Record Office Vacancies in Seattle Raise a Question for Boise Commercial Real Estate
The office market across the United States has been going through a reset. Some cities are seeing stabilization, while others are still working through years of excess space.
One example is the Puget Sound region.
According to reporting and analysis by Elliott Krivenko in CoStar News (you can read the original article here: https://product.costar.com/home/news/1496551523), the Seattle-area office market is experiencing historically high vacancy levels, even though the pace of new vacancy growth has slowed.
For those of us watching Boise commercial real estate, this kind of shift in a nearby West Coast tech hub can offer clues about how the office sector may evolve in smaller growth markets like the Treasure Valley.
Office Vacancy Is Still High — Even if Growth Has Slowed
The Puget Sound office market reached another record vacancy level in the first quarter, though the increase was small compared with earlier years.
Over the past several years, the region has experienced a sharp increase in empty office space. The surge happened as companies downsized, consolidated locations, or adjusted workplace strategies.
Now the market appears to be entering a slower phase of the cycle.
Key dynamics shaping the market include:
- Leasing activity remains cautious and slow-moving
- Large blocks of office space are still available
- Landlords continue offering incentives to attract tenants
- Vacancy growth has slowed but remains historically elevated
Another factor helping stabilize vacancy is the sharp slowdown in new office construction.
The Office Development Boom Has Ended — For Now
During the previous decade, the Seattle region became one of the fastest-growing office markets in the United States.
Developers built aggressively, often starting projects before securing tenants. At the same time, large companies leased extra space in anticipation of continued hiring and expansion.
That environment has changed dramatically.
Speculative office development — buildings constructed without committed tenants — has almost disappeared in the region. Most new projects coming online now are already leased or tied to specific users.
As a result, today’s vacancy levels are being driven less by new supply and more by companies reducing their footprints.
Bellevue Is Drawing More Office Demand
One interesting trend emerging in the region involves a shift toward newer office space in suburban locations.
Eastside markets — particularly Bellevue — have attracted strong leasing interest over the past few years.
Even though downtown Bellevue represents a relatively small portion of the region’s total office inventory, it captured a significant share of recent leasing activity.
Much of the newest space there has already been absorbed by major tenants.
At the same time, large blocks of office space remain available elsewhere, including high-profile properties that lost major corporate tenants.
One example involves a large vacancy created when a major technology company vacated space at a prominent Bellevue property. How quickly that space gets leased again could provide an important signal about future demand.
Seattle Still Has a Large Supply of Office Space
Across Lake Washington, the situation in Seattle itself is more complicated.
Over the past several years, millions of square feet of office space were completed across the city. A large portion of that space is still looking for tenants.
At the same time, older office buildings are competing with newer developments for the same companies.
This has created a challenging environment for landlords.
Some may need to:
- Offer deeper lease incentives
- Renovate or reposition older buildings
- Consider alternative uses for underperforming properties
The future of many of these properties will depend on how tenant demand evolves over the next few years.
What This Means for Boise Commercial Real Estate
At first glance, Seattle’s office market may seem far removed from Boise. But shifts in large coastal markets often influence regional office trends across the West.
Several lessons from the Puget Sound market apply to the Treasure Valley.
Tenant demand is becoming more selective
Companies are increasingly choosing high-quality office space rather than simply expanding square footage.
In Boise, that could mean newer buildings and well-located properties continue attracting tenants while older offices may need upgrades to remain competitive.
New office construction will likely remain limited
Just like Seattle, many markets are seeing a slowdown in speculative office development.
In Boise development pipelines, office construction has already slowed significantly compared with industrial and multifamily projects.
Regional growth markets still have advantages
While large coastal cities are dealing with massive amounts of excess office space, Boise’s smaller market size has helped prevent the same level of oversupply.
Population growth, in-migration, and business relocations continue supporting steady office demand in Boise commercial real estate.
My Take: Boise’s Office Market May Age Differently
From a Boise broker’s perspective, the key takeaway is that market scale matters.
Cities like Seattle built tens of millions of square feet of office space during the last decade. Boise never experienced that level of speculative construction.
That difference could allow Boise’s office market to adjust more gradually.
However, one lesson still applies: tenants increasingly prefer newer, high-quality buildings with modern amenities.
Older properties that cannot compete may need to:
- modernize
- reposition
- or explore alternative uses
In many ways, the national office market is moving toward a quality-over-quantity model — and Boise landlords would be wise to watch that shift closely.
Mike Gioioso (joy-OH-so) has for 16+ years been helping companies of all sizes buy, build, and lease perfect places for business in greater Boise, Idaho and beyond.
www.streetsmartidaho.com mike@streetsmartidaho.com 208-209-9166
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