In recent years, a slew of tech companies have made the Seattle and Eastside regions their home, leading some to speculate that this area may be the new Silicon Valley. According to recent real estate reports, this trend is expected to continue, with more and more companies snatching up prime Puget Sound commercial real estate. The only problem? There’s not much space to go around.
With decreasing vacancy rates and increasing labor participation rates, Cushman & Wakefield/Commerce predicts a greater demand for real estate in the Puget Sound. The commercial real estate firm, which just released its first quarter Marketbeat Snapshot report, expects land prices to remain high, due to limited availability.
“Based on early numbers, this could be a record breaking year in terms of investment activity. We are seeing big demand from international investors who are looking at both Kent Valley as well as the Eastside due to their low vacancy rates and rising asking rental rates,” said Dave Magee, a market lead for the Washington region at Cushman, in a statement.
Spurred by the high-tech industry, the Seattle and Eastside markets have already seen a high demand in 2016. At 6.9 percent vacancy, the industrial space on the Eastside is down 3.3 percentage points from last year’s first quarters, while Kent Valley is at a steady 5.8 percent. Similarly, office space on the Eastside decreased 1.1 percentage points in 2016. Despite high occupancy rates, Cushman & Wakefield/Commerce remains optimistic about more space opening up.
“The high-tech sector is again leading the charge, and we should continue to see the expansion of the office market to the tune of several million square feet of new office inventory coming on-line in the next couple years,” Magee said.