Commercial Real Estate Report Seattle – Q1 2022

Seattle Commercial Real Estate Market Q1

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 first quarter of 2022.

Seattle Office Buildings

Buildings are more desirable when they include the latest technology and amenities. Many companies shifted to a hybrid work model, with the focus moving to quality over quantity of square footage. Going forward, 87% of larger companies plan to use a hybrid work approach according to an Occupier Sentiment Survey. However, Seattle didn’t see a shortage of office space being sold, leased, or built.

There is 10.3 million square feet under construction in the Seattle area. Seattle is behind just the New York City and Boston markets. Downtown Bellevue, Redmond, and Lake Union proved the most active areas for office space construction during the first quarter.

For example, Vulcan Real Estate sold Google’s campus on the northern end of South Lake Union to Deka Immobilien. The German investment firm purchased the campus in February with the square footage totaling 635,000sf. Sold for $802 million, the campus consists of four buildings which sit on two blocks. Notably, in the Downtown core, the Second & Seneca and 1101 Second Avenue buildings sold for $382 million. Combined, the square footage is approximately 543,464sf. 

Warehouse Available at 1523 NW Ballard Way

Industrial Market on the Rise

Seattle’s industrial market remained strong during the first few months of 2022.  CrowdStreet ranked the Seattle-Tacoma area as the third best place to invest in industrial real estate. Many companies adjusted to onshore inventory in an attempt the mitigate supply chain issues. Therefore, industrial vacancy was at just 3.3%, making it a highly competitive market. 

Innovar 4 S Idaho LLC, a local group, sold an industrial complex at 4 S. Idaho Street. The complex, comprised of three warehouses, sold for $16.5 million. At roughly 49,364 square feet, the cost per square foot was approximately $334. In February, a four building industrial complex at 3200 First Avenue S. in SoDo sold. The buyer, CGA II LLC, purchased the building from Sirenas Security LLC for $13.1 million.   

 

Multi-Family Sales and Developement

West Edge, a multi-family building located at 1430 Second Avenue, sold for $293 million. The luxury apartment tower has 340 units, with Kuhl and Wells Fargo in the ground floor commercial units. An unnamed limited liability company associated with PGIM Real Estate purchased the 39 story building. Another notable sale was at 1017 East Republican Street in Capitol Hill. The land sold for $5.56 million. Consequently, three single family homes will be demolished in order for construction to begin. A 155 unit 8-story multi-family building will replace the structures. 

Bosa Development will begin construction on their 3rd & Cherry project, formerly called Civic Squareafter years of delays. Proposed in 2017, permits for shoring and excavation were granted this March. The property sits across the street from Seattle City Hall. It is intended to be the home of a 58 story building with 423 residential units. Additionally, the building will also include retail spaces and a public plaza. James K.M. Cheng Architects designed the $300 million project. 

 

Does the Future Look Brighter for the Seattle Job Market?

According to City of Seattle’s Economic and Revenue Update, the first quarter saw 1.8 job openings per unemployed person. Moreover, 85% of jobs lost since the pandemic have been restored. Nationwide, the unemployment rate fell to 3.6% in March. Regionally, restaurants and hotels are seeing a great need for workers as tourist season nears. The industries, however, have not had much success in hiring.

Downtown Seattle

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.