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Thursday, October 06, 2005

Downtown Seattle Office Rents On The Rise

I have made it clear that I personally believe that real estate in the Seattle area is overvalued. However, I hope that I have also made it clear that the purpose of this blog isn't to skew the facts or present "my side" of the story, but rather to provide a resource for those seeking general information on the subject. Is there or isn't there a housing bubble? Only time will tell of course, but in the mean time I hope to provide stories from both sides of the issue, so everyone can decide for themselves what they should do with respect to housing and real estate.

In that spirit, I would like to highlight a comment made on yesterday's post by Dustin of Seattle's Rain City Real Estate Guide.

Since you're discussing the "business climate" of Seattle, I thought I would balance the discussion with this article:

Seattle buildings filling up; some rents on the rise

I think it speaks to the business climate in Seattle much more clearly than one company's experience.
I agree that one business moving out of town is not indicative of an entire "climate." I posted the story merely because it related to my earlier posts. I appreciate Dustin drawing my attention to this story, as it passed under my radar. I'll have to upgrade my radar. Here's a quote from the article:
Expanding companies have gobbled up more than a million square feet, the equivalent of a typical downtown office tower, according to a report from real-estate brokerage Cushman & Wakefield.
Top-tier class-A buildings such as Two Union Square and Bank of America Tower are getting so full that landlords have raised rates by $2 to $5 a square foot, said Wende Sauvage, a Cushman & Wakefield associate specializing in downtown Seattle.

While it's the first time in years that the words "rent increase" have been uttered in downtown Seattle office buildings, rents are more than $10 below the highs of 2000 and well below the $35 a square foot developers say they need to start the next wave of office buildings. The average class-A space rented for $26.96 a square foot in the third quarter, Cushman & Wakefield said.
That sounds like a local economy that's in pretty good shape, which is definitely necessary for protection against "price corrections" in real estate. Does this mean Seattle is not in a bubble, or that we are safe from the bursting effects even if we are in a bubble? I certainly don't know the answer to that question, and I don't think anyone truly can. As I said, only time will tell. But that doesn't mean it isn't fun to speculate in the here and now. *smirk*

(Tom Boyer, Seattle Times, 09.29.2005)

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