Record vacancies hit downtown Seattle
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Seattle's skyline towers over Elliott Bay, but record-high office vacancies cast uncertainty over the future of downtown's recovery. Photo: Joe Sohm/Visions of America/Universal Images Group via Getty Images
Seattle's office market is sitting at record-high vacancy and availability levels, raising fresh doubts about how quickly the city's downtown can bounce back, even as return-to-office mandates kick in.
Why it matters: Prolonged vacancies, plummeting property values and fire-sale deals on major buildings signal ongoing financial distress for landlords and developers, with potential ripple effects across the city's real estate market.
What they're saying: The Puget Sound region's office market is showing signs of stabilization, with many areas seeing steady or falling availability rates over the past few months, said Elliott Krivenko, Seattle analyst for the real estate information company CoStar Group.
- "There's just one exception: the city of Seattle."
By the numbers: In Seattle's central business district, availability — a measure of currently occupied offices with tenants that plan to leave — was at 34% at the end of January and vacancy was at 30%, Krivenko said.
- Those are record highs, according to CoStar data that goes back to 2005 and 1982, respectively, Krivenko told Axios.
- By comparison, availability on the Eastside stabilized last year around 16% — with large leases from Pokémon, TikTok and Snowflake — while availability went down in the remainder of King County, as well as in Pierce and Snohomish counties, per CoStar data.
- As of October, more than 25 million square feet of office space in the city of Seattle was on the market, representing 58% of the region's total available space, per CoStar.
Between the lines: Small businesses in the Emerald City see return-to-office mandates, such as Amazon's, as a lifeline and a must for downtown recovery, City Council President Sara Nelson previously told Axios.
Yes, but: But Krivenko said the data shows a turnaround will take more than those policies alone.
Reality check: Workers returning is just one ingredient needed for downtown's continued revitalization, DSA president and CEO Jon Scholes told Axios in an email.
- The city also needs more local visitors, more residents, more guests from out of town and more interesting and vibrant activities, he said.
- With Waterfront Park open, the 2026 World Cup on the way and the possibility of a new NBA team, the path to progress is "right in front of us," Scholes said.
The big picture: Last year, Seattle's financial district was listed as among the most vulnerable in the U.S., along with San Francisco's and Houston's, according to a Kaplan report showing defaults on commercial real estate loans climbing amid soaring office vacancy rates.
What we're watching: Seattle leaders are betting on a broader strategy beyond return-to-office mandates, Mayor Bruce Harrell told Axios in an email.
- His plan for downtown includes strategic rezoning, relaxed design regulations and streamlined office-to-housing conversions.