Downtown Seattle Office Market Update
At 14.53% the Downtown Seattle office vacancy rate for the end of the Fourth Quarter 2011 is down 1.35% for the quarter and 3.03% for the year. Direct and sublease space marketed as available decreased from 8.4 million square feet to approximately 7 million square feet over the past 12 months. For the year, Downtown Seattle saw approximately 1.8 million square feet of absorption, highlighted by Amazon.com, Dendreon, Isilon Systems, Getty Images, HTC and Boeing. The significant lease for the fourth Quarter was Amazon inking their 321,000 SF lease at West 8th. Boeing also leased the top two floors at Russell Investments Center.
At year end, the Full Service asking rates for Downtown Seattle office space saw a slight uptick to $27.95/SF compared to $27.45/SF in 2010. However, Class A, hi-rise space with western views are in high demand. Landlords are sending proposals to tenants with rates $3/SF to $4/SF higher compared to year end 2010. Hi-rise space with western views in Class A+ buildings now fetches rates above $40/SF. Overall, landlords have been able to cut back on concessions such as free rent and tenant improvement allowances.
2011 was a banner year for Downtown Seattle investment sales as Seattle continues to attract institutional investors. Several significant office projects sold in 2011 at peak prices. Notable sales included Schnitzer West’s 1918 Eighth and 818 Stewart to JP Morgan Chase, Westlake Center to TIAA, 83 King/505 First to Spear Street Capital, 705 Union Station to PCCP, 1800 Ninth Avenue to Talon Private Capital & Prudential and Seattle Tower to Invesco.
2012 is expected to be another relatively good year for landlords in the Downtown Seattle office market. Amazon is rumored to be in the market for a significant amount of space near their Lake Union Campus. Nordstrom is also expected to significantly increase their footprint in the CBD. Rents in Class A projects with view space are expected to steadily rise due to high demand and limited supply. The recent sale of several Class A projects will also continue to put upwards pressure on rents as these new owners attempt to meet their pro-forma rent projections.
Click here for the complete Seattle Market 2011 Year End Real Report