Hey all you PNW commercial real estate investors, this one’s for you! Some time ago, we warned of the very real possibility of Portland entering a “doom loop” similar to Detroit.
Years of abysmal democratic leadership manifesting itself in anti-business, pro-crime policies led to hollowing out of the city’s core and abandonment of many neighborhoods. In 2022, 21.9% of housing units in Detroit were vacant (AI Overview). From a population high of 1.85 million in 1950, only around a third of its population remains to call Detroit home today. Think it can’t happen here? Think again.
In the Friday, February 21st edition of the Oregonian, local economist Mike Wilkerson was quoted describing Portland’s image as a “dumpster fire.” That was a year ago.
Speaking recently at the Portland Metro Chamber’s annual economic forecast at the downtown Hilton, he cast himself as a “skunk at a picnic” when he warned the city could be on the verge of entering a “doom loop.”
Wilkerson said, “Portland’s population trends, job growth, leasing activity and new housing construction suggest the city’s economy is in dire shape.”
“Urban doom loops are a (real) thing” he said. “And when you look at the data, you can make the case that we are in one or that we are on the precipice of …one. That distinction matters. The point is, once you are in one you typically don’t know it until many years later (and the loss of much equity), and it is very hard to get out of that pattern.
In a “doom loop,” economic activity falls, which leads to decreased tax revenue, which makes it harder to pay for public services which in turn further erodes the quality of life.
In the past when the national economy grew, Portland grew more. When it slowed, we contracted more and harder.
This is no longer the case. The U.S. economy is conspicuous in its growth relative to nearly all others while Portland is not. OOPS!
Compare this to the once gritty South Florida city of West Palm Beach where billionaire real estate developer Stephen Ross is spending money like a “drunken sailor.” (WSJ 2/22/2025).
The man who built New York’s Time Warner Center and Hudson Yards is all-in on West Palm Beach. Convinced that venture capital and tech firms in California are tired of the state’s high taxes, regulatory burden and hostile business environment, he is planning 6 million square feet of new office space, 1.4 million square feet of new condominiums, and 700,000 square feet of retail and dining.
Not only does he hope to attract more west coast businesses and money but he thinks “Miami fatigue,” the sensation that the fast growing metropolis to the south has become too urban congested, and expensive will bring more asset-management and financial firms from New York as well.
Let’s pause for a moment. Today, Ross’s new real estate firm, Related Ross, is on its way to spending nearly $10 billion to transform this once working class South Florida city into a business and financial Meca.
Simultaneously, Mike Wilkerson, a partner at ECO Northwest, a public policy consultant that frequently contracts with regional businesses, estimates over a billion dollars has left Portland. The contrast couldn’t be more stark. Where would you rather own real estate?
We get the whole regional chauvinism thing: Go Ducks, we’re ecotopia, we don’t have hurricanes and the Orange Man. However, we’re talking serious money here.
When money flees, investment opportunities of all types diminish with a concomitant loss in potential profitability. The opposite is true when money arrives. The former has a depressing or net negative effect on economic activity, the latter is stimulative.
The logical takeaway from this is keeping your commercial real estate investments PNW-centric, may result in less growth, profitability and wealth creation.
Prior to the advent of DSTs and the remote ownership-management they provide income property owners, staying put in a declining market could be rationalized by lack of knowledge and access to points distant. This is no longer the case.
The myriad DST properties available in high growth-low tax red states reflect decades of sponsor acquisition-management experience, and billions in syndications.
Prior this this it was difficult if not impossible for retail income property investors to be the Lone Ranger in distant, unfamiliar markets. That day is long gone.
A little homework on who in the DST industry is credible and what property types desirable, should get you over the hump. That’s why we’re here, to educate and emancipate.
If control is not an issue, Delaware Statutory Trusts may help you escape the tyranny of failed blue state progressive governments and the corrosive effects their anti-business, pro-crime policies have on your wealth.
