In the News
August 21, 2012
Seattle Leasing Activity
Western Real Estate Business
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In the second half of 2012, we expect to see a slowdown in leasing activity reflecting the continued tepid growth in the national economy and the limited number of firms in the Downtown area growing their employee counts. While Amazon and a small handful of other firms are adding staff, the vast majority of firms are not experiencing growth. Several notable firms, including Real Networks, Attachmate, US Bank, Bank of America, are downsizing and, thus, we are not expecting to see much in the way of positive absorption for the remainder of the year. Landlords in the South Lake Union area will be able to continue to press lease rates upward and other lease concessions downward due to Amazon's continued growth. However, we don't expect to see landlords in other submarkets being able to follow suit nearly as much. By the end of the year we anticipate the vacancy rate to remain roughly the same as the 11 percent to 12 percent mid-year figure.
Two speculative projects are currently underway in Downtown Seattle. Spear Street Capital's 135,000-square-foot 202 Westlake project is moving forward, along with American Life's 346,000-square-foot Home Plate project. No leases have been signed / announced at either site, but it is expected that Spear Street will sign a lease for 202 Westlake before the end of the year. At this time we do not expect any new projects to start before the end of the year, although several developers are hoping to land tenants to kick off projects. Schnitzer West is marketing its 750,000-square-foot M5 Commerce Center at 5th & Madison, while Daniels Development 760,000-square-foot Fifth & Columbia Tower and the nearby 637,000-square-foot Civic Square Tower also seek tenants. Although lease rates in the Downtown area have risen significantly in the past 18 months, the market in general still does not support the lease rates required to support new high-rise development and the debt required to finance the construction.
- Rod Keefe, senior vice president, Kidder Matthews' Downtown Seattle office