The year ended on a high note for the Seattle office space market in 2011. Net absorption for 2011 ended just over 1.6 MM sq.ft, almost double the net absorption for 2010. 2011 also marked the best year since a high of 2006 that ended in a little over 3 MM sq. ft of net absorption.
While the overall vacancy rate for the Seattle market didn’t change dramatically over 2010, there is a good story once you dive into the details. We ended Q4 2011 with 14.8% vacancy in the Seattle office market compared to 15.3% in Q4, 2010. And while the changes don’t appear significant, there’s a story going on in the Downtown submarket. Last quarter, several significant leases were closed with Amazon taking 386,000 sq. ft. and a total of over 800,000 sq. ft. The impact of these leases definitely showed up when we looked at the Downtown area vacancy rates which dropped to 12.9% this last quarter compared to 15.1% in Q4 2010.
Average rental rates remained fairly steady for all of 2011 ending the year at $25.80 per sq. ft slightly lower than the $25.89 in 2010. However, as the supply and demand paradigms shift due to lower office space availability, particularly of larger spaces in the Downtown area, we would anticipate this to have a positive impact on rental rates.