Multifamily Sales in Portland Beginning to Track Longer-Term Averages

Operating conditions in the Portland multifamily market strengthened during the second quarter, as the pace of deliveries has slowed while renter demand has remained steady. Rental deliveries peaked in 2024, but fewer than 2,000 units came online in the first half, down nearly 30% from recent averages. With supply-side pressures easing, the vacancy rate inched lower during the second quarter, reaching 5.1%. The current rate is unchanged from one year ago and nearly identical to levels from five years earlier, despite increases to area inventory levels and volatility in the local economy. During the first half, net absorption totaled more than 3,500 units, building upon peak levels of demand in the second half of 2024 when net absorption totaled nearly 5,700 units. Rents have been mostly flat, with stronger results posted in the northern part of the metro. The Downtown Vancouver, Orchards, and Battle Ground areas all posted positive rent growth during the past year, with Downtown Vancouver currently recording some of the most expensive apartment rents in the region.

Sales velocity in the Portland multifamily investment market surged from the first quarter to the second quarter, bringing total sales year to date closely in line with long-term historical averages. Transactions have been concentrated in Milwaukie, Troutdale/Gresham, and Vancouver in recent quarters, with these submarkets accounting for more than 40% of 2025 sales. In 2024, Vancouver was the clear leader for total investment activity, followed by Downtown Portland. Milwaukie and Troutdale/Gresham also posted a few transactions. Investors continue to be drawn towards Vancouver’s compressed vacancy conditions and elevated rental rates. Since the beginning of 2020, Vancouver has accounted for 20% of all sales, with transaction counts in this area nearly doubling levels recorded in the next closest submarket, Troutdale/Gresham.

Looking ahead

Operating conditions in the Portland multifamily market are expected to remain stable through the end of the year, as annual supply growth is forecast to be slightly below long-term averages. Projects totaling 4,800 units are expected to come online in 2025, down 28% from one year ago and lagging the region’s trailing 10-year average by 7%. With supply growth tapering off, the vacancy rate should continue to inch lower. Area vacancy is forecast to close 2025 at 5.0%. The development pipeline is extremely light, and the limited additions to inventory could support tightening vacancy levels in 2026 if renter demand can be sustained. Rents are expected to rise at a modest pace in the coming quarters, though annual growth will likely fall short of historical averages.

Sales velocity in the Portland multifamily investment market is projected to accelerate through the end of the year, in line with historical trends. Year to date, total sales have already surpassed the subdued levels recorded in 2023 and are approaching full-year totals from 2024. More recently built properties will likely begin to change hands at a steadier pace as they become stabilized. To this point in 2025, assets completed in the 2020s make up 14% of all sales. That figure eclipsed 20% in each of the previous three years. An early look into the third-quarter data suggests that cap rates may begin to push higher in the coming quarters after averaging in the mid-5% range since the beginning of last year.

Learn more

Contact our Portland office for more information.