The Puget Sound Region continues to weather the crisis brought on by the COVID-19 global pandemic. Moderate leasing activity prevailed this quarter, although total deal volume was 65% lower than Q3 of the previous year.
Vacancy rose over 200 basis points to 10% in Downtown Seattle, the highest since 2017. The primary drivers were tenant contractions and new construction where tenants delayed their occupancy. In addition, over 670,000 sq. ft. of new sublease space became available during Q3.
The Bellevue CBD accounted for three out of four leases in the region that were 50,000 sq. ft. or larger in size—one notable online retailer being responsible for all three, totaling more than two million sq. ft. This has bumped up Class A asking rates in Bellevue to an all-time high of $61.87 per sq. ft., full service, despite other submarkets experiencing a slight drop-off in asking rents.
While a handful of new properties are coming to market, deal velocity has yet to return. Investors are paying close attention to tenant behaviors regarding occupying the workspace—when tenants begin to return to the office, investor sentiment is expected to pick back up.