Seattle Office Space News – September 2016


Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of September 2016.


This month the City’s design review board unanimously signed off on Google’s massive South Lake Union Expansion. The project will include several buildings up to 14 stories tall totaling 621,100 square feet. Construction is expected to begin in early 2017 and completion is slated for 2019.  New images that were part of the design review board show how Google’s new campus will continue to transform the tech-centered South Lake Union neighborhood.

Also this month, timber giant Weyerhaeuser began moving in to their new headquarters in Pioneer Square located at 200 Occidental. The company’s previous home was a 430 acre campus in Federal Way.  This move exemplifies the strategy of many companies to urbanize in an attempt to attract and retain talent.


There was just one building sale reported in September with the Watermark Tower at 1109 1st Ave selling to Martin Smith Inc. The 71,150 square foot office and residential building sold for $20.25 million or $284.61 per square foot. The building is situated right in front of the soon-to-be demolished viaduct and has seen the value appreciate from its purchase in 2012 for $11.2 million.


Once again the tech industry dominated office space news in September. Dropbox leased another floor in the Columbia Tower as it continues to hire aggressively in the region. The San Francisco based storage provider has 65 employees in Seattle currently.

In an opposite trend, Seattle based Porch has announced that they will be reducing their current footprint by 50%. Porch laid off about 92 workers in October 2015 and has now consolidated into 30,000 square feet at their building in SoDo at 2200 1st Ave S.

Finally, international engineering and design firm Stantec opened a Seattle location in September. The company leased 16,993 square feet on the sixth floor of the 400 Fairview building in South Lake Union. Stantec’s employees wanted to be closer the central core, which is what prompted the move from Lynwood to Seattle.


All signs continue to show the tech industry leading growth in the Pacific Northwest. Seattle was named the second hottest tech office market in the U.S. as tech companies leased 2.5 million square feet in the Seattle-Bellevue area last year, trailing on Silicon Valley at 3.9 million square feet. Industry experts expect the trend of large Silicon Valley companies opening outposts to continue as the average rental rate in Seattle is 55% less than the Valley.

A supporting report by Zillow shows that more and more people are continuing to search for homes in Seattle that do not currently live here.  Although this report does not show the entire picture it does offer some evidence that the high home prices are not driving residents out… at least not yet.

Home values in August rose at an 11.3 percent annual rate, the second highest in the nation. Surprisingly, this rate is significantly faster than the Bay Area where rates saw a cooling to 6 percent.

In a direct relation to Seattle’s growth, a $53.8 billion transportation package that would more than double the region’s light rail system is on the November ballot. Local technology leaders are advocating for the measure saying that Seattle needs to step up or fall behind as Seattle’s traffic problems continue to mount.

The office and residential market are not the only real estate sectors seeing extreme growth. A new report shows that nearly 2,940 hotel rooms are scheduled to open in Downtown Seattle in 2017 and 2018. The newest of these projects is Skanska’s 229 room Charter hotel at Second and Stewart Street near the market.

In relation to Seattle’s growing pains, a committee convened by Mayor Ed Murray has proposed several steps that could help small businesses find affordable space in the City. The findings did not support commercial rent control which many business leaders had levied for.


Earlier this month it looked like there would be another tunnel delay, as Bertha’s operators lost their liability insurance for a few hours. The tunnel was originally planned to open on August 31st and the operator had not extended its policy to account for the delays. Luckily, the stoppage was momentary and everything seems to be back on track.

In addition, the tunnel boring machine took a quick maintenance stop earlier this month after a two week break to replace heavy cutting tools.  The projected opening for the project is early 2019.


Brooks Sports headquarters building in the Fremont neighborhood was just named one of the greenest buildings in the world by being a part of the Living Building Pilot Program. The only other building in Seattle is the Bullitt Center. The buildings cut water and energy usage by 75% and reuse 50% of the rainwater that they capture on site.

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Seattle Office Space News – August 2016


Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of August 2016.


Although the weather may be turning, there seems to be no slowdown in Seattle’s office space market. A new report from August predicts that Amazon will occupy twelve million square feet of space by the year 2022, which is 20% more than projected two years ago.

