Tenants are filling up office spaces as fast as they’re being built in Seattle and across the country. Nationally, a plateau in vacancy rates is expected as the supply of office space starts to catch up to demand, predicts Jones Lang LaSalle (JLL), a real estate centric professional services and investment management firm in a recent report.
Seattle and Bellevue however, are showing healthy growth despite the national trend. Colliers International’s third quarter report for the Puget Sound Region says more than 1.2 million square feet of office space has been delivered so far this year. That number is anticipated to double by the end of 2016, and the majority of that office space has already been signed to various tenants.
“We’re seeing strong absorption of new space coming to the market that’s being delivered,” said Lori Hill, JLL’s managing director. “Everything here is pointing to continued growth.”
“Everything here is pointing to continued growth.”
In 2017, 4.7 million square feet of space across the region is expected, over half of which has already been leased. Tech companies are occupying over 65 percent of this space. Laura Ford, Colliers International’s senior vice president noted tenants in the 100 thousand square foot range are also expanding within existing buildings, further highlighting this regions growth.
“Within the next few years we probably have five [buildings the size of the] Colombia Tower being delivered, so with that in mind a lot of square footage will be delivered onto the market,” said Tess Corey, a Seattle-based Colliers International research associate. “But we also see that there will be a lot of tenants wanting to take that over, whether that be the giants, Amazon, Expedia, Google, or smaller tenants that want to follow behind their big older brothers.”
JLL also noted Seattle as one of the secondary markets where offshore investors are setting their sights. Foreign investors from China, Germany, Canada and Korea are notable presences entering the Puget Sound market.
Moving forward, all three experts indicated that future trends are difficult to predict, but this area should remain a healthy market for this type of real estate, especially among tech companies.
“Seattle markets are be driven by tech,” Ford said. “At half the price of San Francisco, we still see many bay area tech companies opening Seattle offices. Then they find that Seattle is a great place to recruit and retain good talent, and they continue to expand here.”