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Permitting delays and uncertainty in the city of Portland remain top concerns of industrial developers and other industry professionals.

At the Columbia Corridor Association鈥檚 annual industrial real estate forecast on Tuesday, the organization鈥檚 executive director, Corky Collier, asked a ballroom full of industry professionals if they were concerned about permitting fees. No one raised their hand.

鈥淗ow about the (permitting) process?鈥� Collier asked.

Dozens of attendees raised their hands.

鈥淧ermits are a big deal,鈥� he said.

The Portland Bureau of Development Services (BDS) is in the process of a major reorganization in which staffers are merging with colleagues from other permitting bureaus, such as water and transportation, in a new entity called Portland Permitting & Development.

Industry professionals said they were encouraged by the city鈥檚 willingness to change. But they cautioned that the changes may not solve the myriad causes of permit delays and uncertainty, including staffing levels and regulatory requirements.

Mackenzie planner Suzannah Hamlin Stanley, who serves on a city advisory board, said BDS may face another round of layoffs. At one point, BDS was pulling $3 million a month from reserves, she said. The bureau has requested 8 percent cost increases for a range of fees, which would require City Council approval. But Stanley said further layoffs appear inevitable at BDS, which covers 97 percent of its budget via fees.

鈥淭hey are pretty underwater at this point,鈥� she said.

BDS鈥� proposed fee increases are scheduled to be considered by City Council on May 15, with a vote to follow on May 22.

No additional layoffs are planned, BDS spokesman Ken Ray said.

鈥淲e鈥檙e not currently anticipating any further layoffs if the proposed fee increases are approved by City Council,鈥� he said.

Collier raised the prospect that developers may be willing to pay significantly higher fees if it meant greater stability at BDS. But Stanley said that wouldn鈥檛 make much difference without more development volume.

鈥淭hey can鈥檛 raise the fees enough without more projects coming in,鈥� she said.

Developers have long complained that BDS staffing suffers from a boom-and-bust cycle. In good times, the bureau increases staffing. In development troughs, it cuts staffing, leaving the bureau flat-footed when the economy improves and developers again propose new projects.

鈥淭his happened during the Great Recession,鈥� Collier said. 鈥淲e laid off a lot of the permitting staff, and then when the economy came back, they weren鈥檛 there.鈥�

Industrial real estate activity slows

Data presented by Capacity Commercial Group showed a broad slowdown in industrial real estate activity. Absorption was sharply negative, down 825,598 square feet in the Portland area year to date.

鈥淲e鈥檙e kind of anticipating 鈥�24 to be a rough year,鈥� said Scott Kappes, a Capacity principal broker.

Industrial real estate was a bright spot during the pandemic lockdowns, when e-commerce surged. Now, the market is struggling to find a new equilibrium, industry officials said.

鈥淚t feels like the e-commerce boom has waned a little bit,鈥� Kappes said.

Recent deals valued industrial land in the Columbia Corridor at $18 to $22 per square foot, Kappes said.

Some developments are moving forward. McKinstry is planning to build a 50,000-square-foot facility at Northeast Mason Court and Airport Way.

Prologis is building Sandy Logistics at the site of a former K-Mart store at Sandy Boulevard and Northeast 122nd Avenue. Crews broke ground in January and should wrap up in January 2025, Prologis Vice President Sean Colletta said.

鈥淲e鈥檙e excited for the long-term potential of the site,鈥� he said.

The largest industrial lease signed in recent months was by North Coast Electric for 293,000 square feet at a Prologis facility.

One bit of good news: Construction cost increases have slowed greatly and reversed for some items, industry officials said. Lead times for parts such as roof joists have fallen.

Electrical panels remain tough to come by, holding up some projects.

鈥淚f you have a site tied up, you better have ordered your electrical servicing,鈥� Kappes said.