Seattle Office Space News – January 2020

5/ February 2020

Below are
comments and links to news articles and other topics relevant to the Seattle
office space market from the month of January 2020.

OFFICE DEVELOPMENTS

Alexandria purchased  the Copiers Northwest building located at 601 Dexter Ave N in South Lake Union last summer and the first design review was held in January. The plan includes a 14-story office tower comprised of 232,830 square feet and underground parking for 233 vehicles. NBBJ is the architect and the project will pursue the Living Building Pilot Program which allows for extra square footage with the addition of green features.

The University of Washington has selected Lincoln Property Co to develop the University District Station Building located at 4300 Brooklyn Ave NE. The project will sit above the subterranean U-District light rail station that is scheduled to open in 2021.  The size of the building is yet to be determined although the University of Washington has agreed to lease 175,000 square feet there.  Perkins + Will was selected as the architect for the project that has a completion expected around 2024.

OFFICE LEASES

This month we learned about four new office leases in the Central Business District. Bank of America subleased six floors from Amazon at Rainier Square located at Fourth Avenue and Union Street in the Central Business District. There are 550 employees that will consolidate into the six floors when the second tallest tower in Seattle is complete later this year. PCC Community Markets and Equinox will be the major retail tenants in the project being developed by Wright Runstad.

DocuSign continues to expand in 999 Third Avenue and it is reported the building will be renamed the DocuSign Tower. The company occupies a total of 227,000 square feet in the building and has approximately 1,200 employees. The 47-story project in the Central Business District was purchased by EQ Office this past summer. General contractor Kiewit began work last spring to renovate the outdoor plaza. The additional floors have room for around 420 DocuSign employees according to reports. 

Slalom added 16,800 square feet to its Seattle footprint as it expands into another floor in the Exchange Building located in at 821 Second Avenue. The company occupies 127,000 square feet and is looking for additional space. The company plans to expand in other markets in 2020. There are 1,500 employees located in Seattle.

Airbnb continues to grow its Seattle footprint from a 5-person engineering team in 2016 to room for 415 workers in 2020. The Seattle group leased another floor at 720 Olive Way and now occupies 58,300 square feet in the building.

OFFICE BUILDING SALES

The Delmar Building at 108 S Washington St in Pioneer Square sold for $7.3 million in January.  The purchase price for the 22,770 square foot building equals $323 a square foot.  The buyer was Delmar Plus Inc. associated with Seattle Gummy Co. a drug-delivery systems maker and the seller was SRO Properties.

ECONOMY

In 2020, the amount of inventory will determine the growth of the housing market. Forecasters say it is hard to predict what will happen after the plateau last year. Inventory will be the biggest factor. “In a Zillow and Pulsenomics survey of 110 economists and real estate experts, an even split thought Seattle would underperform and outperform the national average growth in home value.”

The lack of inventory was seen in late 2019 when the median sales price spiked as inventory plummeted 39 percent from a year ago. The market tends to slow in winter, but across the region sales volumes grew. “December was one of the most active in recent years with an unusual number of ready, willing, and able buyers in the Seattle market. These buyers were competing for little inventory as the year ended,” Coldwell Banker Bain Principal Managing Broker John Deely said.

In 2019, Seattle-area startups received a record high amount of funding according to Pitchbook-NVCA Venture Monitor. There was $3.59 billion received up 20 percent from 2018. The mega-deals were driven by Convoy, Outreach, Auth0, Icertis and others. However, other cities such as New York, Silicon Valley, Boston and Los Angeles receive much more funding than Seattle.

Amazon continues to grow its footprint with a 23 percent increase from a year ago. The company has 798,000 workers across the globe and added 48,000 employees in the last three months. Amazon is now the second-largest employer in the U.S. behind Walmart. The company has more than 35,000 job postings listed with 11,000 jobs listed in Seattle alone.

According to a new study by Dice, Seattle is ranked second for the highest tech salaries. In 2019, the average salary was $109,628 up 4.8 percent from the previous year. Silicon Valley ranked first with an average salary of $123,826 up 4.7 percent from the previous year. Overall, the increase in pay can be partly attributed to Seattle’s aerospace tech workers who known for higher salaries.

As construction activity decreased in Seattle last year, the cost index increased only 3 points. The last time it rose 3 point was in 2012. General contractor Mortenson advised developers to plan for annual cost increases of 3 to 5.5 percent and stated, “All signs point to stability for the construction industry in 2020.”

ARENA

The redevelopment of Seattle’s Key Arena in Queen Anne continues and is expected to be complete in the summer of 2021. The biggest challenge for Oak View Group, the firm leading the project, has been preserving the existing roof that was designed in 1962 by architect Paul Thiry for the World Fair. The roof is currently supported by 72 temporary steel columns and other steel structures as workers dig deeper in order to double the size of the arena.

OTHER NEWS

A big story in Seattle’s office market in the last several months has been the disappearance of demand by Wework.  After the failed IPO in 2019 the company has only signed four new leases across the U.S. totaling 184,000 square feet. In the previous four quarters, the company signed an average of 2.54 million square feet. In Seattle, We Work backed out of a planned We Live project and only opened a few new locations.

A new regional tax has been proposed that would raise approximately $121 million a year from Seattle’s largest employers in order to fund programs that alleviate homelessness. The new proposed bill “allows King County to tax payroll at large companies with employees earning more than $150,000 per year” and these funds would go towards affordable housing, services, behavioral treatment and other programs. Both Amazon and Microsoft have not commented about the legislation, but it was similar legislation in 2018 that prompted Amazon to stop growing in Seattle. To read more click here.

Written by // flinn

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