X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SEATTLE-Fourth quarter figures released yesterday by the local offices of Cushman & Wakefield came as no surprise to those working in the industry. Over the course of the last four quarters — about Puget Sound’s cores — office rents dropped a good 10% to 15%. Oddly enough, though, rates in the Southend and Northend are relatively unchanged.

Measuring Class A averages alone, Seattle’s CBD moved from $38.05 in the fourth quarter of 2000 to a current $34.25 — a drop of 10%. During the same period, properties in the Eastside suburbs fell an average 12.7%, moving to $27.34 from $31.31. Leading the pack in terms of rate losses is the Bellevue CBD. Now averaging $30.88/sf, Bellevue’s rents are off a full 17% from its rates of just a year ago.

And then there’s the Southend office market, contained within the cities of Renton, Tukwila, close-in south Seattle, Federal Way, Kent and Auburn. Weighing in at only 8.5 million sf or so, it comes nowhere close in size to the Seattle and Eastside markets. But the relative stability of its rates is noteworthy in today’s market.

Average Class A rents here have actually risen in the last 12 months. While the increase from the fourth quarter 2000 rate of $23.01 is a mere 34 cents/sf — when comparing it to the mauling other areas have taken, 34 cents a foot looks pretty good. Just ask Bellevue landlords.

Kevin Smith, a broker with the Bellevue office of Cushman & Wakefield, is a specialist in the Southend office market. Explaining the anomaly, Smith tells GlobeSt., “We have not had the uncertainty that came along with the tech firms that landed in the Eastside and Downtown Seattle.” Over the last several years, the Southend has been tenanted with “more traditional” companies, many of which service Boeing. The tenant mix was the saving grace here when high-tech companies hitched up their skirts and high-tailed it out several million square feet of offices.

The Northend experienced an even greater increase in the calculated average of its Class A rents, rising from $23.48/sf in 4Q2000 to the newly-measured mark of $24.88. However, Gary Bullington—also a broker with C&W in Bellevue, says that number is anomalous.

A small market with only 3.35 million sf, averages were skewed by the delivery this quarter of approximately 400,000 sf in two projects (Cosmos Lynwood with 200,000 sf, and Quadrant I5 with 190,000 sf). Bullington says Cosmos has come on line at $20/sf NNN rents, which bent the curve for the rest of the market. All in all, Bullington tells GlobeSt in the Northend it’s been “business as usual.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.