Despite several million square feet of new office space that will become available in the next two years and the difficulty local tech companies are having finding workers, the Seattle-Bellevue area remains one of the most attractive markets in the country to invest in office space for the tech industry.
That was one of real estate service firm JLL’s findings in its annual Technology Office Outlook report. It ranked the Seattle-Bellevue area as the eighth most attractive out of 37 regions it studied nationwide as potential locations for technology firms. That scoring suggested that Seattle’s tech office real estate may currently be a better investment than the Silicon Valley, Boston or the Peninsula region of the San Francisco Bay Area.
“The Seattle-Bellevue area is a prime location for tech companies to grow, as it offers a wealth of young talent, quality real estate and a high quality of life”
“The Seattle-Bellevue area is a prime location for tech companies to grow, as it offers a wealth of young talent, quality real estate and a high quality of life,” the JLL report stated. “Despite strong rent growth, for both commercial and residential property, in the last five years, it remains an affordable place to open an office and live.”
Office rents in Seattle averaged $33.70 a square foot in the third quarter, according to the report, after having risen 7.9 percent over the previous 12 months. Even after the previous year’s increase, the average Seattle rent was still only slightly more than half the rent in San Francisco, which averaged $66.80 a square foot.
At the same time, Seattle’s tech workers can rent an apartment for an average rent of $1,399 a month, according to JLL. That’s less than half of the average apartment rent of $3,067 in San Francisco, which was nonetheless ranked by the JLL as the most attractive tech office market in the country.
JLL also noted that 22.7 percent of the Seattle-Bellevue area was aged 20 to 34. That makes the millennial generation a larger percentage of the workforce than can be found in Boston or Silicon Valley.
Developers are already responding to Seattle’s growing popularity as a tech office location, with “several million square feet of office space set to deliver in the next 24 months,” JLL said. “Tenants looking to grow in the market will have access to much needed premier inventory.”
But at the same time, tech companies in the Seattle-Bellevue market face regional challenges.
There are few large blocks of space in some of the more sought-after submarkets of the Seattle-Bellevue region. And there are an estimated 25,000 job openings in the region’s tech industry that have gone unfilled for at least six months, according to JLL. The firm said that Washington state is struggling to train enough tech workers. Meanwhile, Washington recruits more high-tech workers than any other state.