By Brian Hayden, Flinn Ferguson
To see the article as a pdf with property photos, please click here.
General Overview
Seattle’s office market saw a slight cool down in the end of 2017 with vacancy increasing to 7.6% in Q4 2017 up from 7.0% in Q3. Total net absorption for 2017 for the Downtown Seattle Office Market stands at 1,380,065 square feet. Despite this cooling, Seattle remains one of the hottest office markets in the country. Development in the downtown core continues to be at an all-time high with Amazon accounting for roughly 40% of the square feet added to the metro region from 2015-2017. There continues to be strong demand for Seattle commercial real estate investment product from investors globally. While the vacancy curve seems to be flattening, rental rates across all submarkets and building classes continue to increase while concessions decrease. Market fundamentals are expected to be in favor of landlords for the foreseeable future.
Economy
The Seattle/Bellevue/Everett area saw a slight uptick in unemployment with preliminary seasonally adjusted unemployment increasing from 3.7% in August of 2017 to 3.8 % in November according to The Washington State Employment Security Department. The Bureau of Labor Statistics is reporting a slightly higher rate of 4.1% for the Seattle/Bellevue/Tacoma area.
Proposed Development
This quarter many previously proposed developments have started construction, with only a handful of new developments being announced or completed:
AMAZON FOURTH HQ BLOCK – 8TH AVENUE & BELL/SEVENTH AVENUE & BLANCHARD
DEVELOPER: Graphite Design Group
COMMENTS: 835,000 total square foot project with two towers (24 story & 7 story). 100% leased to Amazon
FOURTH AND COLUMBIA – 701 4TH AVENUE
DEVELOPER: Crescent Heights
COMMENTS: 151,650 square feet of office, 1,200 residences, 150 hotel rooms, 15,500 square feet retail, 101 stories
BLOCK 18 – 2205 7TH AVENUE
DEVELOPER: Graphite Design Group
COMMENTS: 388,000 square feet of office. 100% leased to Amazon
FORMER FEDERAL RESERVE BUILDING – 1015 2ND AVENUE
DEVELOPER: Martin Selig
COMMENTS: 157,000 square feet of office, 223,000 square feet total, with no apartment units
701 DEXTER AVENUE NORTH
DEVELOPER: Unico Properties
COMMENTS: 60,000 square foot building with plans to add an additional 40,000 square feet for a total of 100,000+ square feet of office space
700 DEXTER AVENUE NORTH
DEVELOPER: BioMed Realty
COMMENTS: 350,000 square foot 2-tower office building with 14 stories, ground retail and 520 parking stalls
SLU STREETCAR BARN – 318 FAIRVIEW AVENUE NORTH
DEVELOPER: Skanska
COMMENTS: 11 story office tower built over a new streetcar barn. Size unknown.
Office Construction
While many projects such as Madison Centre and F5 Tower have delivered this year, Seattle continues to be at an all-time high construction boom with the
following developments all currently under construction:
AMAZON II & AMAZON PHASE VI, VII & VIII
DEVELOPER: Vulcan
COMMENTS: 2,094,000 square foot project, 100% leased to Amazon
TROY BLOCK NORTH & SOUTH- 307 FAIRVIEW
AVENUE NORTH
DEVELOPER: Touchstone Corporation
COMMENTS: 817,000 square foot project, 100% leased to Amazon
RAINIER SQUARE REDEVELOPMENT
DEVELOPER: Wright Runstad & Co.
