Cushman & Wakefield | Commerce Reports High Activity in Puget Sound Commercial Real Estate Market in Q1 2014
SEATTLE—May 14, 2014—The Seattle office of Cushman & Wakefield | Commerce released its Marketbeat Snapshot reports today detailing the Seattle and Bellevue commercial real estate market status.
“The Puget Sound region continued to be one of the best recovery metropolitan areas across the nation, fueled largely by job growth in STEM (Science, Technology, Engineering and Math) jobs,” said Dave Magee, Cushman & Wakefield | Commerce Senior Director and Managing Broker of the Washington Region. “The strong job growth coupled with higher wages is allowing for a greater economic benefit across the region and the commercial real estate industry is continuing on its upward trajectory.”
Seattle CBD Office Snapshot
The Seattle Central Business District performed well and saw a 2.9 percentage point (pp) decrease in the overall vacancy rate, dropping to 12.7 percent and direct asking rates are up slightly. The Lower Queen Anne/Lake Union submarket is poised for growth with an increase of 36 percent in for-lease property inventory over the next two years. Despite this increase, the amount of pre-leasing and the growth of Amazon is expected to support this level of new construction and the submarket will continue to see strong numbers.
Seattle Suburban (Southend) Office Snapshot
Leasing activity started off the year strong in the Southend office market with 60,749 square feet (sf) of activity. Although this is 43.6% below the same period in 2013, it is still a strong start compared with the full-year of 2013 where only 214,000 sf of leasing activity occurred. The overall vacancy rate dropped by 0.7 pp to end Q1 14 at 19.5 percent. Progress will likely continue to be slow but expect vacancy rates to continue ticking downward with a slight increase in average asking rates as no new construction is expected to come online in the next couple of years.
Seattle Industrial Snapshot
First quarter construction came in strong with five new projects completed totaling 1.1 million sf with an additional 800,000 sf set to begin construction in the next few months. Despite new construction, the overall vacancy rate remained flat as 643,640 sf of space was absorbed. Absorption tracking fairly closely to new construction is a positive sign for the market.
Bellevue Office Snapshot
The Bellevue and Eastside suburban markets performed well with the Northend trailing these markets. The overall vacancy rate for Bellevue CBD and Eastside finished out the quarter at 9.8 percent and 12.4 percent respectively, while the Northend ended at 20.0 percent. The Bellevue CBD continued to have one of the tightest class A markets in the nation with a direct vacancy rate of just 8.0%. This tight vacancy pushed rates by 3.9% and will continue to push them higher until additional product is available.
Bellevue Industrial Snapshot
The vacancy rate continued to decline across the Eastside/Northend markets improving to 11.3 percent, a 0.4 pp drop on a year-over-year basis. Manufacturing space had the lowest vacancy rate at 6.7 percent while High Tech space had the highest at 16.3 percent. With no new product currently under construction, supply is expected to decrease putting some upward pressure on lease rates. As these rates increase some new speculative construction is likely to occur.
The full reports for each of these markets, as well as historical reports are available for download at: http://www.comre.com/research
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About Cushman & Wakefield | Commerce
Cushman & Wakefield | Commerce, an independently owned and operated member of the Cushman & Wakefield Alliance, has been the leading provider of real estate brokerage services for more than 30 years. Headquartered in Salt Lake City, the firm has offices throughout Utah, Nevada, Idaho and Washington. It offers consulting, brokerage, tenant and landlord representation, property and facilities management, and valuation services to corporations, institutions and investors throughout the Intermountain West and Pacific Northwest. For more information, and for property listings, broker information, market category reports and more visit www.comre.com.
About Cushman & Wakefield
Cushman & Wakefield is the world’s largest privately‐held commercial real estate services firm. The company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the world’s major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and assignments. Founded in 1917, it has 253 offices in 60 countries, employing more than 15,000 professionals. It offers a complete range of services for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. The firm has more than $3.7 billion in assets under management globally. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/knowledge.