Also in August, the exterior of the new Madison Centre began to take shape. The entry will feature a 70 foot wide and 60 foot tall glass rotunda. The 746,000 square foot building is scheduled to open in the second quarter of 2017.

Starwood capital released new renderings of the Macy’s renovation in downtown Seattle. The building located at 300 Pine, is being updated to include a rooftop deck and will have more than 300,000 square feet of office space available space.

Martin Selig is reportedly downsizing the scope of his development project on the former Federal Reserve building site. Fillings show that Selig now plans to add eight stories to the existing structure, totaling 125,000 square feet of office space. Previous plans had shown as many as 44 floors added to the historic building at 1015 2nd Ave, which must be kept intact.

Unico unveiled recent updates to the “Speakeasy” type bar on the 35th floor of Smith Tower, which offers visitors a glimpse into the building’s historic past. In addition, a new Tenant amenity floor has been added on 22.


There was no news of significant office building sales in August.


Darigold will be moving its headquarters from South Seattle to the Georgetown neighborhood where it has leased 37,000 square feet in the newly renovated Georgetown Squared. Darigold will join Anderson Construction, ClearResult, and OpenSquare which have all recently signed leases in the building.


For the first time in several months, there seems to be a few signs of a slowdown in the local and global economy. In the second quarter, 18% of venture capital investments valued a company for less than the previous financing round. This so called “down round” represents nearly triple the amount as previous quarters, in a sign that the VC market is cooling.

In related news, Redfin released a report about residential real estate indicating that price bidding wars may be slowing down as housing inventory increased 7.6% in July. However, Seattle is still tied for Denver as having the lowest inventory in the nation and is still very much a seller’s market.

The average rental price in Seattle jumped 8.4 % in the last year, making the region the second highest for rent growth in the nation.

There were a few articles in August pointing to the fact that Seattle’s economy is incredibly healthy and one of the fastest growing in the nation. A new report from Indeed shows Seattle is the highest paying city in the nation for software engineers, data analysts, and quality analysts when factoring in the cost of living.


Thankfully, there was no news of another delay this month in the construction of the tunnel that will replace the Alaskan Way viaduct along Seattle’s waterfront. The WSDOT did release a video showing how each 36,000 pound piece of the tunnel is constructed and pieced together.


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Seattle Office Space News – May 2016


Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of May 2016.


The long-plagued Civic Square project in Downtown Seattle is finally dead. Touchstone, whom acquired the development rights from Triad, has passed on the opportunity and it seems the giant hole on Third and Cherry will remain indefinitely.

Yesler Terrace, a rather undeveloped submarket southeast of the central business district, is in the middle of a dramatic renovation and may become the densest in the City. Currently, Capitol Hill has the highest density with 54,850 residents per mile, but new plans for the Yesler Terrace could bring 350 apartments and one million square feet of commercial space to the area, raising the density to 110,000 per square mile.

This article profiles the largest construction projects in the Northwest and the following office projects in Seattle made the list:

  • Madison Centre, a 36 story office tower in downtown Seattle.
  • The Mark, a 44 story office tower in downtown Seattle.
  • Urban Visions, 1 million square foot Stadium East Campus.
  • Stadium Place, a large mixed use development in Pioneer Square.
  • Troy Block, a 395,000 square foot Amazon Expansion.

The historical Old Spaghetti Factory on Elliott Avenue may be seeing some changes. Nitze-Stagen plans to renovate the two story building and add a third floor of office space. In addition, they are considering adding a seven story apartment building on the site.


There were no building sales reported in the month of May.


It is rumored that F5 Networks is in the market for 500,000-600,000 square feet of office space.  If F5 does move into that much space, it would be about an 80% increase from their current footprint on Elliott.


Once again, local and national media are calling attention to the rapid growth in Seattle. The Emerald City is now number 18 on the list of largest U.S. cities and the population growth was ranked as the 11th fastest. In another study, the U.S. Census ranked Seattle as the fourth fastest-growing among the 50 largest U.S. cities.  Expedia’s CFO Mark Okerstom told the Wall Street Journal that the driving force behind its move to Seattle is to retain top local talent; the full interview can be found here.

