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SEATTLE-Vacancies all over the Puget Sound continued to rise through the third quarter, according to the latest office market report from Grubb & Ellis. The combination of 888,000 sf of new construction deliveries and minimal leasing activity resulted in 83,000 sf of negative net absorption in the third quarter, pushing the average overall regional office vacancy rate to 16.9% from 15.8% at the end of the second quarter.

The result was continued downward pressure on asking rents. Class A asking rates fell from $28.16 per sf in the second quarter to $28.06 per sf in third quarter, according to the report, while class B asking rates decreased from $20.60 per sf in the second quarter to $20.41 per sf in the third quarter.

“Until job growth returns to the Puget Sound there will be no increase in the demand for office space,” concludes the report, which predicts “a slow recovery” over the next 12 to 24 months. “Meanwhile, credit tenants will have plenty of opportunities for space with favorable lease terms and concessions.”

The vacancy rate in Downtown Seattle rose to 15.2% in the third quarter from 13.9% in the second quarter of 2002. The total Bellevue CBD submarket rose to 27.5% in the third quarter from 26.1% in the second quarter. The overall Eastside vacancy rate now stands at 18.6%, according to the report. The vacancy rate in Renton stood at 18% at the end of the third quarter, while vacancy in the Southend Market as a whole rose to 16.8% during the third quarter from 14.4% at the end of the second quarter.

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