Seattle's office sector is off to a slow start in 2025. For one, net absorption continued to remain in negative territory at -265,000 square feet in the first quarter, according to a market report from Colliers. That's up from the -194,000 square feet in the previous three months but down from the even more turbulent -1.38 million square feet in the 12 months prior.
Also, vacancy ticked up by 10 basis points to 31.2 percent from the fourth quarter. At the beginning of 2024, the category was at only 28.1 percent.
However, Colliers said of the first quarter performance, that "this is the smallest annual increase since 2022 Q4 when vacancy reached 20.6%, up from 18.1% a year prior."
Recommended For You
The Belltown/Denny Regrade recorded the highest vacancy rate in the first quarter, at 34.6 percent, with South Seattle holding the lowest at 9.6 percent.
Meanwhile, there were some positives. For example, Colliers noted seeing a rise in the size of lease deals.
"Most activity is coming from renewals or downsizing tenants, resulting in a market where companies are shuffling between the best buildings or locations," the CRE firm said, adding that nearly 72 percent of the new deals signed in the first quarter were for Class A properties.
"Tenants are expressing a clear desire for superior amenities and premier locations. They see real estate as a potential motivating factor to entice their workforce back into physical office space."
However, it's important to note that Class A leasing rates in Seattle have fallen by 50 cents per square foot to $55.36.
Tommy Bahama commanded the top lease of the first quarter by far, thanks to its 125,558 square-foot renewal at 400 Fairview. The next closest was Lyft, which agreed to renew more than 24,000 square feet of space at 83 King.
Another positive is that no new supply entered the market in the first quarter, and construction has been non-existent in the past six months in Seattle's office sector. Despite that trend, Colliers points out that companies have been downsizing or shrinking their footprint, meaning that vacancy will continue to spike. But with return-to-office policies from companies, including Amazon, leasing is expected to remain strong.
"Return-to office policies play a large part in office leasing," Colliers explained.
"With more companies requiring more in-office attendance, leasing activity will continue to rise."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
