In Downtown Seattle, the vacancy rate continued to decline, dropping from 15.8% at the start of the year to 15.4% on the strength of about 633,000 sf of positive net absorption---the most absorption recorded by CBRE since the third quarter of 2000, when it totaled 1.2 million sf. A substantial portion of the first quarter absorption came from significant pre-leasing in buildings that came on line in the quarter, including Interurban Exchange 3 and 307 Westlake, both of which near 100% leased upon delivery.

There are currently three projects under construction Downtown: the Ninth & Stewart building in the Denny Regrade submarket and, in the Lake Union sub market, 428 Westlake and 815 Mercer. An additional 6.8 million sf of proposed projects await a lasting market recovery and sufficient pre-leasing to begin construction. As with the region as a whole, Downtown traded absorption for rates. Average asking lease rates inched down from $25.95 to $25.47 per sf, fully serviced, yet remain the highest in the region.

The vacancy rate for the Eastside office market remained in the 15% range but nonetheless decreased for the fourth straight quarter, falling a few percentage points 15.3%. Average asking lease rates for the Eastside were relatively constant from last quarter, rising just $0.06, from $22.87 to $22.93, per sf, fully serviced. There is less than 20,000 sf under construction in the market. "Lease rates have stabilized and we are already beginning to see some landlords reduce the concessions they are willing to give away to attract new tenants," says CBRE broker Pete Hollomon.