Cushman & Wakefield | Commerce Reports a Strong but Tight Commercial Real Estate Market in Seattle-Bellevue in Q4, 2014
SEATTLE—Feb. 9, 2015—The commercial real estate in the Seattle-Tacoma-Bellevue metro area saw a tightening of the market according to new data by the Seattle office of Cushman & Wakefield | Commerce. The firm released its most recent Marketbeat Snapshot reports detailing the state of commercial real estate in the Seattle and Bellevue markets.
The Seattle-Tacoma-Bellevue continued to maintain healthy employment numbers with an unemployment rate of just 5.0 percent. Jobs were added at a rate of 3.4 percent, representing some of the highest job growth numbers in the country. Construction jobs were added at the highest rate, with job growth of 9.8 percent.
“Commercial real estate in the Puget Sound area saw rental rates continue their upward trend as tenant demand increased and vacancy dropped,” said Dave Magee, Market Leader of the Washington region for Cushman & Wakefield | Commerce. “This area, particularly in the Seattle CBD, has been led by technology companies vying for space. The tightening of availability will continue to benefit from the rising rates and short supply of office space.”
Seattle CBD Office Snapshot
The Seattle CBD market continued to tighten, and the direct vacancy rates for Lower Queen Anne/Lake Union, Pioneer Square, and Denny Regrade all remained under 7.0 percent. Almost all of the Seattle CBD submarkets saw declining vacancy rates in Q4 14, but the rate of decline has moderated due to the limited amount of large blocks of space available. Due to tight supply, especially in large blocks of space, rental rates are expected to continue rising. Despite a healthy level of new construction throughout the CBD, only 1.1 million square feet of new product is being built on a speculative basis.
Seattle Suburban (Southend) Office Snapshot
The Southend market will continue to benefit from the excess of tenants looking for space in the Seattle CBD and the Eastside markets. The overall vacancy rate in the Southend declined by 1.8 percentage points on a year-over-year basis to end at 18.7 percent. Tukwila and Renton stand out as the strongest submarkets, as both areas have direct vacancy rates of 12.0 percent or less. Rental rates have remained fairly stagnant over the year, averaging at $21.14 per square foot for direct space.
Seattle Industrial Snapshot
Even with 2.3 million square feet of new construction, the overall vacancy rate managed to decline by 0.3 percentage points showing the strength of the industrial market. Of that new product, 1.6 million was built as speculative space. Leasing activity was up significantly from 2013 by 53.2 percent which pushed absorption to 3.3 million square feet. The vast majority of this absorption occurred in warehouse/distribution space with the Kent submarket absorbing more space than all other submarkets combined.
Bellevue Office Snapshot
While a great deal of construction is planned for the Eastside, it is clear the potential inventory is warranted, and that the supply is necessary just to keep pace with the demand of tenants looking for quality space in the market. Boeing’s leases in the Eastside tightened the market, leaving very few large spaces in the suburban Eastside markets. The result of these leases and other market activity is severely limited inventory (5.3 percent direct vacancy) and sky-high rents ($39.47 per square foot for class A office space) in the Bellevue CBD.
Bellevue Industrial Snapshot
The Everett submarket did particularly well due to the commitment and success of Boeing. Otherwise, activity through 2014 remained consistent with the past several years, pushing vacancy rates lower by 1.7 percentage points on a year-over-year basis. The Woodinville/522 Corridor and Bothell submarkets are leading the way with absorption of 429,782 square feet and 212,789 square feet respectively. The majority of the proposed developments are warehouse/distribution buildings in the Everett Submarket. Given an overall vacancy rate of 17.3 percent for this product type and two buildings already under construction in this segment, it seems unlikely that many other buildings will be started in the near future.
The full reports for each of these markets, as well as historical reports are available for download at: http://www.comre.com/research and interested individuals can subscribe on the page to receive the reports automatically as soon as they are made available.
About Cushman & Wakefield | Commerce
Cushman & Wakefield | Commerce, headquartered in Salt Lake City, Utah is an independently owned and operated member of the Cushman & Wakefield Alliance with offices throughout Utah, Nevada, Washington and Idaho. The firm partners with its sister company Cushman & Wakefield | NorthMarq to provide innovative commercial real estate solutions to occupier and investor clients, offering transaction services, capital markets services, occupier and investor services, and real estate advisory. Together the firms manage more than 52 million sq. ft. of retail, industrial, and office assets, have annual revenues of more than $100 million, and employ more than 750 professionals. Learn more at www.comre.com; www.cushwakenm.com. C&W | Commerce and C&W | NorthMarq are part of the Cushman & Wakefield platform, which is the world’s largest privately-held commercial real estate services firm with 248 offices in 58 countries globally.www.cushmanwakefield.com.
About Cushman & Wakefield
Cushman & Wakefield advises and represents clients on all aspects of property occupancy and investment. Founded in 1917, it has 248 offices in 58 countries, employing more than 16,000 professionals. It offers a complete range of services to its occupier and investor clients for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, appraisal, consulting, corporate services, and property, facilities, project and risk management. To learn more, click HERE.