More good news in the Eastside office market. Attached please find the market numbers and graphs for current vacancies, absorption, and new construction for the Eastside Office Market.
A quick summary follows:
-Net Absorption was 136,355 SF for the third quarter, putting the year to date total at 698,598 SF. Following are the main deals that have contributed to YTD absorption, most of which were signed some time ago:
135,000 RSF: Eastpointe CC/Sanmar (sale to owner/user occupant)
67,000: Sunset North/ArenaNet
58,000: Valley View Kirkland/Silicon Designs (sale to owner/user occupant)
55,000: Skyline Tower/Expedia
35,000: Laguna South/HCL
20,000: Lake Washington Park/iSoftStone
21,000: 112th @ 12th/Coca-Cola
19,000: Plaza Center/Penn Mutual (expansion/renewal)
18,000: 200 Building/GLY
-Class A and B vacancy on the Eastside is 15.3% (excludes owner user and buildings under 10k RSF), a slight increase from 15.2% vacancy the prior quarter. The recent completion of Overlake Medical Pavilion is largely responsible for this increase, adding 190,000 SF of near-vacant product to the Eastside market.
-Bellevue CBD vacancy stands at 14.7%, up from 14.1% the prior quarter.
-Redmond is the softest Eastside Submarket at 20.6% vacancy.
-Contiguous Blocks of Space- Per CoStar, there are only 3 spaces that can provide a 100k RSF or more contiguous on the Eastside, this statistic alone will encourage many developers to re-focus on when to deliver their next office development
-Leasing Activity has not been dramatic, it continues to slowly improve and with very little construction (see projected Construction Supply statistics per attached), vacancy will steadily decline over the coming years as expected, and noted in our attached projections. The only sizable project that can add space as you know, before 2015 is Summit III (320,000 RSF). Given their short time to delivery with garage already complete, pre-leasing would likely be a pre-requisite (if they did move forward so should not negatively impact the market when Summit III does deliver
-Finally Evidence of Market Reversal- While there continues to be caution from tenants in the market, the statistics seem to be finally in place to provide strong evidence to tenants that the market is reversing and tenants need to get deals done, and be prepared for increasing rents over the next 3 years.
Please click here for Broderick Group’s 3rd Quarter Eastside Office Market Report.