The U.S. Chamber of Commerce recently ranked Seattle as the 11th best city for innovation, with Boston and the Bay Area taking the top two spots. The demand for jobs has made Seattle the third-best city for Job Seekers by analyzing the number of job openings, cost of living, and worker satisfaction, according to a new study by Glassdoor.

Along with a booming population, the price of commercial and residential real estate continues to skyrocket.  According to Redfin, Seattle area homes are selling faster than anywhere in the nation with an average sale time of eight days, while inventory remains at an all-time low. In relation, seven percent of Seattle homes are now valued at over a million dollars, triple the amount from four years ago.

This month, a union of office space janitors rallied for higher wages as the office space market is the strongest it has been in fifteen years. The union wants a minimum wage of $15/hr and decreased workloads.


In the first positive news for the tunnel and viaduct project in a very long time, the State Route 99 viaduct was reopened ahead of schedule as Bertha continues to chug along on her route.

In addition, the WSDOT released a drone video of the inside of the Tunnel that is currently being built, which you can find here.


Technology giant Facebook opened its new Seattle headquarters, featuring impressive outdoor decks and interconnected stairways, to the public. This innovative new design has raised the bar for tech spaces. Photos can be found here.

In addition, Geekwire took a look at the new Groupon office, which will allows the company to grow its presence here.

Also in May, the City Council voted 5-4 against selling Chris Hansen one block of Occidental Avenue South to build a new NBA and NHL arena. Many see this as a devastating setback to the plans for a new stadium and bringing the NBA back to Seattle.

Finally, the City of Seattle just inked a deal with German technology firm Siemens to improve traffic lights. The new high-tech system uses external data to reroute traffic and produce more efficient travel routes. This is just a small piece of the $13 million dollar Move Seattle tax levy that was approved last year, in an effort to alleviate Seattle congestion.

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Seattle Office Space News – April 2016


Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of April 2016.


In April Urban Visions released further details of their “S” project in Sodo. The latest filing shows 990,000 square feet of office space in five buildings. Greg Smith of Urban Visions announced previously that he would not begin construction without a tenant in place.

The Seattle Housing Authority is attempting to sweeten the deal for a property it has for sale at Ninth and Alder Street. Today, thirteen ultra-low income apartment buildings occupy the parcel. A new owner could develop up to a million square feet of commercial space and now the SHA is allowing an additional 350 multifamily housing units on the site.


Another international buyer has made its way into the Seattle commercial real estate market. Vancouver based Omni Development Capital Corp. purchased the historic 1411 4th Ave building. The building measures 124,740 square feet and Omni has several renovations planned for the project. Mack Real Estate group sold the building to Omni for $29.75 million or $238.49 per square foot.


There were no news reports of office leases in April.


Once again, this month brought news of a shortage of homes for sale in Puget Sound. One year ago there were nearly 3,600 homes and condos for sale and that number is now down to 2,700. With decreased supply comes record setting prices, the year over year median sales price in King County increased 20 percent to $531,250.

With the tremendous growth in Seattle and rising home prices, a new report by indicates that in order to live comfortably in Seattle you must make $72,092.

In one of the few signs of a Slowdown in Seattle, the number of construction workers added in the first quarter remained flat, compared to double digit growth over the past two years. Many construction firms are stating they are able to evaluate all projects and respond to bids in a timely fashion. This is quite a bit different from a year ago they were too busy to consider any other projects


The much dreaded two week closure of the Alaskan Way Viaduct occurred in April. Crews operated on the tunnel boring machine Bertha underneath the Viaduct during the closure. It is estimated that 90,000 vehicles use the Viaduct every day and traffic was routed onto other streets creating mass congestion.  A video guide of Bertha’s path can be found here.


British Columbia based Burrard Group released a simulated flyover of what South Lake Union will look like in 2020, which you can find here.