COMMENTS: 762,800 square feet of office, 216 residences. 100% leased to Amazon
BLOCK 20 – 1234 WESTLAKE AVENUE
DEVELOPER: Seneca Real Estate Group
COMMENTS: 1,100,000 square foot project, 100% preleased to Amazon
2 & U – 1201 2ND AVENUE
DEVELOPER: Skanska Commerical Development
COMMENTS: 650,000 square feet of office
YALE & THOMAS BUILDING – FORMER PEMCO HQ
325 EASTLAKE AVENUE EAST
DEVELOPER: Unico
COMMENTS: 370,000 square foot project with 161,095 square feet existing, likely leased to Amazon
333 DEXTER- 333 DEXTER AVENUE NORTH
DEVELOPER: Kilroy Realty Corporation
COMMENTS: 650,000 square foot project
15TH & MARKET – 1448 NW MARKET STREET
DEVELOPER: Martin Selig
COMMENTS: 204,000 square foot office project
ARBOR BLOCKS EAST & WEST-300-333 8TH AVENUE NORTH
DEVELOPER: Vulcan
COMMENTS: 196,208 & 192,703 square foot projects
FIRESTONE TIRE CENTER – 400 WESTLAKE AVENUE NORTH
DEVELOPER: Martin Selig Real Estate
COMMENTS: 190,000 square feet of office and biotech space
AINSWORTH & DUNN BUILDING – 2815 ELLIOTT AVENUE
DEVELOPER: Meriwether Partners
COMMENTS: 32,377 square foot office building with 6 stories
9TH & THOMAS – 234 9TH AVENUE NORTH
DEVELOPER: 9th & Thomas Partners
COMMENTS: 168,094 square foot Class A office building
LAKE FRONT BLOCKS
DEVELOPER: Vulcan
COMMENTS: Several blocks set to be developed. Google has already leased Blocks 25 & 31 totalling 600,000+ square feet
THIRD & LENORA BUILDING – 2031 3RD AVENUE
DEVELOPER: Martin Selig
COMMENTS: 552,753 square foot 36 story tower with 365 residential units and 176,500 square feet of office space.
HAWK TOWER
DEVELOPER: American Life
COMMENTS: 208,840 square foot project, 64% preleased to Avalara
Top Q4 2017 Office Sales
In general, building sale activity in Q4 2017 saw a decrease in activity from the third quarter:
Notable Q2 2017 Leases
Office leasing in the fourth quarter remained relatively flat compared to Q3. Once again the technology sector fueled much of the activity:
Tenant: Amazon
Building: Macy’s
Address: 300 Pine Street
Square Feet: ~470,000
Tenant: Amazon
Building: Yale & Thomas
Address: 325 Eastlake Avenue E
Square Feet: ~159,334
Tenant: Oracle
Building: Russell Investments Center
Address: 1301 2nd Avenue
Square Feet: ~167,000
Tenant: Oracle
Building: Century Square
Address: 1501 4th Avenue
Square Feet: ~10,000
Tenant: Spaces (Regus)
Building: 450 Alaskan
Address: 450 Alaskan Way
Square Feet: ~60,000
Tenant: Coupang
Building: 8th + Olive
Address: 720 Olive Way
Square Feet: ~47,000
Tenant: Cascadian Therapeutics
Building: 3101 Western
Address: 3101 Western Avenue
Square Feet: ~44,000
Tenant: Privateer Holdings
Building: 2701 Eastlake
Address: 2701 Eastlake Avenue E
Square Feet: ~34,800
Tenant: Thinkspace
Building: Lake Union Building
Address: 1700 Westlake Avenue N
Square Feet: ~20,000
Tenant: Lyft
Building: 83 King
Address: 83 S King Street
Square Feet: ~19,000
Market Data
To summarize, below is a table providing information for the major submarkets of Seattle:
The total vacancy rate for Seattle is approximately 7.6%.
To see the entire article as a pdf with photos, please click here.
Brian Hayden, Principal
brian@flinnferguson.com, 206.626.0891 direct
Since 2003 Brian has exclusively represented commercial tenants with space acquisition and lease negotiations. He provides his customers with comprehensive, diligent and professional representation with in-depth market knowledge and customized negotiation strategies. Brian has extensive experience with facility relocations, lease renewals, space expansions, subleases and lease portfolio representation services.
Brian’s intense work ethic and dedication to his clients earned him Flinn Ferguson’s Top Producer Award in 2011 and 2012 and he became a principal at Flinn Ferguson in 2013.