Commercial Real Estate Report Seattle – Q2 2023
Seattle Commercial Real Estate Market Q2
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 second quarter of 2023.
Seattle Office Buildings
Office leasing activity was well below average during the first and second quarters of 2023. The Seattle metropolitan area only saw 3.6 million square feet leased thus far this year. Seattle proper and the Eastside saw the most activity, but activity doesn’t necessarily mean occupancy. Companies, like Google. T-Mobile, and Amazon will not be renewing existing leases. Towards the end of June, Cleveland based company Ponsky Capital Partners purchased 16310 NE 80th Street in Redmond from WWJB LLC for $10 million. The building, called Cascade View East Office, sold at about $713 per square foot. Built in 1983, the 3 story building has 14,022 square feet and sits on 25,700 square feet of land.
Wang Results sold a vacant two story office building in Bellevue to Intracorp Homes for $10 million. The approximately 60,423 square foot building is at 3190 160th Avenue SE. Built in 1982 and renovated in 2007, it sold for just short of $298 per square foot. Similarly in May, a 2 story 4,760 square foot building in Ballard. Constructed in 1926, Linda Carnell sold the property to nonprofit Roots for Wings, which makes grants that service low income children and families. The office building sold for approximately $342 per square foot and is on 4,356 square feet of land.
Seattle Retail Market
Back-to-office mandates from companies such as Salesforce, Farmers, and Amazon helped increase foot traffic in Seattle, with downtown areas seeing the most marked increase. That uptick helps boost sales in retail spaces in the area, with restaurants seeing the largest improvement. May saw a 9.5% rise in midweek traffic from April, which coincides with the enforcement of Amazon’s mandate. Also in May, the Cinerama at 2100 4th Avenue in Belltown sold for $5 million, or $252.53 per square foot. The seller was the Paul G. Allen Family Foundation. The 19,800 square foot building was constructed in 1962. The theater, closed since 2020, was purchased by SIFF who intend to reopen it under their operation.
A 8,230 square foot vacant retail building in Redmond at 15015 NE 24th Street sold for $5.25 million, or $637.91 per square foot. The building, which was previously Round Table Pizza, was built in 1984 and was vacant at the time of sale. The seller was locally based Allen Friedman with AJE LLC and the buyer was Stream Real Estate Development & Investment, which is also local. A free- standing retail building at 14926 Aurora Avenue N in Lynnwood sold in June for $403.41 per square foot. The three-story building was sold to Irons Brothers Construction for $1.75 million. The company is relocating their business.
Labor disputes at the ports of Seattle and Tacoma threaten to slow down demand for industrial real estate. The availability rate of such real estate properties was a 8% in mid-June, with that figure including new construction. Local company PAR5 Investments sold 11731 120th Avenue NE for $6.35 to Oregon based Gee Automotive Companies in June. The 17,920 square foot fully occupied warehouse in Kirkland sold for $354.35 per square foot. The building has two stories and was built in 1977.
The Scharhon Family LLC sold a building that was previously the home of Halfon Candy Company in West Seattle. Sold for $8 million in April, the 31,300 square foot warehouse is located at 9229 10th Avenue S. National Products, Inc. bought the building for $255.59 per square foot. Similarly, a warehouse in Magnolia was sold by Lyle and Andre Snyder to Bedrock CPA Group, LLC for $386.88 per square foot for a total of $4.1 million. The property, located at 4219 22nd Avenue W, was built in 1979 and has 10,625 square feet. The warehouse was fully occupied at the time of sale.
Multi-Family Sales and Development
Governor Inslee signed legislation to increase housing during the second quarter. House Bill 1110 limits single family housing and changes zoning laws to allow most neighborhoods to include duplexes, triplexes, and fourplexes. The bill was signed in order to help combat the housing shortage. BDR Sonata West sold Encore Apartments to California based Green Leaf Partners Management. Located at 4689 Martin Luther King Jr Way S in Columbia City, the 96 unit multifamily property will be renamed Green Leaf Encore. At the time of sale, vacancy rates were at a low 1.9%. Built in 2022, the property sold for $35.32 million, or $367,917 per unit. Commercial units below were leased by Cameron Kent of Ewing & Clark. The retail tenants, Biojunction Sports Therapy and Pure Barre will open for business soon
Unico Properties sold 80 Main Apartments, located at 80 S Main Street in Pioneer Square, to Ranjiv Singh Hayre in April. Construction for the mid-rise, high end apartment building was completed in 2016. Its 7 stories hold 45 units within 28,990 square feet. Priced at $335,556 per unit, or $15.1 million, the building was 9.3% vacant at the time of sale. SR Investment Group LLC sold 7705 168th Avenue NE to local buyer Pine Forest Properties, Inc. for $46.5 million. Aria Apartments, located in Redmond, was built in 2021. It holds 102 units and 126,186 square feet and was 2.9% vacant at the time of sale in late June.
Does the Future Look Brighter for the Seattle Job Market?
According to the Washington State Economic and Review Forecast, the job market is showing signs of slowing, though it remains strong for now. At the end of the second quarter, Washington’s unemployment rate was 4.1%, higher than the national average of 3.6%. The Federal Reserve raised interest rates, causing home prices to fall and affordability to plunge. Interest rates will continue to rise in an attempt to lower inflation. In June, consumer price inflation in Seattle surpassed the national average.
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.