Seattle Office Space News – September 2016

News

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

OFFICE DEVELOPMENTS

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.

BUILDING SALES

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.

OFFICE LEASES

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.

ECONOMY

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.

TUNNEL/VIADUCT

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.

OTHER NEWS

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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