Firms Chase Talent, Boosting Demand
Retaining talent is the number one market driver for companies to take new construction space, causing rates and demand to rise in the Seattle and Bellevue metro office markets.
SEATTLE—Overall vacancy in Seattle and Bellevue is 8.1% and falling fast, according to Newmark Knight Frank. That number comes with a caveat as NKF doesn’t count space as leased until tenants move, so the vacancy should be closer to 6% in both markets by early 2019.
Redmond had the most noticeable drop in vacancy in the second quarter, down 410 basis points compared with the prior first quarter, thanks to leases from Microsoft at Redmond Town Center, EOSPACE at Redmond Hilltop and, most substantially, Oculus, which has leased or purchased 681,768 square feet on Willows Road during the past three quarters.
The Bellevue Central Business District submarket also experienced a drop in vacancy rates, which fell by 40 basis points from first quarter 2018. Bellevue CBD’s vacancy dropped partly because of move-ins by Visa and Salesforce at 929 Office Tower. The Interstate 90 Corridor submarket had the largest increase in vacancy rates, up 180 basis points compared with the prior quarter. This increase in vacancy can be attributed to Quantum leaving Benaroya I-90 and American Healthways vacating Sunset Corporate Campus.
“Co-working and large out-of-town tech and creative companies continue to be the major market drivers, while large local players are also slowly expanding, and Bellevue has led the charge in early 2018 for both first and second quarters with the highest activity,” Cavan O’Keefe, NKF senior managing director, tells GlobeSt.com. “We expect the Bellevue CBD to continue to be the tightest market in the region. Retaining talent is the number one market driver for companies to take new construction space, causing rates and demand to rise as everyone chases talent.”
To meet demand, NKF continues to grow with a current head count of 42 between the Seattle and Bellevue offices and more is on the way. In fact, NKF recently welcomed Daniel Seger as senior managing director in its Seattle office. In this role, Seger will specialize in leasing and sales of institutional office, flex and life science real estate throughout the Puget Sound.
“Daniel Seger was a strategic hire who will be helping our team in leasing and sales,” O’Keefe tells GlobeSt.com. “He brings an outstanding track record and reputation to the firm.”
Seger joins NKF from JLL, where he was a senior vice president and top producer, practicing a hybrid landlord and tenant representation business. Seger joined JLL when the firm acquired Pacific Real Estate Partners. He began his career with PREP in 2003.