Seattle, Washington’s commercial real estate market represents a fast-growing, thriving area ripe for property and tenant investment.
The Pacific Northwest metro is one of the fastest-growing cities in the country, and dozens of leading businesses call Seattle home. Crexi provides a window into Seattle’s bustling commercial real estate market and equips property seekers with the tools they need to search, analyze, and exchange commercial assets.
Brokers in Seattle and those representing Seattle properties utilize Crexi’s powerful marketing platform and tools to boost their listings’ exposure and close more deals. Crexi has helped brokers close over $440 billion in commercial contracts and market more than $5 trillion in assets.
Crexi proudly supports Seattle, Tacoma, Renton, Bellevue, Kirkland, and the surrounding communities as the region’s fastest-growing online CRE platform.
The State of Seattle Commercial Real Estate
Seattle is the largest city in Washington State and the 15th-largest city in the United States. Located on Puget Sound, Seattle is a major port city with a thriving business community and vibrant cultural scene.
The economy of Seattle is bolstered by its abundant natural resources, including forests and fisheries that support lucrative industries such as technology, timber production, fishing, and seafood processing. Additionally, Seattle’s mild climate makes it an ideal location for outdoor sports, recreation, and tourism activities.
The Puget Sound region also offers many advantages to businesses looking to relocate or invest in commercial properties. There are countless opportunities for real estate investment, from urban areas like downtown Seattle to countryside communities in the surrounding area. Properties here often feature access to nearby waterways for recreation and transportation purposes and ample space for expansion.
Seattle Regional Breakdown
Despite narratives about center cities dying and suburbs being popular for tenants and homebuyers, Seattle is still the main driver of population growth in King County. Suburban cities appear to lag behind due to their restrictive zoning policies and reluctance to approve housing construction in high-demand areas, particularly when it comes to multifamily dwellings.
- Seattle is home to over 735,000, with nearly 2.3 million in King County and over 4 million in the metropolitan area.
- Per census data, the population of Seattle increased by 21% (2020 vs. 2010), while King County grew by 17.5% over the same period, according to the US Census Bureau.
- The largest cities in the metropolitan area include Seattle, Tacoma, Bellevue, Kent, Everett, and Renton.
- Seattle MSA is the 15th most populous in the US.
- The region is planning for 250,000 more residents over the next 20 years.
- The median age is 37.5, a little less than in the United States.
- 45% of the residents are between the ages of 20 and 49.
Seattle Job Market
Seattle is ranked among the best places to find a job in 2023 by WalletHub, based on key criteria including job opportunities, employment growth, average monthly salary, and employment outlook. The employed population in the metro area is 2.1 million, growing by nearly 1.9% over the past 12 months.
- The most in-demand jobs in Seattle include cybersecurity analysts, data scientists, web developers, editors, and market research analysts, according to the University of Washington.
- Unemployment in Seattle is at 3.4% (Bureau of Labor Statistics December 2022), about the same rate prior to the pandemic.
- As reported by the BLS, the fastest-growing job sectors are construction, leisure and hospitality, manufacturing, and information services.
- The GDP of Seattle-Tacoma-Bellevue is nearly $480 billion, increasing by 91% over the past ten years.
- Key industries in Seattle are health services, construction, professional services and life sciences, technology, maritime, manufacturing, and logistics.
- Top employers in the Seattle metro area are Amazon (1.3 million), Starbucks (349,000), T-Mobile (75,000), Microsoft (181,000), and the University of Washington (34,600).
- Public and private colleges and universities in Puget Sound include the University of Washington, Seattle University, Seattle Pacific University, and the Seattle Colleges District.
- Nearly 47% of the residents hold a bachelor’s degree or higher, about 20% more than the rate in the state and 1.3 times higher than the rate in the US.
- Seattle’s transportation infrastructure includes several Interstate and State highways, mass transit, freight rail, the Port of Seattle, Boeing Field, and Seattle-Tacoma International Airport.
Seattle Industrial Market
The Seattle industrial market showed resilience in 2022, with investment activity rebounding after a slowdown in the third quarter and leasing demand remaining strong. A total of 4.4 million square feet was preleased as part of new construction, although delivery has been delayed due to labor strikes and supply chain issues.
