases from the previous quarter was an 11-year lease signed by Ferguson Wellman in Fox Tower last month.
Class B buildings led the market with over 327,000 square feet of space leased across 93 deals, down 20% from Q2. Class B buildings make up 48% of Portland’s total office inventory.
The report found that because Class B buildings offer “high-quality finishes” at competitive rates, this hampers the ability for Class A and C buildings to lease tenants as office users try to maximize value.
Landlords, particularly downtown, are expected to continue offering aggressive concessions to attract and retain tenants.
Office sale activity in the market remains stifled post-pandemic. The most significant transaction was the acquisition of U.S. Bancorp Tower by Swickard Auto Group in July. Though the building sold below market value at $45 million, the report said landlords will continue to offer high-quality space at discounted rates.
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