Deal Flow Down to Trickle as Space Floods Market

SEATTLE, WA-According to third-quarter compilations from the Seattle office of Colliers International, downtown Seattle’s 32.74-million sf office market is struggling with an 11.15% vacancy rate. Landlords in the central business district alone are looking to fill 1.05 million sf of direct-lease holes in their buildings—in competition with 670,000 of sub-lease space seeking new tenants as well.

But, direct or sub-lease, tenants aren’t signing. Rob Aigner, executive managing director of Seattle’s Colliers, says there is a complete lack of what he calls “velocity “or “deal flow.” “There are no transactions happening. It’s a complete role reversal from 18 months ago,” Aigner tells GlobeSt.

He says landlords are doing everything in their power to generate transactions and induce companies to move, including some free rents. Aigner says rental rates here on Class A downtown space is off 15%. “It’s a market reflection of landlords dropping rents to induce moves,” he explains “But, you can’t do enough to make moving financially feasible,” says Aigner, adding, “A savings of $2 a square foot just isn’t enough. Moving is an expensive proposition. You upset your company for a while. There are lead times, new furniture–lots of costs.”