Oregon has a strong business economy with diverse sectors, including manufacturing, technology and renewable energy. According to the Bureau of Economic Analysis, in 2018 Oregon had a Gross Domestic Product (GDP) of $195 billion dollars with an annual growth rate of 3.3%. This ranked it 18th among all states for GDP.
Historically, the state has had a strong agricultural sector, a leader in renewable energy, and a concentration of technology businesses, particularly in the Portland area. The Oregon Department of Agriculture reported that the state generated $5.3 billion in agricultural product sales in 2018. The Oregon Technology Association (OTA), there are over 8,000 tech-focused companies operating in the state, accounting for over 130,000 jobs and $21 billion in annual economic activity.
As the market changes, savvy investors are looking forward to what’s next in Oregon’s economy. Here are some of the key items to watch.
Real Estate Market Swings
The real estate market in Oregon has experienced significant changes over the past few years. While home prices rose steadily nationwide, Oregon saw a more rapid increase in home values and prices, with some of the sharpest increases occurring in urban areas like Portland.
In addition to these higher home values, investors have seen numerous opportunities for other types of real estate investments, such as apartment rentals, commercial properties, and vacation homes. These types of investments often offer a higher return than traditional home purchases, making them an attractive option for those looking to diversify their portfolios and maximize profits. In short, Oregon’s real estate market is one of the most dynamic and profitable in the United States.
Look for more property to shift hands from families to businesses as the rental market grows. Expect those historically involved in flipping real estate to widen their portfolios by trying new kinds of flips and possibly becoming landlords, not just sellers.
Shift Towards Savings
Due to rising interest rates, businesses are adapting their strategies, in order to ride out market uncertainty. These measures include increased saving and investing practices, such as increasing cash reserves and putting money into more diverse investment options. By diversifying their investments, businesses can protect themselves from a potential downturn or capitalize on the higher returns associated with an expanding economy. Furthermore, businesses can also access and use capital in a more efficient manner through debt instruments such as bonds. By incorporating these strategies into their financial plans, companies can better position themselves to take advantage of the opportunities that rising interest rates provide.
Look for traditional banking institutions creating new, long term savings opportunities. Expect the State of Oregon and the U.S. Treasury to issue attractive bond options. Businesses who rely on the sale of impulse and luxury goods may need to reconsider having a narrow focus as consumers follow suit with increased savings. Seek out financial advice for businesses to find the best way to accrue cash for savings and to decide what savings vehicles to use.
Brick and Mortar Coming Back
A 2021 survey conducted by Oregon Business found that nearly three quarters of Oregon employers offer some form of remote work, with just under one third offering full-time remote opportunities for their employees. As employees have settled into remote work, many have found that it’s not as productive or convenient as they had wished.
Employees often prefer to work in an office environment as it offers a sense of community and stability. Many employees still find comfort in the traditional workspace and having a clear division between work and home. Employees who work in an office often benefit from a variety of resources, such as access to corporate IT and other technological tools, as well as a dedicated workspace with all the necessary amenities.
Expect an increase in hybrid work arrangements. Look for employers to get creative with balancing providing employees with a physical workspace without having to pay for a large amount of costly infrastructure. Look for landlords creating new types of shared space agreements with tenants.
Key Industry Buzz
Oregon offers a variety of incentives to businesses that are interested in relocating or expanding within the state. These include state tax holidays, credit reductions, and exemptions from certain taxes. For example, Oregon provides an exemption for businesses on corporate income tax for up to five years with qualifying investments.
Additionally, Oregon provides a number of targeted economic development incentives including the Strategic Investment Program, the Business Retention and Expansion Program, and the Enterprise Zone Tax Credit program. In particular, Oregon has targeted the following industries for some of its best incentives: metal goods, machinery, business services, food and beverage, forestry, wood products, high tech, bioscience, and outdoor gear and apparel.
Look for growth in these sectors. Expect businesses to diversify into these fields to take advantage of the incentives.
