Tap to get financing
Commercial Real Estate Loans
Loan Options
Permanent FinancingLoans Under $1MBridge LoansMezzanine FinancingConstruction LoansUSDA 538 Loan ProgramLife Company LoansSBA 7(a) LoansSBA 504 Loan ProgramFannie Mae LoansFreddie Mac LoansCMBS LoansHUD Multifamily LoansFix and Flip LoansHUD 223(f) LoansHUD 221(d)(4) LoansHUD 223(a)(7) LoansHUD 241(a) LoansHUD 232 LoansHUD 232/223(f) LoansHUD 232 LEAN LoansHUD 232/223(a)(7) Loans
Property Types
All Property TypesRetailOfficeIndustrialApartmentsSelf StorageHotelLandChurchSchoolAuto DealershipAuto Repair ShopCar WashGas StationHealthcareMedical OfficeDental OfficeVeterinaryFitness CenterBowling AlleyConvenience StoreDay Care CenterGolf CourseAnchored Strip CenterRestaurantMarinaWarehouseFuneral Home
Resources
BlogCurrent Mortgage RatesForms and TemplatesCommercial Property for SaleCommercial MLS GuideGlossaryVideo LibraryApply OnlineHow to Get a CRE LoanFrequently Asked Questions
Calculators
Commercial Mortgage CalculatorCap Rate CalculatorNOI CalculatorDSCR CalculatorLTV CalculatorLTC CalculatorDebt Yield CalculatorYield Maintenance CalculatorInternal Rate of Return Calculator
About Us
About UsLeadershipTeamContactWe're Hiring
Get financing
Newly Published
Mar 17 at Commercial Real Estate Loans
Top 10 Commercial Real Estate Lenders of 2023
Mar 15 at Commercial Real Estate Loans
Top 4 Refinancing Loans for Industrial Real Estate in 2023
Feb 20 at Commercial Real Estate Loans
How to Set Rent Rates for Your Commercial Property in 2023
Explore the Janover Network
Mar 27 at Multifamily Loans
How to Navigate Multifamily Tax Credits
Mar 27 at Multifamily Loans
Multifamily Minute Reader Reflections: Interest Rate Outlooks
Mar 24 at Multifamily Loans
The Best 3 Multifamily Loans for Affordable Housing in 2023
Was This Article Helpful?
CRE Insights Blog
Last updated on Feb 19, 2023
3 min read
by Jeff Hamann

The Future of Seattle's Office Space

Seattle's office dynamics continue to be mixed as employers move back to the office. What does this mean for office investors?

Apply for a loan in minutes and get multiple quotes today → Get Quotes

In this article:
  1. Worrying Vacancy in the Seattle Office Space?
  2. Office Asset Investment Influx in Seattle
  3. Related Questions
  4. Get Financing

Seattle. Image by Wilhelm Gunkel from Unsplash.

Although office vacancy remains elevated in most markets, with many employers offering remote or hybrid working options, Seattle seems to break the mold. The metro’s largest office users — Amazon, Microsoft, Google, Facebook, and Apple — are all coming back to the physical office realm, if they haven’t already.

As a result, there’s a great deal of optimism for office investment in Seattle. But do the numbers check out? We look at two recent reports focused on the first quarter from brokerage firms Colliers and JLL to find out.

Worrying Vacancy in the Seattle Office Space?

When talk of employers returning to their physical offices comes up, an office investor may first wonder about the market’s vacancy, and how it compares at the national level. JLL’s first-quarter Seattle report pegged vacancy for the metro at 18.1%. While Yardi Matrix’s report offered a far more optimistic figure of 15.7%, it still indicated that vacancy has jumped upward a full percentage point in the past year.

That’s concerning, though not necessarily a red flag. After all, as employers return to office space, they generally are re-entering space they had been paying for since before the start of the pandemic. This, then, is a number of major office users reducing their shadow space — not pulling available office space off the market.

In truth, vacancy in the office sector at the national level is likely to remain elevated for quite a long time. Tenants are — understandably — hesitant to commit to more space than they already have, meanwhile office construction continues at slightly more than a tepid pace, adding properties that may or may not be in demand to markets that may or may not already have plenty of comparable assets on offer.

Seattle still seems to be a go-to destination for recent graduates and young professionals looking for employment in office-using sectors, at least. Colliers’ report notes that Seattle was the number one city that college students want to move to, citing an Axios survey. While intent to move isn’t the best indicator of actual demographic trends — many students may understandably balk at Seattle’s housing prices, for example — if it comes to fruition, the city would maintain a competitive advantage in attracting talent. Employers seeking to add this talent would necessarily need to size up their office footprints as well, easing pressure on vacancies.

