SEATTLE—Despite a very strong real estate market defined by low vacancy and rapidly rising office rents, the Seattle-Bellevue market remains a relative bargain for tech companies compared to major tech hubs such as San Francisco and New York. That is according to a recent report from JLL.
The firm's 2015 Technology Office Outlook confirms that demand, driven to a great degree by Puget Sound technology firms, which employ more than 131,000 people locally, has pushed office vacancy to its lowest level in 10 years. "This, in turn, is pushing rents steadily higher; rents grew by almost 8% in the last 12 months."
Yet, at an average overall direct asking rent of $33.70 per square foot, the Seattle metro area still more than competes with larger, more established commercial centers, the report says. The equivalent rent in San Francisco, for example, is $66.80.
"We're in a location of prime appeal for tech companies because of the depth of young talent in the region, the quality and affordability of both our commercial and residential real estate, and the overall standard of living that we enjoy here, all of which attracts the type of workers coveted by tech companies," says Chris Hughes, managing director, JLL.
Average monthly apartment rents in a sizzling hot Seattle residential market are still less than $1,400 per month, compared to $2,800 in New York and $3,000 in San Francisco. Average annual tech wages top more than $154,000 in the Puget Sound area where unemployment is well below even the national average at 4.1%.
As a consequence, one of the biggest challenges facing tech companies looking to expand in Seattle is how quickly they can find both talent and real estate. "Even though the local tech sector saw 8.8% employment growth last year, an estimated 25,000 tech jobs went unfilled over the last six months and the state of Washington recruits more tech workers than any other state."
The overall office vacancy rate is hovering around 10%, limiting options for companies seeking to expand, the report says. "However, with several million square feet of new office product due to be delivered in Seattle and Bellevue in the next 24 months, tech companies that plan ahead will be able to lock up excellent space options."
Hughes adds that "Creative space users in the market today for additional space are having to get creative to find the right deals in what is still a tightening market. But that pressure is likely to begin to ease in 2017 as new space comes online and tech companies see far more options than they can see now."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
