We’re seeing meaningful signs of stabilization in the Greater Portland office market. Overall office vacancy improved to 13.11%, down from 14.09% at year-end 2024, while the average asking rate remained essentially flat at $20.32/SF. While the overall market is approaching equilibrium, we’re seeing a divide between the Downtown and Suburban markets.
The suburban market has been the clear bright spot, with vacancy improving to 13.23% and approximately 168,000 SF of positive net absorption.
Downtown vacancy increased to 12.97%, with approximately 168,000 SF of negative net absorption. Class B properties continue to face the greatest pressure as tenants consolidate, relocate, or move into higher-quality Class A space.
At the same time, office-to-residential, hospitality, and retail conversions are helping remove excess inventory. More than 250,000 SF of Class B Downtown office space has now been removed through conversion.
We expect the suburban recovery to continue through the remainder of 2026, supported by owner-user and medical demand. Downtown will likely remain under pressure, while additional Class B conversions should gradually tighten the remaining office inventory.
We also expect asking rents to remain relatively stable, with landlords continuing to compete through tenant improvements, free rent, and other concessions rather than significant reductions in asking rates.