National Summary: 2017’s fourth quarter continued to show strong signs in both retail and industrial investments nationwide; however overall sales volumes were down considerably. Higher yields in competing assets and continued cap rate compression could be the drivers of investor interest. According to Real Capital Analytics, overall sales volume year over year for November 2017 was down approximately 31% from 2016.
Portland Industrial: Inventory remains very tight especially in the outlying submarkets, and that continues to drive prices upward. That being said, industrial did follow the national trend and decline in volume from the third quarter. Although seasonally sales dip in Q4, sales volume showed a significant decline year over year and continued to be well off the peak volume we saw at the end of 2015.
Yet because of low inventory, vacancy rates remain at historic lows and rental rates continued their modest, upward trend. The early 2018 forecast among experts seems to be more of the same, with modest gains in industrial properties and limited inventory. We could see further cap rate compression as the federal reserve seems to be on pace to further raise interest rates and investors compete heavily for an ever-shrinking pool of inventory.
Portland Retail. The national referendum on retail is that the ‘sky is falling’ and will continue to do so in the foreseeable future. With Sears anticipated to close another 100 stores and big box retailers continuing to lose market share to online retailers, many investors nationally are beginning to question the sectors strength heading into 2018. Yet despite the naysayers, Portland is bucking the trend and posted strong numbers at the end of 2017. According to Costar’s quarterly report, the vacancy rate is a low 3.9%, while rent growth in the sector paced at 1.8%. Job and population growth in the metro area seem to be key contributors to the strong showing. Portland seems to be a bright light in a dim sector nationally and 2018 should see vacancy and rent growth both trend in positive directions.