According to Colliers International’s Q2 Research & Forecast Report, which spans the beginning of April to the end of June, the Puget Sound market has “slowed” — in line with trends across the United States — amid COVID-19 uncertainty.
Leasing activity decreased in the area during the second quarter, according to Colliers, with a 180 percent reduction in signed deals for spaces greater than 10,000 square feet. The report notes that although this reduction is significant, most developers view the decrease as “more of a hiccup than something more terminal.”
Construction on the 7.7 million square feet of space underway in the Puget Sound region was either delayed or slowed by the coronavirus. In the report, Colliers notes that 46,000 square feet of construction was delivered in the quarter. The pipeline, however, grew quarter to quarter by 700,000 square feet.
“The majority of this growth highlights the velocity and magnitude of eastward movement, with aggregate space under construction on the Eastside outpacing Seattle by a wide margin over the next half-decade,” the report said.
Although commercial real estate trends and findings as of the second quarter can’t decisively project how the rest of the year will play out, Colliers’ conclusion in its report was mostly optimistic.
“In all, Puget Sound’s tech-driven fundamentals have remained resilient in the face of uncertainty, and with a robust development pipeline should only have room to grow once the dust settles,” the report said.
A few key developments
The GIS International Group, a real estate and construction company based in Redmond, recently broke ground on the GIS Plaza in Bellevue. According to a press release from the organization, the development will be a six-story, mixed-use residential building with 16 custom market-rate condos, ground-floor retail, subterranean parking, and a “luxurious” office space. It also will house the company’s headquarters.
Another GIS project, the Madison Plaza in Kent, also is under construction; it will serve as a 157-unit mixed-use apartment building in the city’s downtown.
Large office spaces are currently up for sale in other parts of the Eastside. In Kirkland, a mixed-use office building on Slater Avenue Northeast, also known as the Kirkland 405 Building because of its close proximity to the freeway, is going for about $11 million. And in Redmond, the 18,289-square-foot Oakridge Park Building 3 is available for $6 million.
A notable COVID-19-related shift in commercial real estate in the Puget Sound area came from REI. The outdoor retailer announced mid-August that it was planning to sell its recently completed corporate campus in Bellevue. Amid pandemic concerns, the company has decided to have its headquarters instead comprised of several “satellite” locations across the region to more widely emphasize remote work.
Before, REI had briefly shut down all its brick-and-mortar retail locations and had implemented unpaid furloughs and executive cost cuts to save money.
Plans still are underway for Amazon to construct a 43-story tower in Bellevue — a building project known as the Bellevue 600 — and the online retailer recently announced its plans to add another tower at the site comprising 27 stories. That tower, designed by Seattle-based NBBJ, also will create new retail amenities and additional green space open to the community. These projects would bring the number of Amazonians expected in the city by 2025 to total 25,000.