Empty office space gets a bit scarcer in Seattle
Seattle's office-vacancy rate fell over the past three months, but commercial real-estate brokers differ on whether to expect further declines.
Seattle Times business reporter
Seattle's office-vacancy rate fell over the past three months, three brokerages agree.
But, as is often the case, they differ on how significant the drop was. Commercial real-estate brokers at the three firms also differ on whether to expect further declines.
In its quarterly report, Colliers International said the greater-downtown vacancy rate fell from 17.2 percent in June to 16.5 percent in September. And in the coming months "there's going to be a significant drop in that number," predicted Greg Inglin, a senior vice president with the firm.
Some spaces that show up in the vacancy statistics in fact have been leased, he said — tenants just haven't moved in yet.
Once they do, he added, the vacancy rate could be in the 13 to 14 percent range by spring.
Some tenants, especially tech companies, are growing and demanding more space, Inglin said. He pointed to the 100,000-square-foot Lake View at Fremont building — half-empty in December, now fully leased.
Another brokerage, Kidder Mathews, said the Seattle vacancy rate dropped from 13.3 to 12.9 percent last quarter. Unlike other brokerages, its vacancy calculations include owner-occupied buildings.
Like Inglin, Larry Blackett, a Kidder Mathews senior vice president, expects that — barring a global economic meltdown — vacancies will continue to decline.
"There's virtually no new speculative construction," he said, "and in the meantime, you've got companies that are continuing to expand."
He pointed to his own company as an example: Kidder Mathews recently renewed its lease at Two Union Square.
"We took more space," Blackett said.
But another brokerage, Cushman & Wakefield/Commerce, said the third-quarter vacancy decline in greater downtown was negligible, slipping only from 20.2 to 20.1 percent. The vacancy rate has hovered around 20 percent for a year, according to the firm's calculations, and senior director Matt Christian doesn't expect it will change much anytime soon.
"I know there's a perception the market is changing," he said, "but the reality is, there's a lot of space out there, and there will be for some time."
Nineteen office buildings in the downtown area have at least 100,000 square feet that's currently vacant, Christian said. That includes more than 500,000 square feet at Columbia Center and more than 275,000 at both 1111 Third Avenue and the Wells Fargo Center.
All three brokerages said average asking rents for Class A space rose slightly in Seattle last quarter. In greater downtown, they topped $32 per square foot per year for the first time since spring 2009, according to Cushman's calculations.
"Landlords are feeling like there's light at the end of the tunnel," Colliers' Inglin agreed.
On the Eastside, Colliers and Cushman both reported the vacancy rate declined in the third quarter, while Kidder Mathews said it increased.
But that firm said the rate should drop next quarter when the numbers reflect Expedia's new 55,000-square-foot lease in downtown Bellevue's Skyline Tower.
That's in addition to the 350,000 square feet the online travel company occupies in its namesake headquarters tower nearby — and there's talk it's in the market for still more space, said Tom Bohman, a Cushman senior director based in Bellevue.
"Expedia still seems to be in a growth mode," he said.
"That's one of the reasons there's positive talk in the marketplace."
Eric Pryne: 206-464-2231 or firstname.lastname@example.org