Local Markets seeing the same trend as National Stats for Multi-Family Sector

This segment of the commercial real estate market locally has definitely changed gears and has developers, owners and tenant’s alike scratching their head.  We have been in a period of slower growth and fewer new projects and construction slowing due to financing and economic challenges.  Experts see signs of this market stabilizing-with new construction slowed, the existing supply, coupled with continued population growth, is expected to absorb new units, leading to a tighter market and potential rent increases. 

It is safe to say, Central Oregon’s multi-family market is experiencing a period of transition, with higher vacancy rates than usual but also signs of stabilization and potential rent increases in the near future. The market is expected to adjust as new supply slows and population growth continues, leading to a tighter market. 

The Spring 2025 Apartment Report from Multifamily NW shows the Portland Metro area vacancy rate is small decline compared to Spring 2024. Rents continue to remain flat, uptick in sales volume while the multi-family construction remains constrained due to financing and economic challenges.  A momentary decrease in new supply may support rent growth as vacancy rates stabilize. Interest rate clarity, investor confidence and reasonable regulatory environment will play key roes in market’s gradual recovery. 

It is interesting to note that work has begun on one of Bend’s largest infill housing projects that will take two years to complete. 277 apartment units are being built at the north edge of the property along Wilson Avenue, the first phase of the of development. The completed project will show 518-unit including three story walk-up apartments, townhomes and single-story cottages, along with 1.5 acres of commercial space.  Wildflower master plan will be one of the largest master planned communities in Bend. 

Central Oregon rents have flattened in the past 2-3 years with Central Oregon Rental Association charting some properties down as much as 23%.  

One can say the familiar reference to  “SUPPLY & DEMAND”  holds true. Lack of Inventory leads to Overbuilding, what does this create? Surplus of Inventory-then the chain goes on with building and development slowing until the demand improves again. 

We are in an evolving market with needed re-balancing -higher interest rates, continual rise in residential homes in our region will be an attractive incentive for investors as the residential market in Central Oregon has unfortunately made many potential home buyers renters for the unforeseeable future paying in monthly rent what in some cases would be their monthly mortgage payment if it was not for the factors influencing the market. 

Key Trends:

• Potential Rent Increase:

  With fewer new units expected in the next two years, rents are projected to rise by late 2025. 

   
• Vacancy Rates Stabilizing:

  Despite slower growth, vacancy rates are expected to stabilize as new supply decreases. 

   
• Developer Incentives:

  Some areas are offering property tax exemptions to encourage private development. 

   
• Focus on Infill Development:

  Large-scale infill projects, like the one on 15th Street in Bend, are moving forward, indicating a focus on utilizing existing spaces for new housing. 

   
• Affordable Housing Initiatives:

  Projects like Cascade Landing are breaking ground, aiming to provide more affordable housing options with various support services

   
• Central District Upgrades:.

  Bend’s Central District is undergoing significant upgrades, including new multifamily buildings and infrastructure improvements. 

  Factors Influencing the Market: