In Market: Pacific Northwest with Mohnish Narlanka

Good, Better, Best – Three Trends for the Pacific Northwest

While overall industrial activity in the Pacific Northwest is positive, the area cannot be lumped together as one market. Real estate trends among the region’s largest metro areas  – Seattle, Portland and Boise – are quite diverse, requiring interested investors to consider each area individually. Here’s an overview of this region:

Seattle: Supply Absorption and Flight to Quality

Vacancy rates are currently elevated, hovering around 9-10% as the region works through a supply-side imbalance stemming from the run up of the last cycle. The market is undergoing a distinct flight to quality. Next generation Class A facilities with greater clear- heights, trailer parking, and modern loading capabilities continue to see demand and strong rates, while legacy Class B/C assets are struggling through stabilization. The moderation of new construction starts in the region should also help with the absorption of existing inventory and thus underlying fundamentals.

We predict that this market will improve over the next few years, with a recalibration of supply demand fundamentals allowing investors and developers to work through what’s available today. The good news is that we’re seeing renewed activity among institutional investors, as well as tenants in the region. We expect to deliver new product into the market in 2027/2028.

Portland: Submarket Divergence and Migration Tailwinds

Portland’s overall vacancy rates are currently between 6% – 8% with the softest part of the market located in the Columbia Corridor area. But the outer ring suburban markets are seeing much stronger fundamentals, driven in part by outmigration from close-in Portland. For example, Hillsboro with a 3.5% vacancy rate, and Clackamas with a 5% vacancy rate, continue to perform very strongly.

Portland’s industrial market is uniquely positioned to capture the benefits of robust regional migration. In the United Van Lines 2025 movers’ study, Oregon led the nation in inbound moves. The industrial market is following suit. Leasing activity indicates that the Portland area provides a lower-cost West Coast option that can service north to Seattle and south to California.

Boise: Transformative Expansion and Renewed Demand

Boise entered a period of transformative demographic expansion following COVID-19 driven migration into the state of Idaho from California, Washington, and Oregon. The industrial market initially reacted to this growth and later entered a phase of saturation. Now demand has renewed for large amounts of space in the Treasure Valley, driven by Micron’s expansion as well as continued positive population trends.

The available industrial market in Boise is around 40 – 50 million SF, compared to roughly 250 million SF in Portland and 360 million SF in Seattle.

Regional Outlook

In total, the markets we cover in the Pacific Northwest encompass about 650 million SF of product today. We believe the market turbulence of the last few years is starting to subside, and that market fundamentals are recalibrating, paving the way for the next cycle of growth for the region.