Market Absorbs Bank's Move

The pending move of Washington Mutual employees into a single building in downtown Seattle has some nervous, but foresight has helped ameliorate the situation, with landlords aggressively trying to backfill the approximate 1.4 million sf of space that will be vacated late next year. "It's not going to have the impact we all thought a year ago," Wendy Sauvage of Cushman & Wakefield tells Globest.com. "Everyone has known for some time that this is going to be happening. Landlords have had time to prepare and market."

The report also highlights the dichotomy between Seattle's slightly stagnant tenant market next to Bellevue's, where heavy leasing activity in the central business district is forcing tenants to look elsewhere. Bellevue's CBD vacancy rate rose to 9.7% from 8.5% during the second quarter, in part because some full floor spaces have become available. "In Bellevue the landlords are calling the shots, pushing tenants to suburban markets," says John Miller, senior managing director for Cushman & Wakefield. Tom Bohman, Cushman & Wakefield's director of Eastside leasing, adds that, "We expect that this slowing in activity won't last long. It appears that landlords and tenants are taking a breather to evaluate all the recent activity and to make wise decisions about what to do next."

On the industrial side, demand is up for warehouse space in Kent Valley, with 3.2 million sf leased this quarter, compared with the 2.3 million sf leased in the first quarter. The climbing economy has boosted port activity, though a moratorium on distribution centers exceeding 200,000 sf in Lacey threatens the entire region. Should the moratorium continue, industrial users will be forced to move south into central Washington along the I-5 Corridor, the report says.

The report also outlines increased investment activity, as large institutions look to pout capital into the Seattle and Puget Sound areas. "I think we have a very active market," says Miller. "We are optimistic. The only question will be the impact of the Washington Mutual building."