Eastside Not Escaping Tech Troubles

BELLEVUE, WA-The Puget Sound office market continues to reflect the damaged look of high tech companies, and the Eastside–long time high-tech headquarters–has not escaped this recent trend. Eastside vacancy rates rose from 3.88% in the fourth quarter of 2000 to 5.14% in the first quarter of 2001, according to the latest CB Richard Ellis survey.

While nearly 25% of the vacant space in the region is sublease space, the impact of sublease space on vacancy rates appears to be stabilizing. Reflecting the healthy preleasing activity of over 3.2 million sf of new office space in the region, absorption was a surprising 1.9 million sf with the Redmond office market, in Microsoft’s backyard, leading the way with over 800,000 sf absorbed.

Average class A asking lease rates are beginning to reflect a softening market and increases have slowed dramatically from previous quarters. Eastside rates dipped a few pennies from $31.06 per sf at the end of last year to $30.82 per sf at the end of March 2001.