South Lake Union’s Surge Fuels Falling Office Vacancy

By Alex Girda, Associate Editor  So many technology firms have flocked to Seattle’s South Lake Union neighborhood of late that tracking them is now a distinct challenge. In a sign of the times, Kidder Matthews senior vice presidents Bill Neil and [...]

So many technology firms have flocked to Seattle’s South Lake Union neighborhood of late that tracking them is now a distinct challenge. In a sign of the times, Kidder Matthews senior vice presidents Bill Neil and Chris Moe have even developed a map to keep tabs on the new arrivals, the Puget Sound Business Journal reported this week.

The largest among the booming neighborhood’s residents include Amazon.com, which is in the midst of completing a 10-building headquarters complex, and the Bill & Melinda Gates Foundation, which is building a 1.3 million-square-foot, 12-acre campus. Neil and Moe told the Business Journal that the district’s magnetic appeal baffles even their clients.

South Lake Union’s surging popularity mirrors a larger trend in the Seattle office market, the Seattle Times reported. In the wake of some second-quarter research appearing to contradict the rising demand, some local brokerage companies suggest that the brief downward dip was a hiccup at most. Cushman & Wakefield Inc. is the only company that has recorded a recent increase in the office vacancy rate, tallying an upward shift from 19.8 percent three months ago to 20.2 today.

 But a senior director with the brokerage insists that the uptick in vacancy is primarily a function of how tenant moves are tallied.. A case in point is Amazon.com’s departure from its previous 500,000-square-foot location, which mostly offset the 540,000 square feet of positive absorption represented by completion of phase four of its new headquarters.  

Meanwhile, a drop in vacancy is coming, fueled in part by the opening of Amazon.com’s 460,000 square-foot office building in Denny Triangle, The Times reports. Such new leasing activity may drop vacancy from the 20.2 percent registered by Cushman & Wakefield to about 17 percent.