Report: Office Vacancy Hovers in 16% Range

SEATTLE-Overall vacancy for the Puget Sound region crept up from 16.1% to 16.3% during the first quarter, according to an early report by the local office of CB Richard Ellis. CBRE attributes the uptick to 692,189 sf of increased inventory during the quarter. Continuing last year’s trend, net absorption was a positive 296,073 sf, but at the expense of average class A asking rates, which fell from $23.74 to $23.61 per sf, fully serviced.

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.