The Puget Sound regional office market continues to tighten despite the number of active cranes. Second quarter reports from various commercial real estate brokerage houses reveal “aggressive expansions in Seattle and on the Eastside” along with healthy levels of job growth,” per Kidder Mathews Q2 report.
Colliers International pointed out the large number of tech tenant move-ins pushed the Puget Sound office market to “unprecedented net absorption and the lowest overall vacancy the past decade.”
CBRE concurred, noting total downtown vacancy has dropped dramatically from a peak of 14.9% a decade ago to roughly 7.7% Q2. That remarkable turnaround comes even against a backdrop of the market’s total net rentable area growing more than 11 million square feet. Seattle has risen from largely being considered a secondary market to one of the leading U.S. real estate hubs, observes CBRE.
Kidder Mathews pegged Q2 net absorption at more than 4.1 million square feet, and Colliers reported that of the 1.9 million square feet of Puget Sound net absorption thus far this year, Class A properties experienced more than 1.7 million square feet of absorption, representing nearly 91% of it.
Seattle’s overall weighted average rate for Class A space ended the quarter at $51.06-per-square-foot full service, according to Colliers. The largest lease of the quarter and year so far was Apple taking Kilroy Realty’s entire 333 Dexter development in Lake Union (660,000 square feet, pictured above).
Kidder Mathews points out Seattle has nine major office projects under construction after delivering nearly 1.9 million square feet of new office inventory over the quarter. There are eight or more planned spec projects expected to come on line by early 2020. With job growth expected to continue and a tolerable level of new construction, the near-term outlook for the regional office market remains positive, notes Kidder Mathews.