FANG is the new driving force in Bellevue real estate, so what is FANG? It is an acronym for Facebook, Amazon, Apple, Netflix and Google who are devouring large blocks in the office market in Bellevue, Redmond, and Kirkland. A large part of this move, even given the health of the office market in Seattle, has been the fallout of the ill-conceived Seattle City Council plan for a head tax. Common sense prevailed but there is anticipation for the next move in a city strongly trending towards socialism.
The rents of new spaces are now heading north of $60 per square foot and the volume of anticipated construction is well over 4 million square feet of space. The collateral effect on the demand for multi-family housing for at least another 20,000 people in the next five years will keep this market strong on the Eastside. This will clearly be not only in the rental market but in the condo market as well. There are currently programmed over 6,000 condominiums in the pipeline.
The interesting part of the new construction in office buildings and the leasing of office space is the churning of space in the small buildings in terms of spaces of less than 10,000 square feet. The market is active but is mostly in existing buildings and as a consequence, the increase of rents against new construction has not fully hit. The obvious fear relates to an economy in which interest rates are rising and construction costs are still escalating. The professionals at Seattle Commercial Real Estate believe in the inevitability of the real estate cycle and do not ascribe to the theory that all will be rosy. Prudence is a good word and that is what we counsel.