Commercial Real Estate Report Seattle – Q1 2023

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 2023.

Seattle Office Buildings

Subleasing continued to increase in the first few months of 2023. At the end of the first quarter, Seattle had around 7.5 million square feet of sublet space. On top of that also sits 30.7 million square feet of direct office space for lease. Nevertheless, there’s been significant sales thus far this year. In January, a 5,192 square foot office building located at 1313 E Pine Street in the Capitol Hill area was purchased for a little under $3.8 million. The buyer, Meriwether Partners, obtained the building for approximately $731 per square foot. Built in 1969, the property was 0% leased at the time of sale. Towards the end of the quarter, Fremont Dock Company acquired an office building in Ballard for $648.23 per square foot. The fully leased property at 408 N 35th Street was built in 2009 and sold for $4.5 million. 

Bellevue Gateway One, which sits on 9.25 acres, traded to Portland based Felton Properties, Inc. for $35 million or $313.21 per square toot. The seller, Lionstone Partners, LLC, purchased the 111,746 square foot property at 11400 SE 8th Street in the fall of 2019 for $48.5 million. Originally built in 1986 and renovated in 2017, the building was 95% leased at sale. 

Seattle Retail Market

Vacancy rates in King County hovered at 3% during the first quarter. Development remained steady, and local suburban areas saw more activity urban cores. Regardless, notable sales still occurred in the Metropolitan Seattle area. For instance, Silver Cloud Inns & Hotels bought a storefront at 1028 1st Avenue S in Pioneer Square for $6.8 million, or $781.61 per square foot. Silver Cloud purchased the parking lot adjacent to the property for $13.5 million last fall. The district board must approve any new construction. Singapore based GIC Real Estate acquired the outstanding shares of common stock for STORE Capital. The portfolio, consisting of 2,801 properties totaling approximately 28,500 square feet, sold for $15 billion. 

The Lee Building at 600 W Crockett Street in Queen Anne sold for $5.2 million in February. Purchased by Beaver Queen Anne LLC for $396.46 per square foot, the two story building has 17 residential units above retail space that’s home to Targy’s Tavern. The property was previously owned by an area family for over 40 years. 


Office Space for Lease
Second Floor Office Space Available in Ballard

Industrial Market

This year, roughly 4.5 million square feet of industrial space has been completed in the Seattle metropolitan area. Additionally, 12 million square feet are scheduled to be constructed by the end of the year. New tenants and competitive rates are expected.  Los Angeles Iron & Steel Company bought a portfolio consisting of 8 industrial buildings in Federal Way from BKM Capital Partners for $29.5 million. The deal, worth $213.77 per square foot, consists of two portions of Campus Business Park totaling 137,359 square feet. 

A 48,864 square foot warehouse building at 3420 E Marginal Way S in SoDo sold for $145.98 per square foot, making the purchase total $7.13 million. Buffalo Industries owned the property for decades before the sale to Marginal Holdings LLC was finalized in January. A Safeway bottling plant containing 77,937 square feet in Bellevue sold to Alco Investment Company for $25.13 million. That makes the price $322.37 per square foot. The industrial building located at 1500 124th Avenue NE was 100% leased by Safeway at the time of sale. There is 8 years remaining on their lease. 


Multi-Family Sales and Development

At the end of March, there were 35,672 new multifamily properties under construction. In addition, there was 3,707 of brand new construction properties, which is encouraging. The quarter ended with vacancy rates at 6.8% and rental rates on the rise. Georgia based Invesco Ltd purchased 206 Bell Apartments in Belltown from local company Weidner Property Management LLC for $37.46 million.  The 82,818 square foot building holds 123 apartments, which sold for $304,512 a piece. Green Leaf Sky Apartments at 4745 40th Avenue in West Seattle sold for $48.5 million, or $321,192 per unit. There are 151 units in the 112,500 square foot building, which was constructed in 2015.

King County acquired a 37 unit apartment building in Capitol Hill for $11.47 million from Prescott Building LLC in Mark. The 9,827 square foot building sold for $309,918 per unit. Construction completed in 2023, and the county intends to make this property part of its Health Through Housing initiative. The initiative provides previously homeless individuals with permanent supportive housing. 

Does the Future Look Brighter for the Seattle Job Market?

According to the Washington State Economic and Revenue Forecast,  layoff announcements jumped 15%  across the U.S. during the first quarter.  Inflation slowed to 5%, down from 6% in February and at its lowest level in almost 2 years. That number, however, is well above the Fed’s 2% target.  Residential construction climbed, but Seattle-area home prices continue to fall. Higher interest and mortgage rates, as well as credit card debt have dampened the residential market.  Nevertheless, there are signs the residential market is improving, especially considering the upward price trend of the past 5 years.

Downtown Seattle Job Market

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.