By Owen Rice
Seattle remains one of the tightest office markets in the country, driven in large part by the highly educated workforce and great number of technology companies with seemingly insatiable demands for talent. The construction cranes that have dominated the Seattle skyline over the past few years have delivered a tremendous amount of new supply yet most of it has been leased. Amazon has leased or owns more than 40% of all the supply added to the Seattle office market since 2015. Other notable large transactions include leases signed by companies such as Oracle (300,000 SF), Apple (660,000 SF), Qualtrics (275,000 SF), F5 Networks (515,000 SF) Google (various transaction exceeding 1M SF), Facebook (863,000 SF in Bellevue) and Dropbox (120,886 SF). These companies are amassing large footprints in our region and companies such as Facebook are committed to over 3.6 million SF in our region which will be home to a population exceeding 5,000 people. Let’s not forget about Microsoft either, the technology company who has long anchored the Eastside. Microsoft is currently expanding its Redmond campus by 2.5 million SF and renovating an additional 6.7 million SF of existing space on the campus.
With the downward pressure on vacancy, rent growth has surged over the past few years. The Seattle office market has reached new heights in our current cycle and vacancy rates for Downtown Seattle are among the lowest in the country at just 6%.
Adjusted for inflation, average asking rental rates in Downtown Seattle far exceed all-time highs and are 30% more expensive than our last real estate cycle’s peak. Average asking lease rates are now at $47.54 per square foot per year with premium buildings exceeding as much as $70.00 per square foot per year.
Seattle’s success is based on a diversified economy which is becoming increasingly anchored by technology companies yet supported by non-technology companies such as Boeing, Weyerhaeuser, Nordstrom, Costco, Starbucks, T-Mobile and Alaska Airlines. Our employment growth is outpacing the national average and our median household income is more than 40% higher than the national average. With some financial pundits claiming a recession is looming, only the future will tell us if we’ve reached our current cycle’s peak. Let’s hope that before we get there, business and consumer confidence propels the cycle further ahead as our region has been a significant benefactor of the economic surge this past decade has endured.
Owen Rice is executive vice president at Hughes Marino, an award-winning commercial real estate company with offices across the nation. Contact Owen at 1-844-662-6635 or email@example.com to learn more.