Downtown office-vacancy rates in Seattle and Bellevue fell by similar amounts — about 1 percentage point — in the past three...
Downtown office-vacancy rates in Seattle and Bellevue fell by similar amounts — about 1 percentage point — in the past three months, but experts say the outlook for markets is quite different.
Downtown Bellevue’s vacancy rate — 8.5 percent, according to a report released yesterday by international commercial brokerage Cushman & Wakefield — is expected to fall further as companies expand to take advantage of low rents and space while they last.
Seattle’s vacancy rate — 14.2 percent, the report says — is expected to rise again next year when Washington Mutual moves out of other downtown space and into its new 42-story tower next to the Seattle Art Museum.
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Bellevue’s downtown recovery is drying up supply and forcing some companies to look for space in the rest of the city and along Interstate 90 and Highway 520.
“Downtown Bellevue is relatively full, close in is fairly full up, and even the I-90 corridor is getting full now,” said Thomas Bohman, director of Cushman & Wakefield’s Bellevue office.
Champions Centre Church signed a lease for around 60,000 square feet at Verizon’s old space in Benaroya I-90 Center North.
Expedia leased space in the Sunset North office complex in Bellevue’s Eastgate neighborhood and is moving employees from the nearby Sunset Corporate Campus.
Other companies are eyeing Expedia’s old space.
Vacancy rates along the two highways remain mixed.
Vacancies along Interstate 90 dropped slightly from 9.8 percent to 9.5 percent, and rose less than 1 percentage point to 14.6 percent along Highway 520.
Rents barely changed, up less than a dollar in both areas.
The average annual rent in Seattle and on the Eastside for high-quality space, known as Class A, climbed a little less than 50 cents a square foot, as landlords took advantage of decreasing supply.
Observers expect rents to slowly recover over the next few years.
Demand for office space north and south of Seattle picked up during the quarter, with vacancy rates dropping less than 1 percentage point in the north to 13.4 percent and almost 2 percentage points in the south.
Rents remained around $23 a square foot north of Seattle and about $20 in South King County.
The vacancy rate for industrial space around Seattle dropped as high-tech companies expanded, businesses inked deals for new distribution centers and a Boeing supplier agreed to open new plants.
Rising rents and falling vacancies are leading to big sales and renewed construction.
Civica Office Commons, a two-tower office complex in Bellevue, sold for $462 a square foot Monday — a record for Class A office space.
“There’s a bit of a disconnect between what people are paying and rental rates,” said John Miller, senior managing director at Cushman & Wakefield.
“There’s a lot of capital out there, and you’re starting to see a feeding frenzy.”
Kristina Shevory: 206-464-2039 or firstname.lastname@example.org