Commercial Real Estate Report Seattle – Q3 2022
Seattle Commercial Real Estate Market Q3
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 third quarter of 2022.
Seattle Office Buildings
The greater Seattle area has struggled with vacancy rates, which are at about 24%. Similarly, inventory is at a record high and subleasing is on the rise. Despite this trend, there have been some notable sales. The city landmark located at 1404 4th Avenue was sold in July. The building, which had once been the Great Northern Railway building, was sold for 10.6% or $404 per square foot. While many call it the Men’s Wearhouse building, it’s formally called the Fourth & Union building. It has 26,246 square feet and was purchased by Rosauer Real Estate. The Pine Street Group has plans to renovate the art deco building.
On the Eastside, an office building in Bellevue sold for just shy of $8.8 million. The buyers were two LLCs associated with a company in Spokane. The two-story building has 17,144 square feet, with the deal being worth $511 per square foot. Fremont saw the five buildings of Fremont Court sell for a little over $17.4 million. Blueprint 3414 LLC purchased the buildings at around $408 per square foot. The west corner portion will have the existing structures demolished. There are plans to replace the buildings with a 90,000 square foot, 7 story building. The building will include office and retail space as well as apartments and parking stalls.
Seattle Retail Market
The metropolitan Seattle area saw retail rents fall approximately 1% over the last year. Regardless of inflation continuing to lift prices for essentials like food and rent, there’s an expectation that the holiday season will offer a boost to the sector. Shoreline saw some activity in retail property sales, with Ballinger Village selling for over $29.1 million in August. It’s home to heavy hitters Thriftway, Starbucks, and UPS Store. The complex has 110,849 square feet and sits on roughly 8 acres. The purchasers, ROIC Four Corner Square, recently sold another Shoreline property, Aurora Square. Worth $36 million, that deal was for 10 acres of retail at 15300 Westminster Way N.
Also in Shoreline, a retail complex changed hands for $3.2 million. Located at 602 NE 164th Street, the property is anchored by 7-Eleven. No plans have been filed for the 1.7 acre property, which was sold for $44 per square foot. A shopping center in Federal Way was sold for a little over $23 million during the third quarter. The shopping center has 87,578 square feet. The three building complex sits on 7.3 acres of land.
Industrial Market
The square footage for industrial buildings has risen sharply for years, forcing developers to move out of the city center and into suburbs. Smaller properties have a vacancy rate of about 4.6% and larger facilities are sitting around 5.7%. Microsoft purchased an industrial complex in Redmond at the end of August for $107 per square foot. The seller, who had owned the property for over 60 years, sold it for a total of $37.6 million. Microsoft currently plans to use the property to house a new EV charging facility for the Commute & Shuffle Fleet. In approximately two years, the property will house a mixed-use building and parking structures, which will have the roofs covered with solar panels.
Lift III Kent 76th LLC purchased an industrial complex with two buildings on about 389,684 square feet at the beginning of the quarter. The property, sold for $272 per square foot or $106.1 million total, is located in Kent. The Industrial District saw the sale of a two story office and industrial building at 3701 Seventh Avenue S for over $8.7 million. The building, which housed the SoDo Flea Market, as 24,305 square feet and sold for $360 per square foot.
Multi-Family Sales and Development
A top performer thus far in 2022, multi-family properties had the largest sales volume. In early July, Upland at Totem Lake sold for $242 million to IMP Upland LLLC. The property, located at 11723 NE 117th Court in Kirkland , was worth $591,687 per unit. It sits on more than 7 acres and consists of two buildings, which are each six stories. A pair of buildings with a total of 119 units in the University District sold to LLCs associated with Redmond based development company Blue Fern Development. University Manor has 80 units and Campus Apartments has 39 units. They sold for a total of $33 million.
Two Ballard buildings with a total of 155 units sold for $41.5 million. Worth approximately $267,742 per unit, the California based company FPA Multifamily bought apartment buildings Belay and NoBa. Belay at 6559 15th Avenue NW has 104 units. NoBa has 51 units and is at 8022 15th Avenue NW. Additionally, 2900 on First apartments in Belltown sold for $68.9 million. The building sits on half a block and has 15,255 square feet of retail space. The building has 135 units and was purchased for $712 per square foot.
Does the Future Look Brighter for the Seattle Job Market?
According to the Washington State Economic and Revenue Forecast, the economy is continuing to expand even though inflation is remaining high. Unemployment rates dropped to 3.5% nationwide in September, down 0.2% from August. However, the unemployment rate in Washington stayed steady at 3.7%. Building permits declined and home sales slowed, leading to speculation that Seattle-area home prices may have peaked for the time being. Even with interest rates and inflation on the rise and the heavy swings of the stock market, the economy is expected to grow.
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.
