Report: Office Market Continues Rebound

SEATTLE-Vacancy in the region’s 83.7 million sf of office space fell from 17% to 16.3% during the second three months of the year, according to the latest report from the local office of Grubb & Ellis. Vacancy fell in all areas save for the 4.4-million-sf Northend, where vacancy rose from 15.6% to 16.2%.In the 42-million-sf Seattle market, vacancy fell from 15.6% to 14.7%. Net absorption was about 100,000 sf for the quarter and is now over 200,000 sf for the year. In the 22.2-million-sf financial district, vacancy dropped from 14.2% to 14% on 31,000 sf of positive net absorption, which remains about 19,000 sf in the hole so far this year.The 22-million-sf Eastside market saw vacancy fall from 17.1% to 16.5% on 215,000 sf of positive net absorption. The best Eastside performer was the 5.6-million-sf I-90 Corridor submarket, which saw vacancy fall from 16.9% to 13% on 209,000 sf of positive net absorption. Vacancy in the 5.8-million-sf Downtown Bellevue submarket fell a few tenths to 21.6% but is poised to dive down toward 10% in coming months as more than 300,000 sf of lease deals are signed.The Southend market rebounded in the second quarter, with vacancy falling from 23.5% to 22.8% on about 60,000 sf of positive net absorption on the heels of 375,000 sf of negative net absorption in the first quarter. The 3.6-million-sf Renton submarket continued to suffer, however, with vacancy there rising from 30.6% to 31.5% on 35,000 sf of negative net absorption.Region wide, class A space saw more than 400,000 sf of positive net absorption while class B space saw about 355,000 sf of negative net absorption. In the Seattle market, asking rates for both classes rose during the quarter. On a region wide basis, asking rates for both classes declined. The asking rates in Seattle are $27.99 and $18.86 per sf per year for class A and B properties, respectively. Region wide, the asking rates are $25.86 and $18.66, respectively.”Our statistics finally show what we have known for the past couple of months, things are getting better, positive absorption and Boeing has turned the corner with reports of new hiring,” says Craig E. Hill, vice president and sales manager of Grubb & Ellis. “The only negative might be that interest rates are starting to creep up, putting pressure on some owners.”