Riding the Tech Boom in Seattle
- Mar 06, 2018
Seattle has it all—healthy fundamentals, skilled workforce and booming economy. The metro is a hotbed for startup businesses, while local tech powerhouses Amazon and Google preserve their hometown glory by boosting construction and leasing activity. The growth is fueled by the University of Washington’s expanding computer science program and the increase in minimum wage, a clear signal that the metro’s traditional economic drivers have reached a new level of maturity.
The market’s office inventory encompasses 95.7 million square feet, with 18.5 million in various development stages. Boosted by positive absorption and high demand, the end of 2017 brought 4 million square feet to the market, almost double the previous year. With 6 million square feet under construction, there’s a solid wave of new commercial developments on the horizon.
Office vacancies averaged 9.2 percent in December, with 7.9 million square feet of office space available for lease. Tenants continue to concentrate their businesses as close to the urban core as possible, opting to pre-lease entire buildings. Pioneer Square and First Hill were in high demand, with vacancy rates of 1.9 percent and 3.7 percent in December. Vacancy was greatest in the highly peripheral Federal Way (24.6 percent), following Weyerhaeuser’s relocation to the Central Business District.
Strong investor interest led to more than $2.6 billion in office sales in the 12 months ending in December. More than half of the volume was concentrated near the urban core, especially in Lake Union and Denny Triangle.