On the minus side of the pro/con market review, Grubb & Ellis says the Puget Sound vacancy rate jumped two percentage points up to 11.1% from the mid-year rate of 9.1%. And, the pile-up of sublease space continues.
Downtown Seattle and the Eastside now combine for 3.7 million sf of dumped space, significant amounts of which have come from firms like Onyx Software, Amazon.com, Infospace and RealNetworks.
Compounding effects of the high-techs' trek out of abandoned offices are new projects coming online. Caught mid-stream when the market shifted directions like a bad storm, 4.4 million sf of mostly-speculative space will be completed over the next 18 months.
Gone, at least for now, are they days when pre-leasing rates dwelt in lofty ranges. According to the Grubb & Ellis report, commitments on Downtown Seattle projects are averaging 58%--and Eastside projects are scraping bottom with tenants locked for only 12% of the total space.
Putting the current situation into the perspective of other downturns, Hill tells GlobeSt, "The direct vacancy rate is still no where near what owners were looking at in early 90s"even if you add in the sub-leases." Looking back to those days, he remembers mostly-direct vacancies in Downtown Seattle and the Eastside of 18%--and a south-end that tanked to 40%.
On the up side, Hill says of late his office has had enough new activity to nearly deplete its inventory of listed Eastside properties. "In the last couple of weeks we have experienced a marked increase in Letters of Intent on listed properties that saw no activity for almost six months," says Hill."We've had several subleases on the market for quite some time, and suddenly we've got commitments," he tells GlobeSt.
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