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January 13, 2017

The new ABCs of CRE in Seattle: Here's the latest acronym developers need to know

Puget Sound Business Journal

Marc Stiles

Amazon and some other tech companies have become so dominant in commercial real estate that there's now an acronym to describe the phenomenon.

"GAFA" stands for Google, Amazon, Facebook and Apple. The first three companies are leasing up new buildings in the Puget Sound region, while Apple is expanding in Seattle's Two Union Square tower, according to real estate industry sources who asked not to be named for fear of antagonizing the company.

The 10 largest office leases signed last year were all executed by tech tenants, according to commercial real estate services company JLL, with Amazon leading the way.

An M for Microsoft would be added if the company was expanding as much as members of the GAFA bloc. Even though it's not expanding, Microsoft's more than 14.7 million square feet of space owned and leased in the region still leads the pack.

Here's what the GAFA group has been up to in the Puget Sound region:

Apple is the smallest user of space, but this week it became the most interesting to watch with brokers saying the company is expanding in Two Union Square. The company reportedly occupies around 30,600 square feet. Apple declined to say whether it's taking more space, and an official of Two Union landlord Washington Holdings did not respond to messages.

In the biggest deal of 2016, Google pre-leased four future office buildings totaling 607,000 square feet in Seattle on Valley Street across from Lake Union Park. The question is whether the company will move all in-city operations here or keep its nearly 137,500 square feet in Fremont when the new campus is done in 2019. A spokeswoman for Google this week said the company still is planning the project and didn't have any information to share. Google recently expanded its campus in Kirkland, and has a facility in Bothell. Currently, the company leases a total of 570,600 square feet in the region, according to a tally by commercial real estate services company Kidder Mathews.

Facebook is more than doubling the size of its offices in Seattle. The company most recently pre-leased two South Lake Union buildings totaling 384,000 square feet. They're scheduled for completion in 2018. This is in addition to the new Dexter Station building in South Lake Union, where the company started moving in last spring. The company reportedly maintains a long-term lease for 60,000 square feet in Seattle's Metropolitan Park campus in Seattle, giving Facebook a total of 779,000 square feet.

In terms of leasing activity, the big kahuna is Amazon, of course. The biggest news were reports last year by commercial real estate companies that Amazon leased a new building in downtown Bellevue, though the company hasn't confirmed this. All total, the company has leased, owns or is constructing more than 10.1 million square feet of space, according to Kidder.

For the full story, go to Puget Sound Business Journal.

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