Commercial real estate in Portland is taking another hit, and this time it isn’t from Covid. The civil unrest in the city, particularly downtown, is taking its toll on businesses in downtown Portland. Major companies, such as Standard Insurance, are leaving their offices in the city due to ongoing safety issues stemming from the chaos from the clashes between protesters and law enforcement.

The Standard Insurance company building, located at 900 SW 5th Avenue, has sustained significant damage from vandalism, and some employees have experienced assaults from the protesters. However, the company says it remains committed to its downtown core, but the timeline for when they might return is uncertain.

AirBnB has been rumored to have moved their headquarters from downtown, as well. Additionally, OCHIN, a national health non-profit, has listed it’s 40,200 square foot offices on Naito Parkway for sale, though they claim that the unrest in Portland is not what prompted them to put the building on the market, and that it is more due to the shift to working from home during the pandemic. 

Other retailers have also reported losing money due to the downtown situation, and are considering relocating to more suburban locations. According to the Portland Business Alliance, between the pandemic and the protests downtown, businesses have lost more than $20 million. In July, PBA’s President and CEO Andrew Hoan stated that, “The financial consequences to the downtown corridor are a running calculation that is almost impossible to wrap your mind around. The financial impacts of physical damage is one thing, and that continues to increase. Then the ongoing loss of revenue to the business community who cannot operate their places of businesses is also a number that continues to rise.”

The office market in downtown has experienced a triple threat – Covid, offices being vacated due to employees working from home, and also the unrest from the protests. There is now an abundance of vacant office space, but little to no demand. In the first half of 2020, vacancy rates hovered around 12.3%. Now, that number has increased to 15.5%.

Instead, businesses are focusing more on the suburbs for a number of reasons. Though many employees are still enjoying working from home, many are looking to have a place where they can collaborate while still maintaining distance. This requires larger spaces that simply aren’t available downtown. Combined with boarded up retail buildings, nightly fires and gatherings declared as riots, people are frankly too scared to come into downtown. 

So what does this mean for the future of the downtown market? Well, that is uncertain. While there isn’t the mass exodus like there was during the Dot com bust, the market is reeling from the effects primarily from Covid, but also the protests. There will be a rebound, but it will most definitely be slow. In a survey of 126 companies conducted by CBRE, 70% of respondents indicated that some portion of their workforce will be allowed to work remotely full-time, and 61% said at least part-time.

What are your thoughts on the effects of the protests and the pandemic on the downtown market? Comment below!