It Could Be Worse. It Could Be San Francisco

SEATTLE-Rental rates for class A office buildings in Seattle’s central business district have slid 22% lower in the first six months of the year. The only other city to post a steeper decline during that time was San Francisco, according to a recent report issued by Oncor International.

The study places the average rate in Seattle at $35 per sf, a $10 dip from January’s rates. In San Francisco, the rental rate slipped 28% during the same time period, dropping to $55 in mid-2001 from $76 at the end of 2000.

According to the Oncor report, San Francisco used to reign as the country’s most expensive office market. With that city’s rental rate decline, the Silicon Valley jumped ahead in the race, with an average rate of $63 per sf, down from $70 six months ago.

Despite its decline, Seattle retained its fifth-place ranking in the survey, reflecting the fact that rents in most of the nation’s largest markets have decreased as a result of the softening economy and the dot-com meltdown. Rounding out the top five were Boston ($60), Manhattan ($55.92), and, now in fourth place, San Francisco.

Not surprisingly, the Oncor report notes that the cities experiencing the steepest declines in average rents were high-tech meccas. Along those lines, Oncor’s conclusion doesn’t offer much comfort, suggesting that markets “haven’t hit bottom,” and a rebound is “nowhere in sight.”