Key facts
- Portland is considering zoning changes to convert vacant downtown office and retail spaces into housing.
- The proposed changes include raising building heights and allowing residential projects in commercial zones.
- A previous affordable housing mandate inadvertently reduced multifamily construction.
- The city has implemented tax abatements to incentivize affordable housing development.
- The zoning package is expected to reach a City Council vote this fall or winter.
Portland is considering significant zoning changes to address a substantial vacancy rate in its downtown commercial real estate, a situation exacerbated by the COVID-19 pandemic and the rise of hybrid work models. City officials aim to convert empty office and retail spaces into much-needed housing.
The proposed zoning rewrite, part of the Central City Code Amendments Project, could reach a City Council vote this fall or winter. The draft includes provisions to raise building heights in targeted areas, open commercial zones to housing, and remove bans on residential development in certain districts. It also loosens citywide limits on ground-floor apartments and offers incentives for developers building larger units suitable for families.
One of the most significant proposed changes allows residential projects to exceed code height limits entirely, provided they do not cast new shadows on parks or nearby homes, and are outside historic districts or protected view corridors. Planning commissioners also reduced the required setback for new housing along Governor Tom McCall Waterfront Park.
While other cities have offered financial incentives like tax abatements or subsidies for office-to-apartment conversions, Portland's current draft lacks these direct financial supports. The city had previously studied a vacancy fee on commercial properties left empty for six months or more, but this idea faced strong opposition from the real estate industry and was deemed unlikely to be effective by researchers.
The zoning changes are one component of a broader effort to tackle housing affordability. In March, Gov. Tina Kotek signed legislation to correct a previous affordable housing mandate that had unintentionally stifled multifamily construction. The original mandate required buildings of 20 or more units to include affordable units without public incentives, leading developers to build fewer homes or cap projects at 19 units to avoid the requirement. The fix involved adding property tax abatements and allowing cities more flexibility in designing affordability rules, with Portland having until January 1, 2029, to fully comply with its condo mandate.