Measuring Class A averages alone, Seattle's CBD moved from $38.05 in the fourth quarter of 2000 to a current $34.25 -- a drop of 10%. During the same period, properties in the Eastside suburbs fell an average 12.7%, moving to $27.34 from $31.31. Leading the pack in terms of rate losses is the Bellevue CBD. Now averaging $30.88/sf, Bellevue's rents are off a full 17% from its rates of just a year ago.
And then there's the Southend office market, contained within the cities of Renton, Tukwila, close-in south Seattle, Federal Way, Kent and Auburn. Weighing in at only 8.5 million sf or so, it comes nowhere close in size to the Seattle and Eastside markets. But the relative stability of its rates is noteworthy in today's market.
Average Class A rents here have actually risen in the last 12 months. While the increase from the fourth quarter 2000 rate of $23.01 is a mere 34 cents/sf -- when comparing it to the mauling other areas have taken, 34 cents a foot looks pretty good. Just ask Bellevue landlords.
Kevin Smith, a broker with the Bellevue office of Cushman & Wakefield, is a specialist in the Southend office market. Explaining the anomaly, Smith tells GlobeSt., "We have not had the uncertainty that came along with the tech firms that landed in the Eastside and Downtown Seattle." Over the last several years, the Southend has been tenanted with "more traditional" companies, many of which service Boeing. The tenant mix was the saving grace here when high-tech companies hitched up their skirts and high-tailed it out several million square feet of offices.
The Northend experienced an even greater increase in the calculated average of its Class A rents, rising from $23.48/sf in 4Q2000 to the newly-measured mark of $24.88. However, Gary Bullington—also a broker with C&W in Bellevue, says that number is anomalous.
A small market with only 3.35 million sf, averages were skewed by the delivery this quarter of approximately 400,000 sf in two projects (Cosmos Lynwood with 200,000 sf, and Quadrant I5 with 190,000 sf). Bullington says Cosmos has come on line at $20/sf NNN rents, which bent the curve for the rest of the market. All in all, Bullington tells GlobeSt in the Northend it's been "business as usual."
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