While many office spaces remain dark in Seattle’s skyline buildings, Capitol Hill office spaces are nearly full. Only an estimated 7% of office spaces on the Hill are vacant, according to data from commercial real estate firm Kidder Mathews. The report tracks 225 office buildings on Capitol Hill. Since the end of 2012, office space vacancies have hovered between 6-7%.
Rob Anderson of Kidder Mathews tells CHS that the greater Seattle area is probably closer to 10% to 12%. With the exception of South Lake Union and Fremont, Anderson said Capitol Hill is likely the most saturated office market in the region.
“6% vacancy rate for office space is very good,” said Anderson in an email to CHS. “This is probably in the top few sub-markets for vacancy rates in the Puget Sound.”
The 6% rate marks a stabilization from years past. During the prime recession years in 2009-2010, office space vacancies on the Hill shot up to 11%. Businesses started trickling back into offices through 2011, until the vacancy rate dipped below 3% in the beginning of 2012.
And those offices don’t come cheap. Anderson tells CHS that the average annual rent for offices on the Hill hover between $22/sq. ft. to around $28/sq. ft. (this excludes many expensive Class A medical offices).
There is around 6 million square feet of
office space “rentable building area” in Capitol Hill/First Hill, which mostly includes office space. Downtown has roughly 33 million square feet. The only major new office building to come online in Capitol Hill in the last year was the ultra-green Bullitt Center. However several companies have recently expanded into new/old offices, including tech companies Add3 and Substantial most recently and new projects are starting construction or in various states of planning.
On the whole, office spaces in Capitol Hill are more expensive compared to those in broader western King County (which would include Bellevue). Gross rents in Capitol Hill, including medical, go for an annual average of $37/sq. ft., compared to western King County where average rents are $30/sq. ft.