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Q1 2016 Seattle Office Market

Analyzing the Data

General Conclusion: Seattle’s office market continued rapid growth at the start of the year with vacancy decreasing to 7.9% in Q1 2016 down from 8.3% in Q4 2015. Positive absorption for Seattle was 554,060 square feet in the first quarter.  Due to strong demand for Seattle commercial real estate investment product and decreasing vacancies, rental rates across all submarkets and building classes continue to increase, sometimes on a weekly basis.  For the foreseeable future, market fundamentals will be in the favor of landlords.

Economy:  The northwest has continued to add jobs in Q1 2016. Washington’s preliminary seasonally adjusted unemployment increased slightly to 5.8% in February 2016 according to The Washington State Employment Security Department.  The Bureau of Labor Statistics is reporting a slightly lower rate of 5.3% for the Seattle/Tacoma/Bellevue area.

Office Construction: The record amount of construction in Seattle can partly be attributed to office development with the following projects currently under construction:

  • Amazon II, and Amazon Phases VI, VII & VIII totaling: ~ 2,094,000 square feet (100% leased to Amazon)
  • Troy Block: ~817,000 square feet (100% leased to Amazon)
  • Madison Centre: ~764,00 square feet
  • The Mark: ~528,000 square feet
  • Yale & Thomas: ~370,00 square feet
  • 200 Occidental : ~370,00 square feet (100% leased to Weyerhauser)
  • Midtown 21: ~365,00 square feet
  • Dexter Station: ~345,992 square feet (100% leased to Facebook)
  • Tilt 49: ~307,296 square feet
  • Urban Union: ~291,00 square feet (100% leased to Amazon)
  • 15th & Market: ~204,000 square feet
  • NorthEdge: ~202,620 square feet (100% leased to Tableau)
  • 1101 Westlake: ~150,000 square feet

Despite all of this development, the available supply is not enough to outpace current demand.

 Office Sales:  The following building sales were completed in Q1 2016:

  • 101 Elliott (former home of the Seattle Post Intelligencer) sold to Credit Suisse Group for $40.4 million from Legacy Partners. That price is just over $397 per square foot for the 101,750 square foot property. The Landmark Seattle P.I. Globe is not part of the sale and is planned to be brought to MOHAI.
  • Vulcan has sold the commercial portion of Alley 24 on Yale and John Street to Met Life. Met Life paid $129.4 million or $600 per square foot for the 215,000 square foot office space.  Vulcan’s total sales in the past few years equates to nearly $2.93 billion.
  • 2001 8thAve sold for $370 Million or $740 per square foot to Rreef property Trust. Rreef is part of Deutsche Asset & Wealth Management.

Office Leases:  Office leasing in the first quarter of 2016 heated up significantly from the end of 2015, due to several large transactions in the technology sector:

  • Google leased over 600,000 square feet in South Lake Union on the Lake Front Blocks that will be developed by Vulcan.
  • In the same neighborhood, Amazon has announced that they leased an additional 286,000 square feet in the Urban Union building.
  • Tableau will be taking over a 110,000 square foot building next to their headquarters in Fremont. The company now has 16 locations in 10 countries worldwide.
  • Oracle continued to grow their presence in Seattle by expanding to 90,000 square feet at Century Square in the central business district.
  • Also at Century Square, Qumulo revealed that they have also expanded into nearly 70,000 square feet.
  • In one of the few non technology related leases, Saltchuck will be moving into 91,000 square feet at Hudson Pacific’s new 450 Alaskan Way project.
  • Daily deal site Groupon is moving into the central business district after leasing 42,000 square feet at 1201 Third.
  • In anticipation of their move to the Seattle waterfront, Expedia leased 38,000 square feet at 645 Elliott.
  • Local coding school Code Fellows announced they will be moving from crowded South Lake Union to 20,000 square feet at Third and Broad in Belltown.
  • Snapchat found a home in Seattle with a lease of 8,000 square feet at 101 Stewart near Pike Place Market.

Below is a table providing information for the major sub-markets of Seattle:

1Q2016 Market Data

The total vacancy rate for Seattle is 7.9%.


