I was reading through a piece from HousingWire about Portland's efforts to tackle its downtown office vacancy crisis, and there's some real food for thought here about what cities are trying when traditional solutions don't work. Portland's facing a serious situation where roughly a third of downtown office space sits empty, largely a consequence of the pandemic and companies embracing hybrid work arrangements. The city is now rewriting its downtown zoning rules specifically to make it easier to convert those vacant office and retail spaces into housing, which the city desperately needs.
According to HousingWire, the Portland Planning Commission approved a package of zoning changes called the Central City Code Amendments Project and sent it to City Council, with a vote potentially happening this fall or winter. The changes would raise building heights in certain downtown areas, allow housing in zones that were previously commercial-only, and remove restrictions on housing in Lower Albina and the Central Eastside. What really caught my attention is that developers building larger family-sized units could receive incentives, and residential projects that don't create new shadows on parks could actually exceed normal height limits entirely.
What's interesting is that Portland initially considered a vacancy tax to push property owners into action, but the real estate industry pushed back hard. Research from Portland State University surveyed more than 400 developers and property owners, and they found that people really weren't intentionally leaving space vacant on purpose. The study concluded that weak demand, safety concerns, and high construction costs were the real culprits, not owner indifference. The city ultimately shelved that idea.
There's a broader story here too about how Portland learned some hard lessons with its affordable housing requirements. When the city originally mandated that buildings with twenty or more units include affordable units back in 2017, multifamily construction actually dropped dramatically. Developers either built elsewhere, moved to other states, or deliberately capped projects at nineteen units to dodge the requirement. State Senator Khanh Pham, who had supported that original mandate, acknowledged the mistake and pushed through new state legislation requiring cities to actually fund their affordability mandates through cash, tax breaks, or fee waivers rather than putting all the burden on developers.
What I'm seeing locally here in the Bay Area and throughout the East Bay is that we're watching Portland's playbook pretty closely. Their experience shows that zoning changes alone aren't enough, and that unfunded affordable housing mandates can backfire by discouraging the very construction we need. We've got our own high vacancy challenges in certain office corridors, particularly after the pandemic changed how companies think about real estate. Portland's decision to pair zoning flexibility with actual financial support for housing development, rather than just trying to tax our way out of the problem, feels like a smarter approach than what some jurisdictions have tried locally.
