Several Portland sweeping zoning changes bear directly on multifamily underwriting in the central city as height limits disappear for residential and encourage two- and three-bedroom apartments to accommodate larger households.
Portland’s Bureau of Planning and Sustainability published a Recommended Draft of the Central City Code Amendments Project (CCCAP) on Sept. 10, setting up a hearing on Oct. 6 and a full City Council vote (tentatively scheduled for Oct. 28) that would rewrite development across the Central Eastside, Lower Albina, the Lloyd District, and Goose Hollow.
The draft Central City Code Amendment Project does not rewrite the Central City 2035 Plan (est. 2018). However, it is a narrower set of 21 zoning and code changes aimed squarely at two problems the city says have piled up since 2020. Those problems are (1) a shortage of housing and (2) a Central City struggling with 25% to 30% office vacancy and empty ground-floor retail.
The Housing and Permitting Committee, a Portland City Council subcommittee, holds a public hearing on the package Tuesday, October 6, at 2 pm. The full council is tentatively set to vote on Oct. 28.
CCCAP traces its origins to the city’s Housing Needs Assessment and Housing Production Strategy, both completed in 2024. It also traces its origins to Gov. Tina Kotek’s Central City Taskforce report. The report is called “All In On Portland’s Central City.” That report called for faster, more concrete steps to reactivate downtown.
To test what changes might actually move the needle, city staff hired ECONorthwest to study the Central City’s height and floor-area-ratio system and interview property owners and developers. The consultant’s conclusion, according to the Recommended Draft, is that current market conditions make large-scale tower construction infeasible almost regardless of zoning entitlements. But greater height and density allowances now could pay off once the market turns and would signal that Portland is serious about future investment. The recommended draft leans directly on that logic.
What multifamily owners should track
Several provisions bear directly on multifamily underwriting in the Central City.
- More land opens up for housing. The draft repeals housing prohibitions in parts of the Central Employment zone, including areas along Northeast Russell, near OMSI and along Southeast Powell, and rezones select Central Eastside, Lower Albina, Lloyd District and Goose Hollow parcels to match adjacent development patterns.
- Height limits could effectively disappear. A new provision allows unlimited height for residential projects that earn a bonus floor-area ratio, with carve-outs for South Waterfront, North Pearl, Riverplace, historic districts, and protected view corridors. The draft also raises maximum bonus heights in several other areas.
- A new incentive targets family-sized units. Projects that include two- and three-bedroom apartments can now earn an additional 1:1 bonus FAR, a deliberate push to accommodate the larger households the city says are increasingly choosing to stay in the Central City.
- Ground floors get more flexible. The draft shrinks the list of streets where ground-floor dwelling units are banned within 25 feet of the lot line and sets new design standards intended to make street-level housing actually work for both renters and pedestrians.
- Vacant sites get breathing room. Owners can now put vacant or master-planned sites into temporary surface parking for a single five-year period, and daily and hourly parking is now allowed in existing Central Eastside lots. These options aim to keep land productive while redevelopment plans get financed.
- Retail caps loosen, too. The Central Eastside’s IG1 zone retail allowance jumps from 5,000 to 20,000 square feet per site, and most Central City Master Plan amendments move from a Type III to a faster, staff-level Type II review.
Read the full report from HFO Investment Real Estate here.
About the author:
HFO Research (Aaron Kirk Douglas) from HFO Investment Real Estate’s Multifamily Marketwatch YouTube podcast, hosted by partner Greg Frick. Aaron Kirk Douglas is director of market intelligence for HFO Investment Real Estate In Portland. Have questions about what these trends mean for your property? Call HFO at (503) 241-5541.
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Photo credit portland.gov
