Even as 1.5-million sf of new office space is under construction in and around the downtown area, the vacancy rate is rising and stood at 4.2% at year's end. Sublet space rose during the year from 249,000 to 622,000 sf. But the C&W report is bullish, nonetheless.
"Despite an increase in the number of dot-com companies downsizing or shutting down completely," the report said, "demand for space was still strong. Developers remained bullish about the market levels as confidence remained high."
Another report, by Grubb & Ellis, showed that 2000 put a damper on rental increases from $2 to $1/sf. Property owners might not be able to get higher rents since renters have more choices.
A bright spot is downtown Bellevue, site of four new office buildings in 2000, with 12 others in the works. The downtown vacancy rate is 2.6% according to G&E, while C&W pegged it at 2.1%. There is about 2-million sf of office space under construction.
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