Seattle Office Space News – July 2020

7/ August 2020

OFFICE LEASES

It was reported in July that the Schultz Family Foundation leased the top two floors of the new seven story office building Watershed located at 900 N 34th St in the Fremont. Weber Thompson designed the building and also leased a floor. Private Division, a subsidiary of Take-Two Interactive confirmed it has leased space in the building as well. Developed by Hess Callahan it is the second ultra-green building they have designed with plans to reduce total energy use by 25% and cut water usage by 75% below the city’s baseline targets.

Also, Goldman Sachs subleased the top office floor of Rainier Square located at 1301-1333 5th Ave from Amazon in July.  It is nice to hear of a couple of deals getting done because easing activity has been virtually non-existent since March.

OFFICE BUILDING SALES

Skanska’s new 2+U 38 story tower located at 1201 2nd Ave was reported to be on the market for sale in July.  There is also a chance Skanska will consider refinancing the 686,000 square foot fully leased asset.  Tenants in the building include SAP Qualtrics, Dropbox and Spaces.

It was also reported that the Weyerhauser headquarters at 200 Occidental in Pioneer Square is for sale. The 183,000 square foot building was built by Urban Visions in 2016 and was a leader in the ongoinb revitalization and redevelopment of Pioneer Square.

Finally, Alexandria Real Estate purchased Turner Construction’s HQ building located at 830 4th Ave S for $19.8 million or $1,508 a foot in July. The seller of the property was Bode Properties IV LLC of Seattle. The acquisition took place after Alexandria purchased the former Salvation Army site just south for $42 million or $602 a square foot.

ECONOMY

In June, Washington State’s unemployment rate dropped significantly. The rate dropped from 15.1% in May to 9.8% in June, according to the Bureau of Labor Statistics. The unemployment rate in Washington is below the U.S. rate of 11.1% for June. The Seattle/Bellevue/Everett metro had a slightly lower rate of 9.3%. In February, Washington’s unemployment rate was 3.8% and according to Paul Turek ESD labor market economist, “once the virus is gone it’s kinda ‘business as usual’. We still have to look at the factors that impact the economy”.

The Seattle area housing market is not nearly as active compared to a year ago, however the market is picking up. Prices have increased due to a strong demand and low inventory. Record low interest rates are fueling the market and the Puget Sound region is a market seeing some of the strongest recovery. According to the Daily Journal of Commerce, “extremely low mortgage rates are helping the market, as are more expansive work-from-home policies ushered in with the pandemic.” Areas outside of the city are seeing higher demand as buyers look to escape crowded cities due to the coronavirus and urban strife. There were 4,350 fewer homes for sale this June compared last. To learn more about the Seattle-area housing market click here.

Furthermore, home buying increased in June and according to the National Association of Realtors, its index of pending sales rose 16.6%, to 116.1 in June. This was the highest level since 2006 and contract signings are now 6.3% ahead of where they were last year. The Freddie Mac reported interest rates on a 30-year fixed rate mortgage dipping below 3%, the first time in 50 years it has slipped that low.

TRANSIT

The lower bridge that connects West Seattle to the rest of the city has become very important to the Seattle Department of Transportation (SDOT) since the upper bridge was closed on March 23rd due to unexpected cracking. The lower bridge has cracks, but they are not abnormal.  The lower bridged carried about 500 vehicles per hour before the high-rise bridge was closed.  Now the lower bridge allows emergency vehicles, essential freight, buses, bikers and pedestrians during peak hours. General traffic can use the lower bridge from 9 p.m. to 5 a.m. To read more about plans to repair the low bridge and maintenance click here.

OTHER NEWS

Amazon extended their work from home policy to January 8, 2021 and also opened corporate offices for employees who want to go to the office. The corporate offices have implemented temperature screenings upon entry, physical distancing measures and new sanitization practices. The latest extension effects restaurant, shops and service providers that operate in and around Amazon’s massive campus in downtown Seattle, however Amazon is offering $10 million in financial assistance to several nearby businesses.

Along with the uncertainty of returning to the office, the Seattle city council passed a tax on corporate payrolls known as the Jump Start Seattle plan. The tax will raise $214.3 million a year to build low-cost housing, support small businesses and fund other programs. This is the largest tax increase passed in the city without a public vote. According to the Puget Sound Business Journal, “the tax starts at 0.7% on salaries of $150,000 at smaller companies and graduates up to 2.4% on compensation of $400,000 and more at companies with $1 billion-plus payrolls.” To read more about councilmembers views and Jump Start Seattle click here.

Written by // flinn

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