Eastside Office Trends Show Promising Signs As WA Nears Reopening

BELLEVUE, WA — Seattle and Eastside office rents remained relatively flat through the first three months of 2021, according to a new report, but real estate experts expect a significant change on the horizon as Washington fully reopens in June and more workers head back to the office.

Savills, a global real estate firm, recently compiled its first-quarter analysis of commercial trends for Puget Sound, finding a few signs of hope for an economic rebound. Overall, the firm found office rent rates stayed relatively stable through March, except for a small increase already seen in Bellevue's Central Business District.

"This is a sign the market is picking up again after rates fell 5% year-over-year," Savills wrote. "Rates will undoubtedly continue increasing, prompting tenants to secure long-term leases to lock in today's power pricing."

Availability for office space grew across the region in the first quarter, with Bellevue seeing the most notable shift, the report found. Despite more availability, Savills logged an 84 percent surge in new office leases, marking a major rebound from the last three months of 2020 amid the third surge of COVID-19 infections.

The firm also noted leases also highlight the differences in approach to post-pandemic plans at large employers, particularly between Amazon and REI.

"Amazon has voiced moving to a hybrid office model and continues to be active in the market, leasing 600,000 square feet (sf) at The Artise building in the Bellevue CBD. Conversely, other local firms such as REI are cutting back on large blocks and moving to smaller satellite offices. The outdoor retailer leased 69,000 sf at 2005 Poplar on the Eastside, signaling a shift to a satellite office-centric model. Other tenants, such as law firms, are more likely to return to the office due to specific remote working challenges such as onboarding and antiquated technologies."

As more of Seattle's largest tech employers, including Microsoft, move forward with the gradual return office work, Savills predicts other firms will continue to follow suit, boosting demand for office space in the coming months.

Among the top 10 major transactions Saville tracked in the first quarter, the firm said nearly 90 percent were on the Eastside, including the 600,000 square feet Amazon leased at the future Artise tower in Bellevue and the REI satellite office planned in Issaquah.

When it comes to leasing rates, Savills found the Eastside nudged out downtown Seattle for the top spot, with asking prices averaging close to $43 per square foot.

Read the full report summary on the Savills website.