General Conclusion: The market is tightening. Vacancy rates will continue to decrease through 2013. Upward pressure will continue on rental rates while concession packages available to tenants will decrease.
Although vacancy rates for the CBD in downtown Seattle are still 11%-18% (depending on class type and information source), this is not an appropriate depiction of the attitudes of landlords here. Large portions of vacant space are concentrated in a handful of troubled or distressed buildings while a majority of landlords are experiencing a much healthier portfolio. Downtown Seattle and specifically the CBD is thus a ‘two-pronged’ market. Interestingly, landlords from both ‘prongs’ are putting upward pressure on rents with the understanding that
Details and Supporting Evidence: Attached are a couple of market reports for your review:
Below is a compilation of statistics from 5 brokerage companies with arguably the biggest research departments in Seattle. The large spectrum of difference between these numbers is a cluster, but when averaged they speak to the same market conditions I have referenced above:
If your company:
then start educating yourself on available alternatives and negotiating with your current building as soon as possible. Given the foreseeable upward pressure on rents, look for buildings/spaces that your organization can use to leverage renewal discussions today. The educational process is cheap/free and should only take a couple of hours.
Alternatively, if your company:
– wait until 6 months prior to your lease expiration and be prepared to act quickly. The 3-6 month window prior to lease expiration is when you are most attractive to potential landlords and when they will offer you the best economics. However, have a lease/sublease signed 3 months before your lease expires. You don’t want to be in a holdover situation or without space and you need to give your company time to complete tenant improvements and plan a move.