These articles are a bit off-topic from the usual news about residential real estate, but I thought they were at least worth a brief mention.
New York Times: In Seattle, Office Vacancy Rate Is Rising Fast
Not long ago, Seattle looked invincible, even as an economic downturn was starting to plague the rest of the country.
High-profile Seattle-area companies like Microsoft and Amazon were adding thousands of jobs, trade with Asia was strong and Boeing was selling thousands of commercial jets. Deemed the best office market in the country in some nationwide reports, the city was attracting real estate investors hungry to buy office buildings and build new projects. It seemed as if nothing could go wrong.
“Out here in Seattle, we were living in a bubble, immune from the rest of the country,” said Bruce Blume, founder of a real estate development firm, the Blume Company.
It was like they thought there was some kind of Seattle… Bubble or something.
The vacancy rate for office space in the central business district reached 10 percent in the third quarter, according to Cushman & Wakefield, still below the nationwide average, but up from 8.4 percent a year ago.
With five new buildings, encompassing about two million square feet, opening next year, the vacancy rate is expected to hit 15 percent. Most of the new space has not been leased.
Sales of office buildings reached $11.47 billion in 2007, some seven times what they were in 2004, according to Real Capital Analytics. Deals so far this year have totaled only $375 million.
Although building prices have tumbled in 2008, it hasn’t been enough to keep investors interested. Since last year, the price to acquire office space has shrunk 32 percent, to an average of $227 a square foot, according to Real Capital Analytics.
From the sounds of it, the commercial real estate market around here is actually getting hit harder and faster than the residential market.
Then again, maybe not? Here’s a competing headline from today’s Seattle Times: Seattle’s commercial real-estate market is No. 1 for 2009
Seattle is the No. 1 commercial real-estate investment market in the country for 2009 — even though it’s in worse shape than a year ago, a new forecast concludes.
It rose to the top spot only because other markets are expected to suffer more from the economic downturn, the report’s authors said.
The forecast, “Emerging Trends in Real Estate 2009,” was released today by the Urban Land Institute and PriceWaterhouseCoopers. It bases its assessment of the overall commercial real-estate situation and individual markets on surveys and interviews with about 700 developers, investors, lenders, brokers and other professionals.