The office market in Puget Sound continued to be one of the most active in the country during the third quarter of 2018.
A report released by Colliers International found office market vacancy dropped to 8.1 percent. Regionally, Amazon remained a large player, occupying space in Seattle’s Lake Union last quarter. Companies and job seekers from San Francisco were major demand drivers for the decrease in office space. Rental rates in Bellevue’s business district increased during the third quarter.
While vacancy is down on the whole in Puget Sound, the Eastside office vacancy rose slightly to 5.8 percent due to some companies moving out of the Bellevue business district which was eventually occupied by large tech companies.
The report stated that on the Eastside, large blocks of office remained low for all areas, with Google’s rumored purchase of the Kirkland Urban campus removing the largest remaining block of office from the market. If that deal goes through, the report said it would leave only a single block with more than 75,000 square feet of space on the Eastside.
California-based Preylock RE Holdings purchased the Willows Creek Corporate Center in Redmond for $117 million where Facebook is leasing 250,000 square feet.
The only large construction project to break ground during the third quarter was the Block 16 project in Bellevue’s Spring District. The 11-story Block 16 development is scheduled to open by January 2020 after $107.5 million in construction financing was secured for the project last May. The project will offer the Spring District 316,000 square feet of office space in addition to 13,000 square feet of retail space.
In another notable development, the building at 100 Atrium Place in Bellevue was sold by Lionstone Investments to Scanlan-KemperBard in September for $112 million.
The report said tenants are looking for a total of 6.6 million square feet of space, with 2.9 million of that being on the Eastside. Nearly 70 percent of those tenants on the Eastside are tech companies.