Tuesday, November 11, 2008

Seattle Market Overview

Andrew Patterson - Associate Finance Officer, Seattle

As the commercial real estate financing market is constantly changing, it is important to follow market trends. Vacancy rates, lease rates, and space absorption are just a few factors that can affect the value of the commercial real estate asset. Please find a summary of the recent market trends for each property type below:

Office Market

  • Overall vacancy rate in Seattle rose 160 basis points to 10.0%
  • 3rd quarter had negative absorption of 365,006 square feet
  • Weighted average lease rates increased 3.3% to $38.50 psf
  • Concern over WaMu’s potential to increase vacancy in the CBD
  • 2.5 million square feet of speculative office under construction

Industrial Market

  • Seattle area's vacancy rate decreased by 50 basis points to 4.1%
  • Aerospace manufacturing increased 4,470 jobs YTD 2008
  • 645,000 square foot IKEA Distribution Facility completed in Puyallup
  • 1.2 million square feet of industrial space currently under construction
  • Port activity down 10% in Seattle & 1.7% in Tacoma YTD 2008

Multifamily Market

  • Market vacancy moved up 70 basis points to 4.8%, excluding new construction
  • Average rent $966, representing an 8% compound annual increase
  • 16% of properties offering rent concessions compared to 10% one year ago
  • 2000 new units in 2008, with a projected 6,400 new units in 2009
  • Rents forecasted to climb 2.7% by next March

Retail Market

  • King County retail vacancy climbed 50 basis points to 4.4%
  • Net absorption of 929,154 square feet in the 3rd quarter
  • Average rental rates decrease marginally to $22.63 psf
  • 3.7 million square feet of retail space currently under construction
  • Taxable retail sales up over 3% in Seattle
*All market information taken from local market reports by CoStar, GVA, and C&W

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