Much has been said about the disruptive nature of tech companies—new, innovative upstarts destroying old industries and creating new economies built on top of the remains of companies long gone. Amazon’s takeover of space in the former Macy’s building at 300 Pine in Seattle, where the technology giant is taking all of the roughly 475,000 square feet of office space the building’s owner had to offer, could not make for a better sampling of this phenomenon.
Amazon in one big swoosh just took out the largest contiguous space in the city in the same month in which it committed to taking all of the commercial space, or 722,000 square feet, in a tower that is just starting construction. That’s nearly 1.2 million square feet of office space. In one quarter.
The news of the Macy’s takeover was announced in a report by Broderick Group, which released its third quarter market analysis this week, and by Geekwire, which confirmed the lease of the entire building that is owned by Starwood Capital Group—stories 3 through 8.
Amazon’s expansion, while major news, is hardly surprising. Tech driving leasing activity across the region is also raising few eyebrows. The distant second on the list of top Seattle leases goes to Redwood City, Calif.-based Oracle, which subleased 160,000 square feet at the Russell Investment Center. That’s roughly 13 percent of the amount of space Amazon took. The distant third, at least from Amazon’s vantage point, is WeWork. The work-live disruptor took just under 150,000 square feet in three locations in Seattle, 73,000 square feet at Fourth & Madison, 54,336 at Hill7 and 18,000 square feet at 1411 Fourth.
As the Broderick report states, these are the good times to be a landlord in Seattle. Class A vacancy is hovering around 6.7 percent, which is the second lowest it has been in the last decade (2016 was lower, but new inventory was added during 2017). Even with the new construction of roughly 3.7 million square feet in Seattle alone, the direct average gross rental rate is expected to reach a new high of $43.46 with net absorption hitting 2.3 million square feet.
There are 12 buildings with 50,000 square feet or more of contiguous space available in the city, and the top three are in the CBD (Madison Centre with 246,000 square feet, 1201 Third with 182,341 and 2nd & Seneca with 158,453). The next six hover around 100,000 square feet each, with the remaining three below that figure.