Yin, Yang: Tables Not Broken, Just Turned

BELLEVUE, WA-Low absorption, huge vacancy rates, freefalling rents. Read enough articles and reports and it’s not hard to surmise there is not any good that can come out of this real estate market. The truth of the matter: It’s just not good for everybody anymore.

“It’s a great commercial real estate market right now,” Bob Farra, manager for Colliers International in Bellevue, tells GlobeSt.com. “It just depends on your perspective. If you’re a landlord, it’s not so great. But if you’re a tenant there are endless opportunities.” He adds enthusiastically, “This is the best tenants’ market we’ve seen in years.”

Making his case for the tenants’ bonanza, Farra points to the fact that rental rates in most Eastside office buildings have dropped by at least 20% over the last year. “Rents are down to the low $20′s now, where they were in the low $30′s, triple net. All that spells opportunity — if you’re on the right side of the market,” says Farra. It is certainly no secret that local landlords have become very creative and very generous in attempting to lure occupants into their sparsely-lit buildings.

For those unfortunates on the landlords’ side of market line, Farra acknowledges that life is not quite so sunny. “The economy here was growing at an incredible rate for eight or nine years, and Nature said, ‘It’s time for a change.’ It was a landlords’ market, and now it’s not.” As far as the rest of this year? “We can expect to see lot more of the same through ’01.” However, Farra predicts, “’02 won’t be as blue.”

What about those interested in purchasing office properties? Have values followed rents downward enough to make them more attractive for investment? “Not much buying is going on yet,” says Farra. “What we’re seeing as far as investment trades between buyers and sellers is a whole lot of fencing, but no one is dancing. Buyers are still leery of the lack of demand, and sellers are still giddy about last year’s values.” But, by sometime in 2002, Farra expects that owners’ feet will come back to earth. “The rest of this year should see a stabilization of values,” he says. And then? Farra expects the trading will commence once again, though not with the heady numbers seen in those wonderful days yore.