https://www.wweek.com/news/2025/03/...ls-to-lowest-level-in-more-than-a-decade/?utm
But Portland has some self-inflicted wounds, they say. The city put inclusionary zoning rules in place in 2017, requiring any new apartment building with 20 units or more to set aside 20% of them for people earning 80% of the area median income. Alternatively, developers could reserve 10% of units for renters who make less than 60% of the median.
Whichever adventure they choose, the requirement diminishes the revenue from rent that a building can collect. Developers adapted in a few ways. First, they got approval for buildings before the inclusionary rules went into effect. That’s why we saw so many cranes on the city skyline for several years. Second, they started maxing out buildings at 19 units to avoid the hit to rent.
“We’ve seen a bunch of buildings that are 19 units or fewer,” says Greg Frick, co-founder of HFO Investment Real Estate.
That’s bad, Frick says, because developers are putting just 19 units on parcels of land that could support many more, thereby cutting the new supply that Kotek wants.
“If you want the private sector to build housing, you can’t keep setting up these hurdles,” Frick says. “You’re not making a compelling case to invest here.”
Tom Brenneke, president of Guardian Real Estate Services, agrees. Many apartment complexes are funded by investors from beyond Portland, and Brenneke says they have soured on the city in part because of the changeable nature of its housing policy. A recent one that’s spooking them: Oregon’s move in 2019 to become first state in the nation with statewide rent control.
“Institutional capital stays really far away from rent-controlled states,” Brenneke says.
But Portland has some self-inflicted wounds, they say. The city put inclusionary zoning rules in place in 2017, requiring any new apartment building with 20 units or more to set aside 20% of them for people earning 80% of the area median income. Alternatively, developers could reserve 10% of units for renters who make less than 60% of the median.
Whichever adventure they choose, the requirement diminishes the revenue from rent that a building can collect. Developers adapted in a few ways. First, they got approval for buildings before the inclusionary rules went into effect. That’s why we saw so many cranes on the city skyline for several years. Second, they started maxing out buildings at 19 units to avoid the hit to rent.
“We’ve seen a bunch of buildings that are 19 units or fewer,” says Greg Frick, co-founder of HFO Investment Real Estate.
That’s bad, Frick says, because developers are putting just 19 units on parcels of land that could support many more, thereby cutting the new supply that Kotek wants.
“If you want the private sector to build housing, you can’t keep setting up these hurdles,” Frick says. “You’re not making a compelling case to invest here.”
Tom Brenneke, president of Guardian Real Estate Services, agrees. Many apartment complexes are funded by investors from beyond Portland, and Brenneke says they have soured on the city in part because of the changeable nature of its housing policy. A recent one that’s spooking them: Oregon’s move in 2019 to become first state in the nation with statewide rent control.
“Institutional capital stays really far away from rent-controlled states,” Brenneke says.