Office Asset Investment Influx in Seattle

Investors seem to have great confidence in Seattle’s sustained recovery. Transactions year-to-date through April totaled $1.3 billion, the Yardi Matrix report showed, landing right alongside other vibrant office economies like Dallas-Fort Worth and the Bay Area.

Like in most other markets, investors have tended to target Class A assets — or value-add opportunities in an effort to flip lower-end buildings into Class A assets. What this means is that, while investment opportunities exist, they either require significant amounts of capital or a keen eye to differentiate an old building with potential from…just another old building. Location is key, as always, but even dated assets in a high-demand area like the Denny Triangle can command prices unheard of in most smaller markets.

Related Questions

What are the current trends in Seattle's office space market?

The current trends in Seattle's office space market are that investors have tended to target Class A assets, or value-add opportunities in an effort to flip lower-end buildings into Class A assets. Vacancy in the office sector is likely to remain elevated for quite a long time, as tenants are hesitant to commit to more space than they already have. However, Seattle is still a go-to destination for recent graduates and young professionals looking for employment in office-using sectors, according to a survey by Axios.

For more information, please see the following sources:

  • JLL's first-quarter Seattle report
  • Yardi Matrix's report
  • Colliers' report

What are the benefits of investing in Seattle's office space?

Investing in Seattle's office space can provide investors with a number of benefits. According to the Yardi Matrix report, transactions year-to-date through April totaled $1.3 billion, which is on par with other vibrant office economies like Dallas-Fort Worth and the Bay Area. Investors have tended to target Class A assets, or value-add opportunities in an effort to flip lower-end buildings into Class A assets. This means that even dated assets in a high-demand area like the Denny Triangle can command prices unheard of in most smaller markets.

Additionally, Seattle is a go-to destination for recent graduates and young professionals looking for employment in office-using sectors. According to Colliers' report, Seattle was the number one city that college students want to move to, citing an Axios survey. This could help ease pressure on vacancies, as employers seeking to add this talent would necessarily need to size up their office footprints as well.

What are the challenges of investing in Seattle's office space?

Investing in Seattle's office space can be challenging due to the high demand for Class A assets and the need for significant capital to purchase them. Additionally, investors need to be able to differentiate an old building with potential from just another old building. Vacancy in the office sector is also likely to remain elevated for a long time, as tenants are hesitant to commit to more space than they already have, and office construction continues at a tepid pace. Lastly, Seattle's high housing prices may be a deterrent for college students who intend to move to the city.

Sources:

  • The Future of Seattle's Office Space
  • JLL's first-quarter Seattle report
  • Yardi Matrix's report
  • Colliers' report

What are the potential opportunities for investors in Seattle's office space?

Investors in Seattle's office space have the potential to take advantage of Class A assets or value-add opportunities in an effort to flip lower-end buildings into Class A assets. Location is key, as investors should look for assets in high-demand areas like the Denny Triangle. Additionally, employers returning to their physical offices may reduce their shadow space, which could ease pressure on vacancies. Seattle is also a go-to destination for recent graduates and young professionals looking for employment in office-using sectors, according to Colliers' report, which could help maintain a competitive advantage in attracting talent.

What are the best strategies for investing in Seattle's office space?

Investors have tended to target Class A assets — or value-add opportunities in an effort to flip lower-end buildings into Class A assets. Location is key, as always, but even dated assets in a high-demand area like the Denny Triangle can command prices unheard of in most smaller markets.

Tenants are understandably hesitant to commit to more space than they already have, meanwhile office construction continues at slightly more than a tepid pace, adding properties that may or may not be in demand to markets that may or may not already have plenty of comparable assets on offer.

Seattle still seems to be a go-to destination for recent graduates and young professionals looking for employment in office-using sectors, at least. Employers seeking to add this talent would necessarily need to size up their office footprints as well, easing pressure on vacancies.

For investors looking to invest in Seattle's office space, the best strategies are to target Class A assets, focus on location, and consider the potential of dated assets in high-demand areas. Additionally, investors should be aware of the current market conditions, such as tenants being hesitant to commit to more space than they already have, and office construction continuing at a tepid pace. Finally, investors should be aware of the potential of Seattle as a go-to destination for recent graduates and young professionals looking for employment in office-using sectors, as this could lead to employers needing to size up their office footprints, easing pressure on vacancies.

In this article:
  1. Worrying Vacancy in the Seattle Office Space?
  2. Office Asset Investment Influx in Seattle
  3. Related questions
  4. Get Financing
Categories
  • Office Real Estate

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →
Janover logo

Commercial Real Estate Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487

hello@commercialrealestate.loans

Commercial Real Estate Loans

Eligible Property Types
Mortgage Rates
Commercial Loan Calculator
Glossary

Site Information

Privacy Policy
Terms of Use

This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

Copyright © 2023 Janover Inc. All rights reserved.