Portland’s office rental market in 2025 is a tale of two cities. On one hand, vacancy rates have reached historic highs, leasing volumes are shrinking, and tenants continue to downsize as hybrid work solidifies into a long-term trend. On the other hand, specific sectors and locations are quietly gaining momentum.
Downtown Portland has shown surprising resilience, with Class A and B buildings seeing actual tenant-driven leasing activity. At the same time, medical office space and premium towers are reporting stronger-than-average demand, suggesting that value, flexibility, and function are driving choices in today’s evolving market.
This blog breaks down where demand is growing, which submarkets are stabilizing, and how leasing patterns are shifting in 2025. For investors, brokers, and landlords, Portland’s data reveals both caution and opportunity.
TL;DR
- Vacancy rates in Portland have surpassed 15%, setting new records in 2025.
- Average lease sizes have dropped below 3,000 sq. ft. as hybrid work continues.
- Healthcare and premium office buildings are showing resilient tenant demand.
- Downtown Class B properties have seen genuine absorption activity.
- Suburban markets remain uneven, with large spaces struggling to lease.
What’s Driving Portland’s Office Market in 2025?
Portland’s office market is experiencing a period of prolonged adjustment. Vacancy rates are rising, lease volumes are shrinking, and hybrid work is forcing companies to rethink their space needs. Below are the key factors shaping office rental trends across the metro area in 2025.
Hybrid Work is Reshaping Space Demand
Many companies continue to adopt hybrid work models, resulting in reduced space requirements. This shift has pushed average lease sizes below 3,000 square feet and contributed to persistent negative net absorption. Tenants are prioritizing flexibility and efficiency over traditional large-scale office footprints.
Pre-Pandemic Leases Are Expiring
As long-term leases signed before 2020 roll off, tenants are downsizing or relocating. These expired agreements have added substantial vacancy to the market, with direct vacancy rates rising to 15.1% in Q2 2025, Portland’s highest in over a decade.
Sublease Space Is Gradually Declining
While total vacancies are rising, sublease space has finally begun to decline for the first time since the pandemic. This signals a slow but notable shift, as fewer tenants are attempting to offload excess space mid-lease, and more are making deliberate, long-term decisions.
Negative Net Absorption Continues
Portland recorded a net loss of 836,633 square feet in Q2 2025, bringing the total negative absorption to 1.27 million square feet over the past year. This ongoing trend shows that more space is being vacated than leased, a clear indicator of market stress.
Construction Pipeline Has Nearly Stalled
New office development has almost halted, with less than 0.5% of inventory under construction. This slowdown could help rebalance supply and demand in the long term, but does little to relieve current high vacancy levels.
Also Read: 10 Key Insights for the Commercial Real Estate Market Outlook 2025
Key Metrics That Show Portland’s Office Rental Trends
Here’s how Portland’s office rental market is shifting in the first two quarters of 2025:
Also Read: Real Estate Data Providers: Compare Features, Pricing, and Quality
How Are Vacancy Rates Shifting by Submarket?
Not all parts of Portland’s office market are performing equally. While the overall vacancy rate is climbing, specific submarkets are seeing either stabilization or worsening conditions. Here's a closer look at how different areas are absorbing—or struggling with—available office space in 2025.
Downtown Portland Shows Modest Recovery
Downtown has been one of the few bright spots, with both Class A and Class B properties recording real leasing activity. Vacancy reductions in Class B buildings were driven by new tenants, not conversions or removals. This signals renewed interest in the city center from smaller professional firms.
Suburban Submarkets Remain Soft
Suburban areas continue to face challenges, with large blocks of space still sitting idle. The Maine Mall area and Falmouth submarkets, in particular, saw new vacancies with limited leasing response. Demand remains concentrated in smaller buildings, while anything over 30,000 square feet is slow to move.
Medical Office Space Remains Tight
One of the strongest performing categories is medical office space. Vacancy is just 1.33% across the sector, driven by active leasing at locations like the Rock Row campus in Westbrook. Demand here is outpacing supply, making it one of the most competitive segments in the region.
Availability Gaps Between Classes Are Widening
While premium Class A towers in downtown continue to attract tenants, older Class C buildings in both urban and suburban markets are struggling. These properties often lack the amenities and design flexibility needed for hybrid teams, leaving them behind in a flight-to-quality trend.
Also Read: What Are ADUs in Real Estate?
What Types of Office Space Are Performing Best?
In Portland’s shifting office market, not all spaces are struggling equally. While demand for traditional large-footprint offices continues to decline, certain asset types are showing resilience. Below are the categories of office space seeing the most leasing momentum in 2025.
Premium Downtown Towers Are Attracting Tenants
Newer, high-quality buildings like Block 216 and Eleven West are bucking market trends. These properties offer modern amenities, energy-efficient systems, and prime locations that appeal to professional services firms looking for long-term stability in compact, premium spaces.
Medical Office Space Remains High-Demand
Healthcare tenants are driving significant leasing activity, especially in suburban medical campuses. The Rock Row development in Westbrook is a standout, with multiple large leases signed in 2024 and early 2025. Vacancy in this sector is well below the citywide average.
Smaller, Flexible Suites Are Preferred
With average lease sizes falling below 3,000 square feet, companies are gravitating toward spaces that offer flexibility and lower overhead. Configurable suites with private offices, shared conference rooms, and short-term lease options are outperforming traditional floorplate offices.
Spaces With Built-In Amenities Are Competitive
Tenants increasingly expect coworking-style perks: lounge areas, wellness rooms, high-speed connectivity, and in-building cafes. Offices that deliver these features are attracting tenants faster and achieving stronger retention rates, even as broader market demand softens.
Also Read: How AI is Transforming Real Estate in 2025
Conclusion
Portland’s office market in 2025 remains in flux. Vacancy is high, leasing activity is selective, and hybrid work continues to redefine space needs. Yet, within this softness are signals of growth: strong demand for medical offices, stable absorption in Class B downtown buildings, and investor interest in resilient submarkets.
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FAQs
Why Are Vacancy Rates So High in Portland in 2025?
Vacancy rates have surged due to hybrid work, expiring pre-pandemic leases, and prolonged negative absorption. Many companies are downsizing or not renewing at all, leading to over 15% direct vacancy citywide.
Which Portland Submarkets Are Showing Signs of Recovery?
Downtown Portland is showing signs of recovery, particularly in Class A and Class B buildings. These areas have seen positive leasing activity, unlike larger suburban properties, which continue to struggle with high vacancies.
Are Office Rents in Portland Rising or Falling?
Asking rents have increased slightly to $29.64 per square foot, but growth is slowing. Analysts warn that continued high vacancies could reverse this trend, potentially leading to rent declines later in the year.
What Office Types Are Seeing the Most Leasing Activity?
High-end towers, smaller flexible suites, and medical office buildings are seeing the most activity. Tenants are prioritizing modern amenities, location efficiency, and smaller footprints tailored to hybrid work models.
