Economy in Review

Portland, Oregon is a thriving city with a diverse economy. The city has a strong technology sector, with companies such as Intel and Tektronix having a significant presence in the area. Additionally, the healthcare industry is a major contributor to the local economy, with several large hospitals and medical centers located in the city.

The unemployment rate in Portland is lower than the national average, and the city has seen steady job growth over the past few years. This has helped to drive demand for commercial real estate, particularly in the multifamily market.

Multifamily Market

The multifamily market in Portland has been strong in recent years, with high demand for rental units driving up prices. The city has seen significant population growth, particularly among millennials and young professionals, which has fueled demand for apartments and other rental properties.

According to data from the U.S. Census Bureau, the vacancy rate for rental units in Portland is lower than the national average. This has led to increased competition among renters and higher rents for landlords.

Office Market

The office market in Portland is also strong, with several large companies choosing to locate their headquarters or regional offices in the city. The technology sector is particularly active in this market, with many startups and established companies alike seeking office space in Portland.

Despite this demand, there is still some available office space in the city. Landlords are offering competitive lease terms to attract tenants, including flexible lease lengths and tenant improvement allowances.

Industrial Market

The industrial market in Portland is driven by the city's location as a major transportation hub. The Port of Portland is one of the largest ports on the West Coast, and several major highways and rail lines run through the city.

As a result, there is high demand for industrial space in Portland, particularly for logistics and distribution facilities. Landlords are able to command high rents for these properties, and there is limited availability of space in some areas of the city.

Retail Market

The retail market in Portland has been impacted by the growth of e-commerce, with many traditional brick-and-mortar retailers struggling to compete with online retailers. However, there is still demand for retail space in certain areas of the city, particularly in high-traffic locations such as downtown and near major transportation hubs.

Landlords are offering creative lease terms to attract tenants, including shorter lease lengths and flexible rent structures. Additionally, some landlords are converting retail spaces into mixed-use developments that include residential or office space.

Self-Storage Market

The self-storage market in Portland has seen steady growth in recent years, driven by the city's population growth and the trend towards smaller living spaces. Many residents are turning to self-storage units to store their belongings as they downsize their living arrangements.

Landlords are able to command high rents for self-storage units in Portland, particularly in areas with limited availability of space. Additionally, some landlords are offering climate-controlled units and other amenities to attract tenants.

Hospitality Market

The hospitality market in Portland has been impacted by the COVID-19 pandemic, with many hotels and other lodging facilities experiencing lower occupancy rates. However, there is still demand for hospitality properties in the city, particularly in high-traffic areas such as downtown and near major tourist attractions.

Landlords are offering creative lease terms to attract tenants, including revenue-sharing agreements and flexible rent structures. Additionally, some landlords are converting hospitality properties into mixed-use developments that include residential or office space.

Commercial Real Estate Loans by Purpose

There are many types of loans available for commercial properties in Portland, and the best fit for you depends on your investment strategy. Here are some broad categories of financing available.

Permanent Financing

Permanent financing is a type of loan that remains in place for an extended period of time. It's commonly used to finance the acquisition of commercial properties or to refinance existing debt. Types of permanent financing include bank loans, loans from government-sponsored entities like Fannie Mae and Freddie Mac, HUD loans, credit union loans, loans from life insurance companies, commercial mortgage backed securities (CMBS) loans, and other types of loans depending on the specifics of the commercial property.

Refinancing a Commercial Real Estate Property in Portland

I wouldn't quite call this a separate type of loan, but I have to mention refinancing in here. These are typically permanent loans (but not always) used to pay down an existing, partially amortizing or interest-only loan.

Often you may be able to time a refinance to happen after an interest rate drop — an ideal solution — but if your loan is maturing during a period of higher rates, you shouldn't stress too much about this. We'll work with you to find the best loan terms for your commercial property by reaching out to potentially thousands of lenders. Just complete the form below, and we'll get to it.

Construction Financing

Construction financing, also known as interim financing, is used to finance the cost of construction for commercial properties. It is usually a short-term loan that covers the cost of land development and building construction. Once construction is completed, the borrower can typically convert this into a permanent loan or pay it off with a new loan.

Bridge Loans

Bridge loans are a type of short-term loan that can be used to cover costs in the interim period between the end of one loan and the beginning of another. They are typically used in commercial real estate to finance the transition between construction financing and permanent financing. Bridge loans generally have higher costs than most other financing options and are often interest-only and non-recourse.

Commercial Real Estate Loans by Type

Depending on the purpose of your loan, you will have several financing options available to meet your investment goals. Read below to learn more about specific loan types.

Bank Loans

Bank loans are a common financing option for commercial real estate in Portland. They can offer competitive interest rates and flexible terms, but the specifics can vary greatly from bank to bank. While they may not always be the best fit for larger, more complex projects, they can be an excellent option for smaller, simpler properties.

Life Company Loans

Life company loans are typically used to finance high-quality assets in major markets. They generally have lower loan-to-value ratios than most other loan types but offer competitive interest rates and long terms. However, they may not be suitable for riskier projects or properties in less established markets.

Agency Loans

Agency loans, offered by government-sponsored entities like Fannie Mae and Freddie Mac, are typically used for properties that are mostly multifamily. They offer attractive loan terms, low, fixed interest rates, and are non-recourse. However, there are restrictions on the amount of income that can come from other commercial uses.

HUD Loans

HUD multifamily loans are government-backed loans that are primarily used for the construction, substantial rehabilitation, purchase, and refinancing of multifamily properties. These loans offer long-term, non-recourse financing with competitive interest rates but have extensive requirements for qualification.

CMBS Loans

Commercial Mortgage Backed Securities (CMBS) loans are a type of mortgage-backed security backed by commercial real estate loans. Lenders focus more on the strength of the property than the borrower's credit, making them a good option for properties with strong cash flow.

SBA Loans

Small Business Administration (SBA) loans, such as the SBA 7(a) and SBA 504, offer attractive financing options for small businesses. However, the maximum amount for an SBA 7(a) loan is $5 million, while SBA 504 loans can go up to $20 million. They cannot be used for multifamily properties and are only available for properties that the business owner occupies.

Mezzanine Loans

Mezzanine financing is a hybrid form of financing that combines elements of debt financing and equity investment. It is typically used in commercial real estate to fill a funding gap between the primary loan and the total cost of a project.

Commercial Property Insurance in Portland

This part isn't about loans, but it's just as important to your investment's success. Let's talk (quickly) about insurance.

Insurance premiums have skyrocketed in the past few years, as I'm sure you know. While multifamily gets a lot of the attention, rates for insuring anything from office buildings to shopping centers have jumped significantly.

Janover Insurance Group is dedicated to finding the best insurance solutions for your commercial real estate assets in Portland. Click to get a free insurance quote for your property — no obligation.