Will businesses leave the Seattle real estate market? »Publications» Washington Political Center

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On August 5, 2021, Puget Sound magazine reported that demand for office space Seattle is down 29% from pre-pandemic levels, while demand in other cities is almost back to normal. Demand index for office space View The Space (VODI) reports that this is primarily due to two reasons: local employers not requiring employees to return to the office, and the lack of job advertisements compared to pre-COVID announcements.

There may be other reasons why Seattle is so far behind.

With tech giants like Microsoft, Amazon, Google and Facebook not requiring employees to return to the office until the end of this fall and offering full or partial telecommuting, demand for office space may not return to pre-pandemic levels anytime soon.

Another factor, in part for small businesses that have office space in Seattle and now have employees working remotely, is the inability of these businesses to move out of long-term office leases without penalties. It is unclear how many businesses have long-term leases and are in this situation. When these leases are renewed, will they be renewed at all?

The commercial real estate market may see an increase in occupancy rates when these leases are terminated by businesses that no longer need the premises. This will not affect the market for another 12-18 months when leases started before the pandemic was blocked reach maturity. In contrast to suburban and rural areas, where the space is easier to repurpose for warehousing and use in light industry (a market segment that especially good during the pandemic) high-rise office buildings in the city center are more difficult to change for new purposes.

Recognizing that zoning restrictions could limit recovery, Seattle Mayor Jenny Durcan announced on monday that a temporary 12-month ordinance would allow alternative uses for more than 450 street businesses that closed or left the city during the pandemic.

Despite forecasts that a business could reduce the number of employees associated with an office, businesses that expect to retain some physical presence will need additional space per employee to meet new work safety and health standards for social distancing. This may be enough to mitigate the potential outcome of business leases, but this is unlikely.

It is estimated that the growth in teleworking, even after returning to the office, is around 20% of the workforce. VODI reports indicate that while Seattle does not have the highest number of remote jobs in tech, the honor goes to San Francisco, which ranks as one of the highest cities for remote workers.

The VODI Job Report, which could explain Seattle’s much higher job rate, does not reflect the impact of the rise in homelessness and lawlessness seen in Seattle over the past 24 months. Problems forced employers reconsider your plans before returning to office space in Seattle’s CBD. Several hundred enterprises have moved from Seattle from downtown to the more business-friendly Puget Sound. IN Seattle business tax is also driving business out of Seattle.

Like a Washington political center predicted over a year agoteleworking will become the norm for many employees, and hybrid part-time roles in the office will change space requirements for many enterprises.

One thing is clear: Seattle’s commercial real estate market is changing. What’s not so clear is whether it will return to pre-pandemic employment levels, and if so, how long it will take.

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