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Empty office spaces soar in Seattle core

Eric Pryne Seattle Times

Empty office space in downtown Seattle has climbed to levels not seen in decades.

The total vacancy rate hit 21.1 percent during the fourth quarter, according to statistics by brokerage Cushman & Wakefield. That’s “a record vacancy for downtown Seattle,” senior director Matt Christian said.

It hadn’t topped 20 percent before in the 22 years the firm has been tracking the market.

There’s nothing official about Cushman & Wakefield’s numbers: Every brokerage calculates the vacancy rate differently. Grubb & Ellis pegged the fourth-quarter rate at 18.9 percent. Colliers International said it was 17.6 percent.

But all agreed that empty office space increased between 2 and 3 percentage points from the previous quarter. And all agreed the rate has nearly doubled over the past year, driving down what landlords are charging tenants for new leases.

The downtown vacancy rate probably will continue inching up in 2010, several real-estate professionals said – but it’s likely close to its peak.

“We think the end is near,” Christian said.

The vacancy rate has soared not only because demand for office space has declined but because the supply of it has increased – “a devastating combination,” said Patrick Mullen, research analyst with Grubb & Ellis.

During 2009, developers delivered 2.1 million square feet of new downtown office buildings that they started building before the crash. Most of that space remains unleased.

The amount of vacant downtown office space increased by 1.2 million square feet during the fourth quarter, according to Cushman & Wakefield. The mostly unleased new buildings delivered during the quarter accounted for most of that.

Now, however, the supply pipeline is about to run dry. “Pretty much all the supply that was going to come on the market has by now,” Mullen said.

Just one 200,000-square-foot unleased office building will be completed this year, he said. Vulcan is building 1.3 million square feet in South Lake Union, but that’s already spoken for, leased long-term to Amazon.com.