Nearly 66% of all large Seattle-area office-leasing transactions in the third quarter occurred downtown, and 70% of the large deals in the quarter involved tech companies, according to a recent market analysis.
The Seattle area is experiencing a shortage of available “large-block” office space, requiring preleasing in new developments in order to “secure top-tier space,” according to the report by global real estate services firm Savills. That’s despite the fact that the greater Seattle office market is fast expanding, with some 8.8 million square feet of new office space in the pipeline, driven by the space demands of technology companies.
Despite the continuing high demand for office space, however, leasing activity in the third quarter ― at 2 million square feet in total ― was down by 28.3% compared with the prior quarter and 9.7% year over year. Space availability is much tighter in Seattle’s central business district, with an overall 9.8% vacancy rate, compared with the suburbs ― which recorded an overall third-quarter vacancy rate of 19.3%.
“Increasing rents and lower availability [vacancy] rates in the central business district will continue to attract developers as tech tenants are willing to pay a premium for Seattle’s talent,” the Savills report states.
Suburban office-space availability rates vary widely, however, with the Bellevue/Eastside submarket recording a 9.3% vacancy rate, compared with 27.7% for the South end, the Savills report indicates.
Tech-related Second Ave.; Facebook, 166,614 square feet at 1229 124th Ave. N.E. in Bellevue/Eastside; and Adaptive Biotechnologies, 108,568 square feet at 1165 and 1551 Eastlake Ave. near downtown Seattle.