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Seattle Office Space for Rent

Seattle is one of the country’s fastest growing cities of the past decade, with no stopping in sight. This economic boom has led to an increase in number of businesses hoping to establish a presence in the Puget Sound and capitalize on the consolidation of employee talent. As a result, the Seattle office space market has seen demand, competition, and rents climb to new heights, while landlord concessions such as free rent and Tenant Improvement allowances have dropped.

The market for office space in Seattle has tightened because of a lack of new construction in 2018, with less than 1 million square feet of new space coming available for lease. The 2019 construction pipeline is more robust with 5 million square feet of new inventory, however, few of these new spaces have availabilities (most spaces are already taken by the city’s large tech companies).

Because of the limited inventory, the Seattle office space market is particularly tight for growing businesses looking to lease office space larger than 50,000 square feet. This has pushed many companies to seek options in the nearby suburbs.

 

Office Space | Seattle Lease Data and Trends

Continued leasing activity with limited new supply has pushed Seattle office space rents to record highs. The vacancy rate has fallen below 10%, creating an opportunity for suburban landlords to attract the next generation of name-brand firms.

 

Office Space for Lease Class A Class B Vacancy Rate
Downtown $51/sf $37/sf 10%
South Lake Union $58/sf $37/sf 18%
Pioneer Square $42/sf $35/sf 7%
Belltown $39/sf $33/sf 10%
Ballard/Fremont/U-District $45/sf $36/sf 4%
Eastside $45/sf $37/sf 8%
Seattle/Puget Sound $48/sf $31/sf 12%

 

Over the past 5+ years, the most significant trend in the Seattle office space market is the widening gap between the costs of Class A and Class B spaces. Since 2014, asking rents for Class A office space has seen 7% annualized rent growth, 16% higher than the growth rate for Class B office space. Seattle market experts expect this gap to widen further. Demand for high-end office space continues to outpace construction, giving landlords an upper hand in lease negotiations.

Because Seattle’s job market is so strong, employers are using their office space as a lever to attract and retain top talent. As commercial real estate and employer branding become further intertwined, more businesses will be comfortable paying for premium space.

 

Seattle Office Space for Rent | Popular Neighborhoods

Downtown Seattle 

Overlooking Elliott Bay, Downtown is Seattle’s largest submarket, and home to most of the city’s office towers. It is also the most accessible area by public transit, whether that be bus, ferry, or light rail. Notable tenants in Downtown Seattle include Deloitte, Uber, Twitter, Zillow, Nordstrom, Oracle, Redfin, Axon, and Moz.

South Lake Union

Since the early 2000s, South Lake Union has undergone the most dramatic change of any neighborhood in Seattle. This is largely driven by Amazon’s expansive presence in the area, highlighted by The Spheres. Amazon’s growth has attracted other large tech companies such as Facebook,. Google is currently working on a more than 600,000 square foot headquarters to compete with Amazon for talent and foothold in the neighborhood.

Pioneer Square

For businesses seeking a more laid-back environment than South Lake Union or Downtown, Pioneer Square presents an excellent option with plenty of public transit resources. The late-1800s Romanesque Revival buildings give the neighborhood a distinct identity, and its proximity to the International District gives employees a range of food options.

Belltown/Lower Queen Anne

The submarket is anchored by the Space Needle and the Seattle Center, but has fast become a high-end residential neighborhood and area for businesses to secure waterfront office space. Tenants include The Expedia Group, Louis Dreyfus Corporation, and the Bill and Melinda Gates Foundation.

Fremont/Ballard/Wallingford/U-District

Best known as residential neighborhoods with vibrant restaurant and brewery scenes, the area north of Lake Union is also home to Brooks, Tableau, Adobe, and Google (moving to South Lake Union in 2021). U District is also home to the University of Washington’s main campus.

Georgetown/South Seattle

South Seattle is the principal industrial and shipping district of Seattle, and connects the city to West Seattle. The most notable tenant in the area is Boeing, but the area is also home to small manufacturers and manufacturing-minded startups.

Nearby Suburbs

Some of Seattle’s largest employers operate outside of the city limits. These include REI (Kent), Microsoft (Redmond), T-Mobile (Bellevue), Alaska Airlines (SeaTac), and Costco (Issaquah).

 

Office Space | Seattle Market Outlook

While construction was slow, the growing demand for office space in Seattle inspired robust investment activity. Compared to the prior year, 2018 sales volume increased from $3 to $3.9 billion. Additionally, there are several office towers currently under contract, a signal that investor interest for the region’s commercial real estate remains strong.

For businesses looking for office space for rent, the lack of supply in core submarkets means there will likely be an increased demand for office space in the nearby suburbs. Continued expansion and adoption of public transit throughout the Seattle Metro area will increase accessibility outside of the city center.

Seattle’s thriving tech sector plays a significant role in the city’s current and future economic and cultural environment. Significant demand from growing tech companies, both early-stage startups and billion-dollar firms, is continuing to boost economic momentum and office space demand.

 

What Our Brokers Say About Seattle Office Space for Rent

Seattle was the country’s fastest growing city in 2017, and continues to see a mass migration of high-earning tech employees. This has caused prices to climb in both the residential and commercial real estate markets, and U.S. News & World Report recently ranked Seattle 10th in their Best Places to Live list.

Although housing prices are rising, Seattle is still a discount compared to San Francisco, New York City, Boston, Washington DC, and other higher-priced cities – a huge driver of residential and subsequent business movement.

More than 60 percent of the current Seattle office space demand is on behalf of technology companies. The tech industry’s need for additional space has placed a premium on centrally-located, modern offices with high-end amenities and access to Seattle’s growing public transit infrastructure.

But the vibrant tech scene is not the only reason to be excited about Seattle. Seattle is also focused on improving transportation, with the city and county investing heavily in building infrastructure and different modes of mass transit that will relieve the growing traffic problem, support environmental sustainability, and support the modernization of the region.

With Seattle showing all the indicators of a growing hub, the coming years will show if it can sustain its momentum to develop its place as one of America’s great cities on the global stage.