The Seattle/Puget Sound office market shows no signs of slowing down as increasing development looms large.
The regional vacancy rate ended the second quarter at 8.1%, ten basis points below the first quarter as the market continues to absorb new fully-leased office developments. The Puget Sound office market tallied 320,258 SF of positive net absorption during Q3, further increasing the year-to-date absorption total to almost 1.5 million SF in 2017. The month of August showcased the dominance of full building users as Tableau moved into its newest 123,332 SF home at 744 N 34th St and Amazon’s highly anticipated occupancy of 368,876 SF at Centre 425. Seattle saw the deliveries of Madison Centre and 450 Alaskan hit the market this quarter as both seek to fill up remaining available space. Alexandria Real Estate began construction on The Atrium in South Lake Union which will consist of 216,000 SF. WeWork continues its expansion as it leased 54,336 SF at Hill7 in the Seattle CBD and is set to move in Q1 2018. In the Bellevue CBD, Vulcan has revealed plans for an immense 800,000 SF office development adjacent to the Bellevue Transit Center with an estimated delivery in 2020. 929 Office Tower in Bellevue saw a considerable number of new leases this quarter bringing their vacancy rate down to 12%. Fully leased by Amazon, the massive 722,000 SF Rainier Square Redevelopment began construction this quarter and is set for completion by the summer of 2020.
- Seattle submarkets have seen over 2 million SF of new supply so far in 2017 with another 735,000 SF scheduled for completion in the final quarter of the year. The Lake Union submarket will be the focus of Q4 as it is scheduled to deliver almost 400,000 SF of office space.
- 63% of all under-construction office space has already been pre-leased including the new Q3 deliveries. The Global Innovation Exchange at The Spring District in Bellevue opened its doors this summer along with Centre 425 opening and welcoming Amazon to the continuously expanding Bellevue market.
- Seattle tenants in the market for space exceed 2.6 million SF of demand. Tech tenants = 72% of total demand.
- Eastside tenants in the market for space exceed 2.6 million SF of demand. Tech tenants = 60% of total demand.
- Seattle – The region still remains among the top markets for construction activity and is set to deliver several projects during the upcoming quarters. High demand continues as vacancy remains low and rental rates across all property classes saw an uptick this quarter. Despite Amazon announcing plans for an alternate HQ, concerns regarding the company’s presence in the region seem to have dissipated as they continue to expand their presence in the region.
- Eastside – Vacancy took a substantial dip down to 5.6% as Amazon moved into its new space at Centre 425 in August. Despite the increasing lack of space, city officials estimate the CBD is only 60% built after approval of the recent Up zone that will allow for a massive expansion of space. To capitalize on this change, developers such as Vulcan are already unveiling grand plans.