Bellevue CBD Office Market Vacancy Hits 20%-Plus

BELLEVUE, WA-Third quarter numbers posted by the office market in Bellevue’s central business district were dismal at best, with the total vacancy rate rocketing to an unnerving 20.7%. However, a long-time broker with the Bellevue office of Cushman & Wakefield says vacancies may have hit a plateau, and there are even a few signs of a positive shift.

According to a third quarter report out of C&W, the Bellevue CBD contains a total of 5.22 million sf of office inventory, of which just over 527,000 sf of direct space and more than 550,000 sf of sublease space are currently available. Of the totals, approximately 4.124 million sf of space are considered Class A, of which nearly 922,000 sf (or 22.4%) are available.

A comparison between this and last year’s market statistics is striking. Where current vacancies are in the low 20′s, the mark at the end of the third quarter of 2000 was a tight four per cent. Twelve months ago, average rents in Bellevue’s CBD had hit a lofty $35.35/sf but have dropped nearly $4 to $31.49/sf. And, as of the end of September 2000 this sub-market had seen the absorption of 467,371 sf of office space—compared to only 65,462 sf since the first of 2001.

Despite the numbers, though, Dave Young, an associate director with Cushman & Wakefield, believes, “The bottom has not fallen out of the market.” In fact, he adds, “There are some positive signs that the market is beginning to tighten.” In Bellevue, Young cites the status of approximately 250,000 sf of office space held by Microsoft that the company had previously put up for sublease. The C&W broker says Microsoft recently changed its position, choosing to hold it for now-anticipated future needs. GlobeSt, however, was unable to confirm this with Microsoft by deadline.

Looking forward, Young remarks, “Hopefully, we’ll continue to absorb the (available) space.” As for how long that is expected to take, Young says most of the region’s real estate experts were anticipating 18 to 24 months—assuming no major changes to current economic conditions.