Saturday, 16 May 2009

Where is Portland Oregon going?

Over last 10 years, Portland Oregon has enjoyed steady economic growth. In addition, it has also established leadership status in eco-consciousness, creativity and off-beat coolness. Therefore many creative types and IT folks has migrated to Portland and total polupation has increased by 14% from 1,936,110 in 2000 to 2,207,462 in 2008. Many of new residents are from California and, compared to San Francisco or Los Angeles, affordable real estate was great attraction.

However, Portland is facing major economic challenge right now as unemployment rate has doubled to 12% in March 2009.

I would like to introduce a couple of interesting article about Portland's economic challenges as follows.


'Youth Magnet' Cities Hit Midlife Crisis

  • As seen from below chart, Portland has attracted decent share of 25+ adults with college degree between 2005 and 2007.
  • This article focuses on challenging job market for young adults who moved to Portland.
  • I found it amazing that, while everyone laments about job situation but nobody says negative things about Portland. Those folks are having very difficult time keeping or finding good income job.

Metro Total Population 2005 - 07 Annual Migration Educated 25+ Share on Total Population
Cape Coral 590,000 3,564 0.60%
Sarasota 690,000 4,103 0.59%
Des Moines 560,000 3,132 0.56%
Charlotte 1,700,000 8,922 0.52%
Austin 1,650,000 8,448 0.51%
Raleigh 1,090,000 5,000 0.46%
Tucson 1,010,000 3,910 0.39%
Seattle 3,340,000 12,498 0.37%
Phoenix 4,280,000 14,103 0.33%
Portland 2,210,000 7,025 0.32%
Las Vegas 1,870,000 4,900 0.26%
Tampa 2,730,000 6,469 0.24%
Atlanta 5,400,000 12,397 0.23%
Riverside 4,120,000 9,198 0.22%
Sacramento 2,110,000 3,913 0.19%
Denver 2,510,000 4,624 0.18%
Kansas City 2,000,000 3,591 0.18%
San Antonio 2,030,000 3,639 0.18%
Houston 5,730,000 7,624 0.13%
Dallas 6,300,000 8,028 0.13%

Oregon Fail - Hard times for business and real estate out West.

This commentary has pointed out Portlant/Oregon's economic problem as follows:

  • Cost of doing business and regulation in Oregon is one of the highest in US. It is very difficult to compete against business-friendly states such as Texas and Idaho.
  • Oregonian priority is enjoying life Vs. growth -- therefore recession hit harder to Oregon than to other states.
  • Lack of economic diversity. Oregon depends too much on durable consumption goods such as lumber mills, semiconductor and motor coach.
  • Oregon once attracted IT business such as semiconductor. But, due to high cost of business, many of IT related jobs fled to other states and to Asia.
  • Because of skyrocketted real estate, middle class family can no longer afford housing in Portland. Expensive real estate made migration to Portland less attractive.
  • Increasing population has driven real estate construction and lumber business but those business are suffering now.
  • As much of business and migration was from California. California economy slump has caused severe dents in Oregon economy.
  • Outside of Portland, education level not so high. Low education employees job security is very shaky under recession.
  • Oregon does not have many large corporation headquarters. Therefore, when companies reduce headcounts, they tend to ax jobs in non-core locations.
I believe Portland Oregon is at cross road; 1) is it continue high-regulation, anti-growth, off-beat town or 2) does it totally change to pro-business / pro-development town with cheap real estate? It is important to note that, according to the success of Austin Tx, pro-business and affordable housing is what Portland is missing (maybe sunny weather too).

It is quite interesting to how Portland evolves!

Happy Investing!!!!

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