The Greater Seattle office market continues to tighten despite an increasing pipeline of inventory.  As the infographic by David Boynton above shows, the appetite for commercial office space in the region is at levels higher than anything seen in the previous decade.  The largest contributing factor of the demand being tech companies aggressively expanding in both the Seattle and Eastside Markets resulting in increased job growth over the next five years.

As of the close of Q2, the Greater Seattle region saw 51,900 new jobs added to the region year over year.  The area’s employment is projected to grow by 3.3% per year over the next five years, resulting in an additional 295K jobs by Q1 of 2024.

The Greater Seattle region indicates strong institutional investor interest and confidence as the region is on track to log the highest sales volume since 2007, with $4.3B of transactions YTD as of Q2.

According to a recent survey by Deloitte, 97 percent of institutional investors surveyed planned to increase their capital commitment to Commercial Real Estate over the next 18 months.  Specifically, Seattle ranked third in the list of top 5 cities in the world where investors wanted to increase their real estate exposure in a survey by AFIRE.

Net absorption in the Greater Seattle region for Q2 was 4.1M SF, the highest quarterly net absorption in recent history, with Seattle consuming 3.3M SF and the Eastside adding 640K SF.  By comparison, the net absorption in the Greater Seattle region for all of 2018 was 4.46M SF.

Despite the 4.1M SF of absorption, tenant requirements still totaled 5.5M, 2.5M of which was in the Seattle CBD and 3M in the Bellevue CBD.  Nearly 82% of all under construction office space in the Greater Seattle region has already been pre leased.

Vacancy in Seattle Class A office space reached a 10 year low of 5.9%, while full service rents hit a high of $51.06/SF, a trend likely to continue. In addition to the activity in the Seattle CBD, the Eastside saw a notable increase in activity following Amazon’s announcement to expand their operations to Bellevue.  Vacancy in the Bellevue CBD Class A office space was 3.9% while full service rents were $56.47.

Notable Transaction in Q2 include:

  • EQ Office, 999 Third and US Bank Centre ($1.2B)
  • Preylock RE, T-Mobile Headquarters ($468M)
  • Amazon, Bellevue Corporate Plaza ($196M)

Notable Lease Signatures in Q2 include:

  • Amazon, Binary Towers (715K SF)
  • Apple, 333 Dexter (620K SF)
  • Dropbox, 2+U (121K SF)

Notable Deliveries in Q2 include:

  • Facebook, Arbor Blocks East and West (389K SF)
  • Google, Lakefront Blocks (291K SF)
  • Tableau, Google, Kirkland Urban North and Central (375K SF)