The Puget Sound region has among the lowest office-vacancy rates in the nation and it also ranks among the top markets in the country for new office construction, a recent study by real estate services firm Cushman & Wakefield reveals.
The technology sector continues to drive the office sector nationally, representing the largest lessor of office space. In the first quarter of this year, it accounted for some 25 percent of the top leases signed across the nation, the Cushman & Wakefield study notes. In the Seattle area, nearly 47 percent of all office leasing last year was related to the tech sector, and the region accounted for 7.2 percent of all tech leasing nationwide.
The Puget Sound Eastside region, which includes Bellevue, recorded the second-lowest office vacancy rate among the 86 U.S. markets tracked by Cushman & Wakefield ―at 5.9 percent as of the end of the first quarter.
“In the largest new lease [in the region], Facebook preleased all 316,000 square feet of Block 16 at the Spring District in the [Interstate] 405 Corridor submarket,” Cushman & Wakefield’s analysis notes. “The [Bellevue] project arrives in early 2020.”
The city of Seattle had the fourth-lowest office vacancy rate nationally as of first-quarter 2019, at 7.8%. San Francisco recorded the lowest vacancy rate, at 5.8%, and Southern California’s Inland Empire was third, at 7.2%. The low vacancy rates in the Seattle region also have led to rising office lease rates, with the average asking rent as of first-quarter 2019 at $34.91 per square foot in the Puget Sound Eastside region and at $42.86 in Seattle’s central business district, according to Cushman & Wakefield.
On the new construction front, the city of Seattle ranked ninth among the top 10 markets as of the first quarter, with Midtown Manhattan leading the pack. The top 10 markets accounted for 48 percent of all new construction nationwide.
Some 3.4 million square feet of office space was under construction in Seattle as of the first quarter of the year, Cushman & Wakefield reports. Throughout the entire Puget Sound region, however, that number totaled 5.1 million square feet, with an additional 13.6 million square feet of office space in the construction pipeline.
“The Puget Sound region experienced record-high rates of job activity, investment, and construction heading into 2019,” the Cushman & Wakefield study states. “Nearly 40,000 new jobs were added year-over-year, with unemployment falling 40 basis points to 3.8% (matching the national rate). Investment in the region has been going strong, with $1.7 billion worth of transactions recorded in the first quarter.”