Seattle Sees Commercial Real Estate Boom
The ebb and flow of real estate values and demand is always interesting to watch. Seattle was one of the great casualties of the dot – com blow up, with commercial rates dropping significantly in the early part of the century.
Now it is the exact opposite, the cities commercial demand is exploding as the combination of population and corporate demand is placing pressures on a city that because of geographic limitations, has very little room to expand. And it is not just retail and class A office space, warehouse pricies have gone up 23 percent in the past year.
Seattle is finally recovering from the dot-bomb, and office space is now undervalued compared with other West Coast cities, creating a frenzy, he said.
Some cities, such as Dallas and Phoenix, respond to an increase in demand by constructing more buildings just beyond the next highway. That’s almost impossible in Seattle because of the water. As a result, local rental rates are spiking.
At $26.75 per square foot, the average rent for class A office space in downtown Seattle grew 12 percent in the third quarter compared with the same period a year ago. And the office vacancy rate continued to tighten to 12.6 percent from 13.7 percent in last year’s third quarter.
Downtown Seattle’s resurgence has lagged behind Bellevue’s, experts said. That’s because downtown Seattle’s 36 million square feet of office space is six times greater than Bellevue’s.
“Bellevue is a good bellwether for Seattle,” Fosseen said.
But downtown Seattle is catching up. The area’s absorption rate — or change in occupied space — typically averages 600,000 to 800,000 square feet per year. However, in 2006 it could top 2 million square feet, “which is huge,” said David Gurry, first vice president of Seattle office leasing.
Commercial real estate continues to boom.
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