If your company:

  1. Doesn’t need to move
  2. Has an upcoming space/lease requirement in the next 2 years
  3. Can reasonably forecast headcount needs for years into the future
  4. Has a rental rate in line with or above market

– Start educating yourself on available alternatives and negotiating with your current building to get an understanding of your landlord’s position in the market.  Given the increasing pressure on rents and decreasing concessions, companies are incentivized to be educated on proposed developments that will be delivering in 18-24 months.  It is also helpful to be educated on the market so you can prepare to react quickly to increasingly volatile conditions.

Alternatively, if your company:

  1. Might need to move
  2. Needs size flexibility
  3. Wants to pursue a sublease or plug-n-play opportunity
  4. Prefers not to commit to a lease term beyond the next six months

– Wait until six months prior to your lease expiration and be prepared to act quickly.  The three to six month window prior to lease expiration is when you are most attractive to potential landlords and when they will offer you the best economics.   However, have a lease/sublease signed three months before your lease expires.  You don’t want to be in a holdover situation or without space and you need to give your company time to complete tenant improvements and plan a move.

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Seattle Office Space News – March 2016


Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of March 2016.


Office developers remain confident in Seattle.  At 1201 2nd Avenue in the central business district, Skanska is in for design review on their planned 671,000 square foot 2+U office tower.  Skanska has not announced any leasing in the project.

Expedia plans to expand its already massive waterfront headquarters on Elliott Ave. Expedia submitted plans to build an additional 600,000 square foot building and has room for several more phases of development on the 40 acre campus in the future. Construction to turn the former Amgen laboratory space into office is slated for 2016.

The Civic Square development that has long been delayed finally has a new developer.   Triad development which has been working on the deal since 2007 has asked the City to transfer its interest to Touchstone. Touchstone has until May 11 to reach terms with the City before the deal that has been plagued with political scandals finally dies.


Last year King County’s largest  25 real estate sales brought in more than $4.8 billion. The sale of the Columbia Tower to Hong Kong based Gaw Capital tops the list.  In total, foreign investors acquired $2.8 billion worth of commercial real estate. A trend to make note of is that nearly $875 million was spent on Industrial Properties, likely due to the strong investor competition for high prized office buildings.


The biggest headline in recent Seattle office leasing history came this month. Vulcan announced it will be developing a 600,000 square foot campus for Google in South Lake Union between Mercer & Valley Streets and Terry and Fairview Avenues North. Google will relocate from their current Seattle offices in the Fremont submarket.

Amazon also had an announcement in March revealing that the company has leased the 286,000 square foot Urban Union building from Schnitzer.  Urban Union is near Amazon’s headquarters in South Lake Union at 501 Fairview Ave N. Some estimates show Amazon has committed to 8.8 million square feet In Seattle not including the 1.1 million square foot headquarters they plan to construct at Westlake Avenue.

Local coding school Code Fellows announced they will be moving from crowded South Lake Union to 20,000 square feet at Third and Broad at the edge of Belltown.  High prices in South Lake union led Code fellows to the new location, which is owned by Martin Selig Real Estate.


The Seattle economy seemingly continues to boom with most indicators showing little sign of a slowdown.  The amount of construction cranes in Seattle is now up to sixty, which is 43% higher than this time last year. The same report indicates that 9,000 residential units have been built in the past few years here. Even though 9,000 residential units have been built in Seattle over the past few years, the residential market continues to be hotter than ever. The number of homes available in King County decreased 30% year to date and home prices spiked 19.8% last month. Much of this growth has been spurred by technology giants such as Amazon and Google. Tech workers now make up more than 8.2% of Washington’s Workforce and they make a lot of money. The average salary was $130,000 for tech workers the second highest in the nation. Seattle now has the 5th highest concentration of rich millennials according to Zillow.

The amount of high paying jobs available from large technology companies combined with a more affordable housing market has caused many workers to migrate to Seattle from the Silicon Valley. The amount of Valley residents searching for homes in the Northwest quadrupled between 2011-2015.

This article profiles how ten years ago Amazon quietly created Amazon Web Services and how that has led to Seattle becoming the cloud capital of the world, attracting even more talent to the Northwest.

