The professionals from Seattle Commercial Real Estate have been closely following the downtown Seattle office market for years. Recently, 65% of the revenue for the budget of the City of Seattle is generated in the core area of downtown. Last year the core area hit a vacancy of 35%, a historical high. The cost of this vacancy in 17.8 million square feet in Greater Seattle totals lost rent valued at $791.7 million.
There is a thing called the Urban Doom Loop. Seattle is facing a precipitous decline in the assessed valuations of its office buildings. Seattle has submitted an $81M tax B & O tax increase in a November ballot submission. Mortgage defaults are rising, with a major developer having lost significant parts of a portfolio and now facing the risk of further losses. Other lenders facing foreclosures are “extending and pretending” rather than taking possession of problem properties.
In 2025, we saw the first signs of the shrinking of inventory in sublease space, the precursor to a turn in leasing. Rising from depths of a 35% vacancy factor, Seattle’s office market leads the nation in the percentage of space being absorbed from its historical low. Amazon’s back-to-office policy brought back 50,000 employees to Seattle’s core area, with its obvious impacts on retail spaces adjacent to Amazon’s buildings. Nationally, we lead the nation in those working from home (31.3%), or approximately 140,000 people. This needs to be compared to the 170,000 workers who commute daily.
The amazing thing is that office rents are still holding in the high $40 range in Seattle’s core, while Bellevue downtown office rents are more than $60 in Class A buildings. Seattle Commercial Real Estate’s experts interpret these trends to mean that as companies recognize the need for collaboration and cohesiveness in the office, more people will occupy office space, reducing vacancies. What will ultimately determine the health of the office in the core area? Politicians need to collaborate with business and create a safe, inviting, and drug-free core area. Seattle Commercial Real Estate is hopeful, but we still are skeptical of the commitment from the electorate and the City Council.
