Seattle Commercial Real Estate wrote about the Office Market in the CBD and had no sooner published the article on the website than the Puget Sound Business Journal’s CRE Quarterly report looked at the issue of offices nationally as well as locally. The preferred metric as called was “Paid Full Days Worked from Home” and it looks like this trend is clearly sticking.
In 2020 the rate of remote work soared to 60%. The trend appears to be much more popular in West Coast cities than other areas of the US. About 20% of work postings in Seattle stress remote. That is a part of the culture of high tech. The inevitable consequence is a drop in demand for office space. But it needs to be noted that the demand from High Tech companies seeking employees has not declined.
The announcements are clear. Two companies dropped over 31% of their office square footages and Microsoft announced a pause in construction of five office towers in Bellevue and a delay in the start of a sixth tower with a total of over 3,000,000 square feet, a staggering 25% of the existing inventory in downtown Bellevue. Leasing activity has fallen across the board. Seattle’s CBD vacancy rate is now 18.6%.
The facts are that people prefer working from home and to them, this is almost the equivalent of a pay increase of 6-10%. On the other hand, the preferred workdays from home are Monday and Friday. The facts still exist that the demand for office space will not go away, but the demand for Class B office space will suffer the most. The office of the future will be a hybrid and will have companies taking less space and using that space for longer hours with more flexible scheduling.
The impact on downtown retail is significant. CBD retail relies on office occupancy. In Seattle’s CBD until issues of safety and homelessness are resolved it will mitigate a return to a dynamic and vibrant retail core. Seattle commercial real estate is looking around a corner, but the weather report is not completely clear and sunny.
