Portland's Road to Recovery

Smelling Like Roses?

The restoration of Portland lingers as some aspects of recovery sprout

written by Lee Lewis Husk

THREE YEARS after Portland withered under the punishing light of Covid, monthslong protests, a mushrooming homeless population and spiking crime rates, many people are wondering whether the City of Roses is recovering. The short answer is, it depends on your perspective.

For downtown resident Sandy Poole Keiter, “I do feel like Portland is getting better, but the last three years were terrible.” Six years ago, she and her husband, Jim, traded their suburban home for a highrise apartment along Southwest First Avenue. Only a block off the waterfront, the couple spent their first three years relishing their proximity to cafes, outdoor concerts, festivals and the city’s famed foodie culture.

In 2020, the pandemic and street protests shuttered large swaths of the city and made residents and visitors alike feel unsafe. Now the couple has an apartment they can’t afford to sell. When they go out, they’re confronted with huge piles of trash, largely due to homeless encampments, and wonder why the city isn’t picking up the trash.

There’s no question that the city and its government have taken a huge dive in public confidence and their ability to address issues of safety and homelessness. A December 2022 poll conducted by DHM Research for the Portland Business Alliance concluded that voter pessimism has leveled off, but homelessness and crime remain top issues facing the region.

The crime surge is supported by Portland Police Bureau’s data showing a slight uptick from 2019 to 2022 in personal assaults but a big jump in property offenses like burglary, vehicle theft and vandalism. More alarming, homicide cases nearly tripled, from thirty-six in 2019 to ninety-seven last year. Gun homicides are up 73 percent over the previous threeyear average.

The surge in violence began in 2020 when police resources were redirected to quelling protests. “Defund the police” was a rallying cry that led to the Portland City Council and the mayor to cut millions from the police budget. (The cuts were partially restored in 2021.) Oregon’s Measure 110 decriminalized small amounts of controlled substances and rendered the court system helpless to prosecute possession of small amounts of drugs such as heroin, cocaine and meth.

Survey respondents in the business alliance poll identified homelessness as the biggest problem facing the region, but the percentage was down from 2021, suggesting that voters are feeling better about the region and sense that progress is being made.

Mayor Ted Wheeler has said his top priority is to get homeless Portlanders stabilized, better connected to services and into housing. Last November, he and the Portland City Council adopted a five-part plan and $27 million to fast-track construction of affordable housing and connect unhoused individuals to mental health and substance recovery services. It aims to help unhoused individuals find paid work and contains a ban on unsanctioned camping, replacing that with emergency shelters, Safe Rest Villages (tiny homes where people experiencing homelessness can access services) and designated campsites. The plan also creates diversion programs for low-level offenses outside the criminal legal system.

Portland, Oregon

Office Space Still Sitting Vacant

According to industry sources, commercial office space in the city core has dipped from 30 to 50 percent of pre-pandemic levels. “It’s been pretty bleak these last two to three years,” said Kelly Ross, executive director of the National Association of Industrial and Office Properties, Oregon Chapter. He cited a combination of factors, some left over from the pandemic where a large percentage of office workers have not returned to downtown as well as homelessness, lack of cleanliness, crime and an unfavorable tax climate.

Six of ten respondents of a July 2022 survey by the Portland Business Journal perceive the current business tax policies within the Portland metro area as anti-business with 61 percent calling the business climate “bad.” However, 31 percent expressed optimism that the next year would be better.

The survey also found that one-third of business executives are considering a move out of Portland due to taxes, the anti-business climate and safety concerns. JLL, a global commercial real estate services company, reported that the largest contributor to 2022’s decline in downtown occupancy was Liberty Mutual’s departure from its namesake building, Liberty Centre, to Kruse Way in Lake Oswego.

Nearly all respondents in the business journal survey believe the city and county governments haven’t done enough to address crime and homelessness, and only a third believe they have done enough to help businesses recover from the pandemic.

“We’re seeing improvements in terms of boards and plywood coming off business windows,” Ross said. “There also seems to be a slight improvement in the homeless situation as well.”

