Compliments of Jason Smith of Kidder Mathews, attached is a Seattle-area office real estate market review for Q4 2012. As the report notes, the region’s office market continues its gradual overall recovery. Leasing was widespread, with all five submarkets reporting positive results for the first time in a year. The positive impacts of Amazon in the north end of the Seattle central business district (CBD) and various gaming and internet companies in the Bellevue CBD continued through the fourth quarter, joined by renewed leasing from more traditional sectors. The most recent beneficiary was the overall Class A category, which saw increased leasing activity in the fourth quarter in legacy Class A buildings such as Columbia Center, Safeco Plaza and 901 Fifth.
Rental rates were unchanged in most markets; increases were achieved in better properties across the Bellevue and Seattle CBDs. The vacancy rates in the other submarkets have not yet reached levels to prompt rent growth, but the rates have held steady and are unchanged in three quarters.
The fourth quarter saw continued employment growth, although it does remain focused on the technology sector. The prognosis for 2013 was recently upgraded in the Puget Sound Economic Forecaster report, with employment targeting a 2.7% increase in 2013, the sixth straight quarterly increase. This should support leasing in the office market similar to that seen in 2012.