Office slump hits Seattle hard
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Seattle leads the nation in office rent declines as vacancies climb to record highs, according to a November CoStar analysis.
Why it matters: Seattle's office slump is reshaping the region's commercial real estate landscape — with long-term implications for property values, city tax revenues and the future of downtown.
State of play: Elliott Krivenko, senior market analyst at CoStar, tells Axios the steep drop in leasing demand and rent is already undermining valuations, and true recovery may still be years away.
By the numbers: The office vacancy rate for the region stands at 17.3% with about 43 million square feet listed for sale or lease, per CoStar, and it's projected to peak at 18.3% in 2026.
- The average asking rent for office space in the Seattle metro fell 0.7% from Q3 2024 to Q3 2025.
- The steepest drops have been in the city's central business district, including Belltown and Queen Anne, where rent declined about 2% over the past year, per CoStar.
A separate report by Cushman & Wakefield found downtown office vacancy nearing 35% in the second quarter of 2025.
Yes, but: Cushman & Wakefield notes continued tenant interest in top-tier but lower-priced space — especially large contiguous blocks in and around downtown.
- Return-to-work policies from companies such as Amazon, Google and Meta have helped increase downtown office occupancy and foot traffic, per Cushman & Wakefield's Q2 report.
What they're saying: Krivenko attributes Seattle's declines to weak demand due to the downsizing of tech companies and the prevalence of entrenched remote work.
- "The market's heavy reliance on tech means layoffs and footprint reductions hit harder here than in more diversified cities," says Krivenko.
Zoom in: Landlords are responding with aggressive concessions: larger tenant improvement budgets, extended free rent and more flexible terms — especially in high-end offices, per CoStar.
What we're watching: CoStar predicts the vacancy rate will peak over the next year and begin a slow recovery in 2027.
- Krivenko says the market is already showing some early signs of recovery with lower availability of space actively listed for sale or lease.
- The stabilization of vacancy rates followed by an uptick in large lease signings will signal a broader recovery, Krivenko says.
- The most definitive signal, he says, would be an increase in tech hiring, "given that Seattle's office market often aligns with tech sector trends."