Seattle Office Market Insights: A Consulting Perspective

At Loan Analytics, we strive to provide investors, developers, and stakeholders with actionable insights on the commercial real estate sector. Our latest review of the Seattle office market highlights important shifts in vacancies, rents, and leasing activity—changes that underscore both near-term challenges and long-term value opportunities. Below is a summary of the key market factors, followed by our expert perspective.

Market Snapshot

12-Month Deliveries: 2.1M SF
12-Month Net Absorption: -548K SF
Vacancy Rate: 16.4%
Market Asking Rent Growth (YoY): 0.1%

Though Seattle’s office market continues to navigate record-high vacancies and a tech-driven downturn, new leasing momentum and a tapering supply pipeline signal potential stabilization. For landlords, tenant retention and competitive offerings remain critical; for investors, pricing recalibrations are uncovering opportunities—particularly in areas favored by major corporate tenants.

Demand and Vacancy Trends

Mixed Leasing Activity

Seattle saw approximately 8 million SF of new leasing in 2024—an uptick of about 15% year over year. Notably, large tech occupancies in Bellevue and the Spring District contributed to improved traction. Despite this, overall office demand still lags pre-2020 benchmarks, and net absorption remained in negative territory for 2024.

Sustained High Vacancies

Vacancy rates sit at roughly 16.4%, reflecting a significant departure from the sub-12% levels of past downturns. Tech employment slowdowns, remote work adoption, and corporate consolidations have softened tenant demand. As a result, landlords are offering more flexible leasing terms and exploring adaptive reuses—like residential conversions—to mitigate prolonged vacancies.

Consulting Insight:Owners of prime Class A buildings should weigh competitive concessions, tenant improvement packages, and flexible lease structures to capitalize on newly renewed tech commitments. Meanwhile, smaller or outdated office assets may face greater headwinds unless owners pivot to alternative uses or deliver cost-effective renovations to attract mid-sized tenants.

Rent Overview

Downward Pressure at the Top

Since 2020, Seattle’s office rents have experienced a pronounced decline, outpacing the national average. Class A and Trophy properties (4 & 5 Star) bore the brunt, reflecting both oversupply and subdued large-tenant expansions.

Across the market, year-over-year rent growth registered at around 0.1%, essentially flat. While rents in some secondary locations remained stable, downtown Seattle and certain high-profile tech submarkets continue to see lease rates drop or stagnate as available space outstrips demand.

Consulting Insight:For Class A landlords, it’s critical to maintain price discipline while selectively offering incentives to stabilize occupancy. Owners of value-oriented Class B and C properties may hold firmer on rents, especially if they can differentiate via cost savings or niche amenities—such as smaller, plug-and-play suites catering to tenants leaving older Class A spaces.

Construction Pipeline

Diminishing Activity, But Legacy Projects Proceed

Although Seattle remains one of the nation’s more active office development hubs, construction starts have slowed markedly. Of the roughly 5 million SF under development, the majority is tied to owner-occupants or heavily pre-leased spaces. A handful of marquee projects—particularly in Bellevue and South Lake Union—remain paused until market conditions and leasing prospects improve.

Parallel to this, redevelopment and conversion projects are emerging as supply-side safety valves. Several landlords are investigating or moving forward with partial or full office-to-residential conversions in older, underutilized buildings.

Consulting Insight:Developers and investors considering large-scale office projects should note that new groundbreakings increasingly hinge on securing high pre-leasing commitments—especially in prime submarkets, where corporate expansions can still justify new builds. Elsewhere, exploring mixed-use concepts or adaptive reuse strategies might ensure steadier absorption.

Investment and Sales Activity

Notable but Cautious Transactions

After a historically weak period, 2024 office sales volumes recovered to around $1.5 billion—triple the prior year’s tally, though still significantly below peak levels. Institutional interest remains tempered by uncertainty around rent growth and leasing velocity. In contrast, owner-users have seized on price discounts to purchase and occupy well-located properties.

High-profile deals in Bellevue’s Spring District—totaling over half a billion dollars—demonstrate sustained out-of-state investor interest where creditworthy tenants like Meta and Snowflake anchor projects. Nonetheless, abundant Class A supply, combined with downward pressure on rents, keeps many investors on the sidelines, waiting for cap rates to recalibrate further.

Consulting Insight:Buyers with a medium-to-long-range investment horizon can find compelling deals in places such as Bellevue, Redmond, or South Lake Union, particularly for properties already backed by strong credit tenants. Sellers of well-located assets should highlight stability metrics (like occupancy and tenant credit) and potential for longer-term value amid limited new development.

Local Economic Backdrop

Tech Volatility, but Persistent Growth

Historically, Seattle’s office market has relied heavily on tech sector expansions, notably among Amazon, Microsoft, and a growing constellation of AI and aerospace firms. While layoffs and remote work initiatives have dampened short-term demand for large blocks of space, the region’s deep talent pool continues to draw new occupiers—especially in next-generation sectors like satellite technology and AI.

Consulting Insight:As tech hiring normalizes, Seattle’s combination of skilled workers, robust infrastructure, and relative affordability (versus San Francisco) should sustain demand in the office market. Forward-looking property strategies that cater to collaborative, flexible workspace designs will likely be best positioned to attract tenants adapting to hybrid work.

Strategic Takeaways

Refine Lease Strategies: With vacancies elevated, building owners should differentiate via flexible layouts, turnkey spaces, and robust amenities—particularly at the higher end.
Consider Adaptive Use: Obsolete office product might realize stronger returns by converting to residential, hospitality, or mixed-use—especially in dense neighborhoods.
Select Acquisition Opportunities: Investors open to a multi-year holding period can leverage reduced pricing to acquire quality assets with stable tenants—particularly in Bellevue and other submarkets boasting solid long-term fundamentals.
Plan for a Gradual Recovery: Over the next 12–24 months, further consolidation or slow absorption is likely; however, the Seattle metro’s broad economic strengths lay the groundwork for rebound and longer-term rent stabilization.

Looking Ahead

Though the Seattle office market still faces challenges from subdued leasing and elevated vacancies, there are early indicators that the worst may be passing. A more moderate construction pipeline and the region’s deep, tech-centric economic base suggest room for recovery as market conditions settle.

At Loan Analytics, we provide our clients with the data and strategies to proactively navigate this evolving landscape. From underwriting acquisitions to devising repositioning plans, our tailored guidance positions you to capitalize on Seattle’s eventual rebound—translating short-term dislocations into long-term gains in the office sector.

Sources: CMBS, Moodys, Bloomberg, feasibility study consultant