Seattle is on the verge of becoming the next San Francisco

Seattle, Washington – In a surprising turn of events in the commercial real estate market, Seattle has become a worldwide leader in tech office leasing even as big local businesses reduce their office space requirements. Based on a mid-year analysis by Savills, a commercial brokerage company, the Seattle area leads the world in office lease activity by tech companies, exceeding tech-centric cities like San Francisco and global centers like Delhi.

The five biggest tech offices in the Seattle area leased around a million square feet during the first half of the year, almost twice the area leased in San Francisco. os Angeles followed Seattle, with its top five deals totaling just under 900,000 square feet. This tendency is especially interesting as tech behemoths like Amazon and Microsoft have left multiple office buildings empty as they resize and relocate their operations, so reducing their footprint in the area.

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The tech industry in Seattle exhibits a strong hunger for growth and relocation inside the city. For example, new and startup tech companies are rapidly filling the three large office buildings Amazon just decided to abandon in Seattle’s Denny Triangle in favor of development in Bellevue. Microsoft likewise followed a similar trend, closing four office buildings in Bellevue’s downtown and grouping activities at its Redmond headquarters.

The change to Bellevue is notable; businesses like Snowflake and Pokémon are signing big leases. Snowflake grabbed up over 300,000 square feet in a sublease from Meta in what appears to be a reflection of a faster market bounce in Bellevue than Seattle. At the same time, TikHub has been rapidly growing in Bellevue, leasing large office space to enable its e-commerce operations.

Credit: Getty

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Still, there are indications of strong Seattle activity as well. A digital remittance startup, Remitly leased around 86,000 square feet from Amazon at the Rainier Square tower in downtown Seattle. This action highlights a strategic advantage smaller technology startups utilizing valuable sites left by larger corporations have.

“While some of the bigger tech companies had been looking around Bellevue for most of last year, a smaller company like Remitly took advantage of the Rainier Square sublease,” said Eric Lonergan, executive managing director of Savills’ Seattle office. “I think we’ll see more of that type of deal in Seattle.”

Despite these improvements, Seattle’s general office availability still exceeds desired levels, indicating a slower recovery than Bellevue. Industry professionals such as Colliers’ Connor McClain, however, think that when the market recovers and more businesses apply return-to- office policies, Seattle may experience a rebirth in lease activity.

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“There’s no crystal ball, but there’s one way to go in Seattle and that’s up,” McClain said. “It just might take us a little longer.”

The ability of Seattle and Bellevue to draw and keep IT companies will be vital in determining its commercial real estate market as the dynamics between the two areas keep changing. Apart from reflecting a change in how businesses are reconsidering their office space needs post-pandemic, the current lease trends also highlight a competitive but cooperative connection between the two cities.