Regionwide, overall vacancy rose from 16.12% in the fourth quarter to 16.74% in the first quarter, leaving about 13.4 million sf vacant, and average full-service class A asking lease rates decreased three pennies to $24.13 per sf per year.
Despite that, there was 92,704 sf of positive net absorption, due largely to the delivery of Downtown Seattle's IDX Tower, an 845,000-sf building that came online about 75% leased to firms that expanded into the building from smaller leases in other Downtown Seattle buildings.
Speaking of which, IDX Tower was largely responsible for 315,600 sf of positive net absorption in Downtown Seattle--the first quarter of positive net absorption since the third quarter of 2001--as well as a 44-cent rise in average full service class A asking rates to $27.15 per sf per year. Of course, it also helped push Downtown Seattle vacancy to 16.14%, up 0.7 percentage points from the end of the fourth quarter, according to the CBRE report.
Vacancy in the Eastside office market ticked up 0.32 percentage points to 16.81% during the first three months of the year after dropping slightly during the fourth quarter. Net absorption was a negative 84,000 sf. On a positive note, Eastside sublease offerings dropped from 32% of available space to 27% of available space. Still, the average asking full-service lease rate for class A space fell 74 cents to $23.16 per sf per year.
The smaller office markets in the region also remained soft. The Southend market recorded the highest negative absorption (minus 208,828 sf) in the Puget Sound region for the second consecutive quarter, pushing vacancy from 16.89% to 19.54%.
The Tacoma/Federal Way office market posted positive absorption of 51,209 sf, decreasing vacancy by 1.07 percentage points to 15.04%. The Snohomish County office market also saw a drop in vacancy, from 21.74% to 21.41%, but continued to lead the region in that category.
Finding a colorful way to state the obvious, CBRE Eastside office broker Joe Baldwin tells GlobeSt.com that the current situation is the antithesis of the late 1990s, when vacancy was in the low single digits and tenants were plentiful. "In 1999, a letter of intent meant nothing to a landlord," says Baldwin. "Now it means nothing to the tenant."
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