Why Empty Office Buildings Are Costing Mid-Sized Cities Like Portland Millions
While national office markets show recovery signs in 2026, Portland, Oregon remains deeply distressed with a 26.6% office vacancy rate. Empty buildings have created a cascade of fiscal problems, including property tax shortfalls leading to city and county deficits. Prosper Portland is pursuing slow-moving solutions including office conversions, multifamily development, and tax increment financing districts.
Summary
The video contrasts the recovering national office market—where vacancies have declined for three straight quarters and cities like New York and San Francisco show strong activity—with the ongoing struggles of mid-sized cities like Portland, Oregon. Portland's office vacancy rate stood at 26.6% in Q1 of the reporting year, slightly down from the previous quarter but up 170 basis points year-over-year according to Colliers.
Economist Jeff Renfro of Multnomah County explains that Portland had a vibrant pre-pandemic downtown with full office buildings, active restaurants, and regular festivals. The pandemic-driven decline in downtown workers hollowed out that ecosystem. Compounding the office vacancy problem, a perception of reduced safety in the early pandemic years deterred even suburban residents from visiting downtown for leisure activities like dining or concerts.
The fiscal consequences are severe: vacant buildings mean landlords cannot pay property taxes, which are the primary funding source for city and county services. Both the City of Portland and Multnomah County have run deficits for several years, with more expected. By law, the city cannot raise residential property taxes to compensate, leaving law enforcement, public safety, and social services underfunded.
Cornell Wesley, head of Prosper Portland, outlines a multi-faceted recovery strategy that includes converting vacant office spaces to retail or housing, supporting small businesses through grants and financing, creating new events to draw people downtown, and establishing tax increment financing districts to attract private investment. Wesley acknowledges the effort is difficult and slow, but expresses optimism rooted in community talent and collective commitment. He notes that new office construction is unlikely in the near term, making adaptive reuse and multifamily development the more realistic path forward.
About this episode
After five years of unprecedented pain the U.S. office market is showing new signs of life. But for mid-sized cities like Portland the story is a little different. Empty store fronts, vacant office buildings, and a struggling downtown isn't just an eye sore, it's having a real impact on the city's bottom line. Now, the city has plans to address the vacancies. Diana Olick reports. Reporter: Diana Olick Produced by: Devan Burris Edited by: Darren Geeter and Andrea Miller Senior Managing Producer: Shawn Baldwin Additional Footage: Getty » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Want to get ahead at work? Then you need to learn how to make effective small talk. In CNBC’s new online course, How To Talk To People At Work, expert instructors teach you how to use everyday conversation to gain visibility, build meaningful relationships and advance your career. Use coupon code EARLYBIRD for 20% off. Offer valid from April 20, 2026 to May 4, 2026. Terms apply. https://cnb.cx/4sGlSkh Connect with CNBC News Online Get the latest news: https://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC on Threads: https://cnb.cx/threads Follow CNBC News on X: https://cnb.cx/FollowCNBC Follow CNBC on WhatsApp: https://cnb.cx/WhatsAppCNBC #CNBC Why Empty Office Buildings Are Costing Mid-Sized Cities Like Portland Millions
Key Insights
- Jeff Renfro argues that the perception of reduced downtown safety during the early pandemic years compounded Portland's economic decline by deterring suburban residents from visiting for leisure, not just remote work reducing office occupancy.
- Renfro states that both the City of Portland and Multnomah County have experienced deficits for several consecutive years and expect those deficits to continue for the foreseeable future, directly tied to vacant buildings' inability to generate property tax revenue.
- Cornell Wesley acknowledges that no new office buildings will likely be built in downtown Portland anytime soon, framing multifamily conversions, multifamily development, and tax increment financing districts as the realistic levers for restoring downtown vibrancy and attracting private investment.
Topics
Transcript
[0:00] After five years of nearly unprecedented pain in the US, office market 2026 is starting to show new signs of life. Office vacancies have declined for the third straight quarter, and demand is now outpacing supply. In some markets, according to Colliers, New York City and San Francisco in particular are seeing strong activity. That's the national picture, but some mid sized cities are still in deep distress. Well, it's not a good look for any community to have any vacancies in it. What's more important is how you're trying [0:31] to solve for it. Portland, Oregon, it's still plagued by vacant or just partially filled office buildings and empty storefronts that used to serve a strong downtown workforce…
Full transcript available for MurmurCast members
Sign Up to AccessMore from CNBC
Where Markets Think Fed Chair Warsh Is Taking Interest Rates
Kevin Warsh has been sworn in as the new Federal Reserve Chair, bringing different communication philosophies and inflation measurement preferences. The Fed faces a challenging balancing act between stable employment and rising inflation above 4%, while Warsh's preference for data-open meetings could introduce more market volatility.
Can AI Compute Become The Next Big Futures Market?
Start-up Silicon Data has partnered with CME Group to launch what could be the world's first AI compute futures market, pending CFTC regulatory approval. The market aims to help companies hedge against volatile GPU rental costs, similar to how airlines use oil futures. Key challenges include standardizing GPU pricing benchmarks and building sufficient market liquidity.
Why KFC Has Fallen Behind In The U.S.
KFC has fallen significantly behind competitors in the U.S. fast food chicken market, now ranking fourth by market share despite the category booming. In 2025, the company launched a turnaround plan featuring boneless menu items, a new beverage lineup, and redesigned restaurants. Meanwhile, KFC's international business continues to thrive, making its U.S. struggles even more pronounced.
What To Expect From Trump’s Trip To The G7 Summit In France
President Trump is headed to the G7 summit in Evian, France, where he faces strained relationships with most allied leaders over tariffs, the Iran war, and Ukraine. European and Asian allies feel increasingly sidelined as the U.S. pivots its focus toward Middle Eastern Gulf nations. Key agenda items include the Iran conflict, Ukraine support, AI regulation, troop withdrawals, and supply chain security.
The Next Phase Of The Obesity Drug Race
The obesity drug market is rapidly evolving beyond Wegovy and Zepbound, with new pills, triple-agonist drugs, and alternative mechanisms entering clinical pipelines. Lilly's experimental Retatrutide showed unprecedented 28% average body weight loss, the highest ever recorded for a drug. Competition is intensifying across weight loss, tolerability, and dosing convenience dimensions.