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
China's Swagger After India's iPhone 18 Leak
A Chinese repair specialist highlights cybersecurity vulnerabilities in India's electronics supply chain following an iPhone leak from Tata Electronics, which China's state media uses to argue for the superiority and necessity of manufacturing in China. Despite the leak, Apple continues diversifying production away from China, including manufacturing iPhone 17 Series in India, while counterfeit iPhone copies remain technologically impossible to replicate at scale.
Why Buying A Condo Just Got Harder
Beginning August 3rd, Fannie Mae and Freddie Mac are implementing stricter lending standards for condo mortgages, requiring comprehensive building reviews instead of streamlined processes. This change, motivated by the 2021 Surfside collapse, could make condo purchases more difficult and expensive for buyers, potentially worsening housing affordability.
Why Airline Ticket Prices Are Unlikely To Go Down
U.S. airline ticket prices are unlikely to decrease despite lower fuel costs because the four largest carriers control 82% of market capacity and are experiencing strong consumer demand. Customers remain willing to pay higher fares, and the collapse of discount competitor Spirit Airlines has removed affordable seating from the market.
Best Buy Is Shrinking Some Stores. Here’s Why That’s A Good Thing
Best Buy is opening smaller format stores (12,000-25,000 sq ft) as part of a strategic pivot to reach new markets and drive growth under incoming CEO Jason Bonfig. The company aims to combine physical retail experiences with digital channels and AI tools to enhance customer experience and capitalize on emerging technologies.
How Audi Is Trying To Claw Its Way Back From A 30% U.S. Sales Drop
Audi is struggling with a 30% U.S. sales drop and three consecutive years of double-digit losses, facing headwinds from tariffs, plummeting EV sales, and lack of domestic manufacturing. The company is launching new SUVs, including the Q9 three-row model, to compete in the premium segment where SUVs represent over 80% of sales, but tariff-driven price increases threaten its historical value-for-money positioning.