Gregory Wendelken, Marcus & Millichap's Seattle regional manager, says on the heels of Boeing's recent announcement that it will lay off tens of thousands of employees, "it is evident that the region's ties to the aerospace industry will result in a local economic slowdown." According to the report, Boeing employs approximately 80,000 Puget Sound residents—representing 4.8% of the total employment base here. As much as 20,000 jobs could be lost in the cut-backs.

Wendelken says softening in Puget Sound aerospace and technology bodes for a regional economic rebound that will lag behind national recovery. The bright lining to his dark cloud of prediction is that he believes the impacts will be "less severe and not as prolonged as it was in previous cycles." The report says long-term gains in Puget Sound real estate have historically outpaced losses sustained in cyclical downturns. Wendelken adds that while the local commercial real estate markets will be affected by reduced consumer spending—a byproduct of the layoffs, "the prospects for long-term growth are still positive."

Speaking directly to the office market here, the report says vacancy increased from 3.6% in June to a current rate of approximately 10.5%. Including sublease space, it says market vacancy has hit 14% and vacancies have resulted in softer rents. Since the first of the year, Marcus & Millichap says rents have dropped 5%, with the median price/sf falling 5.5%.