Despite the strong real estate and jobs market in Seattle, Venture Capital investments in the area are down so far this year. There has been 67 percent less capital invested in Seattle than this time last year apparently because of the sluggish global economy and fears of a tech bubble forming.


The tunnel boring Machine Bertha has reached its “safe haven” and will undergo maintenance for a month before it starts tunneling under the viaduct. Bertha has now made it 17% of its 1.7 mile journey.

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Seattle Office Space News – February 2016


Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of February 2016.


Hudson Pacific Properties to bring some needed Class A office space to the Pioneer Square sub market.   The announcement suggests that construction will start within the next couple of months on the  160,000 square foot project at 450 Alaskan Way.  So far, there have been no pre-leases have signed.

In the Central Business District, the mega 102 story skyscraper planned by Crescent Heights, has been downsized from 102 stories to 100 stories to comply with a FAA injunction.  Initial filings show a 2017 start date for the half block mixed use project on Fourth Avenue between Cherry and Columbia.

Just down the street, the largest development currently under construction in Seattle, Madison Centre has received a $150 million equity deal. Developer Schnitzer West has joined with Cornerstone Real Estate Advisors on the equity portion and has closed on a construction loan with Blackstone Debt Strategies. The 754,000 square foot office project is scheduled for completion in spring of 2017.

Seattle developer Greg Smith of Urban Visions hopes that he can attract another tech tenant to a new building where Amazon once had space. The Launch Pad at 1516 Second Ave will be 170,000 square feet of creative space and is in the initial design phase.

Martin Selig will also begin construction on a project in the Ballard submarket this month. The 200,000 square foot building at the intersection of 15th and Market Street already has leases signed for the top two floors, although Selig declined to say who the tenant was.


Seattle’s landmark Post Intelligence globe building has a new owner. Credit Suisse Group purchased the building for $40.4 million from Legacy Partners. That price is just over $397 per square foot for the 101,750 square foot property. The Landmark Globe is not part of the sale and is planned to be brought to MOHAI although a timeline has not been set for the move.

In its latest disposition, Vulcan has sold the commercial portion of Alley 24 on Yale and John Street to Met Life. Met Life paid $129.4 million or $600 per square foot for the 215,000 square foot office space.  Vulcan’s total sales in the past few years equates to nearly $2.93 billion.

A building mostly occupied by Amazon at 2001 8th Ave, sold for $370 Million or $740 per square foot to Rreef property Trust. Rreef is part of Deutsche Asset & Wealth Management and this is the second property they have acquired in the region recently.


This month, cloud company Oracle continued to grow its presence in Seattle by expanding to 90,000 square feet at the Century Square building in downtown Seattle. In addition, Qumulo announced an expansion in to 70,000 square feet at Century Square.

In anticipation of its move to the Seattle waterfront, Expedia has leased space along Elliot. The travel company signed a lease for 38,000 square feet at 645 Elliott owned by Martin Selig and will use the space to test the location and move from the Eastside.


In no surprise, the Seattle area economy continued to show strong indicators even as national and international stock markets remained stagnant. A report by John L. Scott showed that year over year median home prices were up nearly 21% for condo sales in Snohomish county with other areas following closely behind. The report also indicated that the number of homes selling within 30 days is twice the amount of a normal “healthy” market.

The City’s job market is currently ranked the fourth hottest in the Nation according to CareerBuilder and is one of the main reasons the housing market is on fire.  Another indicator showed that Seattle is still a top moving destination in the country. Penske Truck Rental ranked Seattle as the 8th most popular moving destination, dropping slightly from 6th last year

There have been significant conversations around the revitalization of the central business district and several statistics confirm this statement. The City’s 12 greater downtown neighborhoods are the fastest growing in the state with nearly 70,000 people calling the core home. There are 46 active construction projects in this submarket which will add to the amount of bars, restaurants, and other entertainment that will stay open long after the work day ends. At the same time, the CBD has added nearly 30,000 jobs since 2010 which also helps to propel growth.

Finally, with rising rent for commercial space this article profiles five popular trends in office space design including: Integration, culture and the use of open space.


For pictures and more information about King 5’s very tech friendly Sodo office click here.

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