Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q2 2012. As the report notes, the Puget Sound office market during the first half of 2012 was active on several fronts. Leasing was strong in both Seattle and Bellevue central business districts (CBD), rental rates showed some modest gains in the core markets, and the dollar amount of this year’s sales activity skyrocketed.
New leasing activity was led by ecommerce companies and was focused on newer buildings in specific neighborhoods. It was in those neighborhoods that vacancy fell enough to tilt the market in the landlord’s favor and led to a firming of rental rates in Class A space at the north end of the Seattle CBD and across downtown Bellevue. Led by the $480 million price for Russell Investment Center, total investment sales for the first half of the year totaled $1.30 billion in 77 deals. This compares with $1.37 billion in 134 sales for all of 2011.
Regional vacancy rate is at 10.89%, down from 11.52% last quarter. Office acquisitions continue near Amazon at the north end of the Seattle CBD office market, and several developers are near starting speculative projects in that same submarket.
In the north and south ends of the Seattle CBD and in the Bellevue CBD, rental rates have shown some signs of moving up. Institutional investment interest picked up speed in 2012, as Seattle remains at the top of most institutional investors’ lists.