Seattle Real Estate Market Experiences an Explosion of Growth
Companies with headquarters outside of Washington are rapidly rushing to Seattle to open satellite offices. Facebook reportedly leased enough space on South Lake Union to accommodate 2,000 employees. This leaves Dropbox, Apple, Uber, Cisco and Groupon still looking for Seattle-area satellite office.
Seattle employees offer a wealth of talent and these companies are looking at tapping into the tremendous endowment of Amazon, Microsoft and Boeing employees.
This demand for office space is increasing rents, while vacancy rates are at an all time low. This is also causing developers to take out commercial construction loans, to quickly build new buildings to accommodate these satellite offices.
Local tech companies that are looking to expand include Tableau Software, DocuSign, Trupanion and Juno Therapeutics. Non-tech companies include Group Health Cooperative, Holland America Line, NBBJ and Safeco Insurance.
The global real estate firm CBRE requires an additional 3.6 million square feet in the next few years to accommodate their upcoming growth.
The surge for real estate is occurring in urban areas, which is uncommon compared to the increase in suburban office parks more than a decade ago. Today, companies are also demanding more amenities to help attract younger workers, which it putting pressure on landlords to update buildings and take out commercial property loans for renovations.
The tech sector accounts for nearly 44-percent of the commercial interest in office space in Seattle. Ironically, this real estate demand does not account for Microsoft.
Fremont is also seeing a business boom, as more employees want to work, and live and play within walking distances. Instead of working in isolated campuses or office parks, businesses are shying away from these traditional areas and thinking outside the box.
Expedia announced it would move near Elliott Bay in Seattle and relocate 3,000 of their employees by 2018.
Rent spaces are continuing to keep increasing this year due to high demand and a very strong investment market. There is no sign this strong rental market will let up anytime soon, which gives investors great hope for recouping their costs from the last several years.