The exceptionally tight supply in the Puget Sound market continues to benefit landlords, with vacancy near record lows and rents on the rise. The Q4 2022 Seattle Industrial Market Report from Newmark shows:
- Total industrial inventory: 313,658,659 SF
- Direct asking rent: $12.49/SF per year NNN vs. $11.31 a year ago
- Vacancy rate: 3.3%, a decrease of 0.7% over the last 12 months
- Absorption: 7.4 million SF (2022)
- Key leases by tenant: Electrolux 299,000 SF, Kaye Smith Business Graphics 124,000 SF, Richelieu 83,600 SF, Alliance Packaging 53,000 SF
- Recent sales activity by property: Pacific Gateway $260 million ($316/SF), Renton Logistics Center $120 million ($250/SF), 3130 Hogum Bay Road NE $23.9 million ($166/SF)
- Largest industrial submarkets: Kent, Sumner/Puyallup, South Seattle, Marysville/Everett
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Seattle Office Market
According to Newmark’s most recent report, the Seattle office market saw a weakening in the fourth quarter of 2022, as overall absorption was negative 685,252 square feet for the year. This coincided with an 11.8% increase in vacancy , direct availability at 14.0%, and sublease availability at 4.5%. Despite this uptick in available sublease space, there is still 14.2% less space available than at its peak in 2021.
Investors may want to focus on areas with higher quality properties that have maintained appeal despite economic uncertainties. Tenants looking to lease space may find themselves with more options, but may also face higher-than-normal competition for the best office space in Puget Sound.
- Total office inventory: 130,587,640 SF
- Average asking rents: $45.71/SF per year, full-service gross
- Asking rent change: 4.0% year over year
- Vacancy rate: 11.8%
- Absorption: -685,252 SF in 2022
- Key leases by tenant: Kimley-Horn 46,466 SF, P2S Engineering 23,650 SF, Statsig 20,696 SF, Parametrix 16,865 SF
- New construction: 9.1 million SF currently under construction
- Key sales by property: Southgate Campus/Valley Office Park $84 million ($176/SF), Belle View Office Park $28 million ($487/SF), Alderwood Business Campus $26.3 million ($190/SF),
- Largest office submarkets: Central Business District, Lake Union, Bellevue CBD, Pioneer Square/Waterfront
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Seattle Retail Market
The Q4 2022 Seattle Retail Market Report from Kidder Mathews reveals activity has been gaining velocity, with increased leasing, rising rents, and low vacancies. Since the start of the pandemic, remote and hybrid work have continued to impact urban cores as daytime employment figures remain lower than pre-pandemic levels. This trend is also seen in suburban retail markets.
About 460,000 SF is under construction, including Black Diamond Crossing in East King County and various strip centers, freestanding shops, and pad developments. In some instances, lower-density retail centers are being redeveloped into higher-density mixed-use buildings with ground-floor retail. Here are the most recent stats according to KM and the NAR Commercial Real Estate Report:
- Total retail inventory: 179,109,602 SF
- Average asking rent: $28/SF per year, NNN
- Rent growth: 5.4% year over year
- Vacancy rate: 2.7%
- Absorption: -101,100 million SF over the past 12 months
- New construction: 460,000 SF under construction
- Investment sales trends: $2.0 billion with just under 600 transactions
- Average cap rate: 5.3%, declining by 50 basis points year over year
- Average transaction price: $418/SF up from $375/SF in 2020
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Seattle Multifamily Market
Multifamily housing in Seattle remains relatively stable, according to a report from MHN. Vacancies, rental rates, and construction deliveries have all seen an uptick while unemployment has dropped. This year alone saw 8,200 units break ground from 28,000 under development.
Transactions also surpassed last year’s volume, with more than $3.2 billion recorded so far this year. The average cost per unit is up over 9.3%, compared to this time last year. Here are the most recent performance stats of Seattle multifamily from Kidder Mathews:
- Total housing units: 1,678,969
- Renter occupied: 39%
- Multifamily inventory: 654,798 units
- Average asking rent: $1,843
- Rent growth: 2.8% year over year
- Vacancy rate: 6.8%
- Net absorption: 592 units in Q4 2022
- Investment sales trends: $372,161/unit average, an increase of 9.34% year over year; cap rates 4.6%
- Recent sales activity by property: Kiara $322.2 million ($699,002/unit), Toscana Apartments $123.9 million ($315,221/unit), 624 Yale $103.9 million ($504,404/unit)
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