He said the one bright spot in commercial real estate is the industrial sector which has experienced growth as a result of e-commerce, manufacturing, warehousing and distribution.

“It’s going to take strong leadership by Portland City Council and the Multnomah County Board of Commissioners to make tangible and visible changes to the way things look on the ground in the central city— cleaning up, homeless camps, clamping down on criminal activity and making downtown a more welcoming place, especially for capital investment,” Ross said.

It’s going to take strong leadership by Portland City Council and the Multnomah County Board of Commissioners to make tangible and visible changes to the way things look on the ground in the central city.

Portland Metro Home Sales Still Brisk But Slowing

“After all the negativities cast on the Portland area with Covid, riots and more people living on the streets, it hasn’t adversely affected the real estate market,” said Diana Colin, president of the board of directors of the Portland Metro Association of Realtors and broker at Keller Williams Realty Portland Central. Sellers still have the advantage but climbing interest rates have changed the dynamics.

Before the pandemic, interest rates were around 3.5 percent. “We predicted 2020 was going to be an extremely strong sellers’ market,” she said. “Then Covid hit. We were down for about two weeks trying to figure out what to do,” Colin said. With help from the governor to classify realtors as essential workers, realtors were able to get right back into the market. She said they figured out how to keep clients safe through masking, having every home fully sanitized and providing virtual home tours. “We had to change the way we do business,” she said.

In February 2023, the mortgage rate for a thirty-year fixed loan was 6.5 percent (down from 7.2 percent in October 2022). “That was a real jolt to the system. Buyers were in shock,” she said. “They couldn’t believe the $650,000 home they thought they could afford was down to a $430,000 home.” As of December 2022, the average sales price for Portland Metro was $610,900, up 25 percent from $459,200 three years ago. Although bidding wars have cooled off, prices haven’t come down much, and buyers are adjusting to the new reality.

“Sellers are realizing they need to be more competitive. If a property is in good condition and the asking price is realistic, homes will sell within days,” she said. Market Action, a publication of the RMLS (Regional Multiple Listing Service), shows it’s taking longer to sell a home, an average of fifty-five days in December compared with thirty-two days the previous year.

An interesting observation of Colin’s—a thirty-six-year veteran of residential real estate—is that more buyers are millennials who lived at home during the pandemic years, saved up and are now ready to set up housekeeping. Portland’s reputation for livability, friendliness and affordability compared with California and other places make it a hot market for first-time buyers.

Other buyers include baby boomers like the Keiters, who want to shift from larger homes into condos or retirement communities. Colin said people still want to come to Oregon from California, Washington and many parts of the country.

Leisure Tourists Are Back But Business Travel Hasn’t Rebounded

Leisure travel is leading tourists back to the City of Roses, but business travel has been slow as many offices remain partially closed downtown, according to Marcus Hibdon, spokesperson for Travel Portland.

“Portland tourism is seeing real recovery from the massive impacts of the pandemic,” he said. “However, there is still a long road to full recovery.”

Portland tourism is seeing real recovery from the massive impacts of the pandemic. However, there is still a long road to full recovery.

Hotel occupancy rates are rising but haven’t come close to pre-pandemic figures. For example, hotel occupancy in 2021 and 2022 was 45 and 54 percent but that was far below 75 percent occupancy in 2019. Overnight visits are growing, and vacation rental properties like Airbnb are experiencing an uptick.

“More importantly, the city itself has returned to normal with new businesses offering plenty for travelers to see and do in our beloved neighborhoods, drawing locals and visitors alike,” he said. “National media are paying more attention to Portland again, especially in our dining scene as we arguably have several of the country’s best new restaurants.”

People have begun to venture back into Portland and its still-recovering downtown. Portland State University, a vital presence in the city core, reopened. People are crowding farmers’ markets, the Rose Festival, parades and other popular events. The thirty-five-story Ritz Carlton with 132 luxury residents and a hotel are under construction and will be the city’s first five-star hotel. The City of Roses may not resemble its former self, but a new beginning has budded.