Commercial Real Estate Report Seattle – Q4 2021
Seattle Commercial Real Estate Market Q4
Is the commercial real estate market slowing down or is it picking up
Seattle commercial real estate covers several different sectors, including but not limited to retail, office, and multi-family. We will look at those three sectors to determine the status of the Seattle commercial real estate market during the fourth quarter of 2021.
Seattle Office Buildings
Seattle is expected to see positive absorption in the coming year. Adjustments are being made since many office employees are either working remotely or following a hybrid work model. The average investment in the office market escalated, however the average increase in rent was lower than previous years. Rent increase went down to 1.8%, 2.8% lower in 2021 than the ten year average.
ScanlanKemperBard, a real estate developer based in Portland, purchased two buildings in Fremont for $26 million. The properties overlook Lake Union and are comprised of both office and industrial space.
Another notable sale was 5th and Bell, a building in the Denny Triangle District, purchased by Hudson Pacific Properties. The company bought the rights to a 50-year leasehold for that doesn’t include the building or the land for $119 million. The space is currently leased to Amazon.
Industrial Market on the Rise
South Seattle continued to be a hotbed for the industrial market in the last few months of 2021. Dermody Properties had a notable acquisition in Kent. They purchased two properties from Olympic Steamship Co. for $62 million totaling 458,000 square feet. The properties are intended for warehouse and distribution.
Last year saw over 23 million square feet of newly leased industrial space in the greater Seattle area, a 44% increase over 2020. Supply chain issues sparked by the pandemic caused a large upswing in industrial development and construction. This climb is due in large part to the demand in the purchase of physical goods.
Multi-Family Increase in Development
More renters moved in than moved out in 2020, and new construction is on the rise in 2021 and planned on in progress in 2022. This new construction should alleviate rent growth in the coming years. A significant number of residents moved into Downtown and South Seattle. Downtown Seattle is seeing 18% growth, with 4,000 new units under construction. South Seattle has approximately 1,400 new units, a 21% growth.
The 1200 Stewart building project located Downtown Seattle’s Denny Triangle will add over 1,050 units and is scheduled to be completed in October 2022. Developed by Canadian based Westbank and designed by Henriquez Partners Architects, the two 48 story towers will host a galleria and creative workspaces. A two story Live Nation a music venue and a distinctive Boeing 747 fuselage are also included.
Does the Future Look Brighter for the Seattle Job Market?
Professional and business services, including technology, saw a marked increase in employment levels. Leisure and hospitality continued to suffer. Despite a dip in hotel demand during October, Downtown Seattle statistics show a rise in December. This hike is most likely due to the holiday season.
Seattle’s unemployment rate fell to 3.3% at the end of the Fourth Quarter. However, reports of inflation in the United States rising 7% in 2021 and the uncertainty of the omicron variant created uneasiness in the future.
Where Can I Find a Seattle Commercial Real Estate Broker?
There are many Seattle real estate companies, but Ewing & Clark has been providing our city with real estate service since 1900. Feel free to reach out to Ewing and Clark or one of our Seattle real estate agents that knows the Seattle commercial real estate market. If you prefer, start today on our Greater Seattle commercial MLS search and let us know what you want to see.
