Rates don’t improve, but vacancy rates show good growth in Seattle office space market

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.

OfficeSpace.com Launches New Service in Portland, Oregon

OfficeSpace.com Launches New Free Service That Provides Businesses in Portland, Oregon With a Better Way to Find and Lease Office Space

Also offers landlords and brokers free listing capabilities, real-time tour booking and social media integration


SEATTLE, Washington – January 24, 2012 – OfficeSpace.com today unveiled a new service designed to arm tenants with the information needed to help them make better real estate decisions for their businesses. Launching first in the Portland, Oregon metro area, the new site provides businesses with a free and powerful search functionality to help them find available office space that meets their search criteria. OfficeSpace.com also helps tenants-to-be, obtain in-depth information about properties, book tours and ultimately provides the ability to close their lease transaction online.

In addition to providing time-saving tools and resources to tenants, OfficeSpace.com also offers landlords and brokers the ability to post their listings for free on the site, and the ability to set their availability for tours using a real-time calendar where they can even provide tours to multiple tenants simultaneously.  OfficeSpace.com will be providing a valuable service, connecting tenants to landlords and brokers. 

OfficeSpace.com also makes Social media integration with Facebook, LinkedIn and Google+ easy for both landlords and tenants. For example, tenants can read reviews of other tenants in the building and share comments with each other on the spaces that they have toured in order to help keep organized. Landlords can leverage social media integration by sending out new properties to their networks from OfficeSpace.com with one click of their mouse.

“We understand that entrepreneurs and business owners are busy people and they want to start their research online, in their limited spare time, before committing to taking the next step, ” said Susie Algard, OfficeSpace.com’s CEO. “With OfficeSpace.com, tenants can access more information instantly and for free.”

While all size businesses can benefit from leveraging OfficeSpace.com, tenants of smaller spaces can benefit disproportionately as most commercial real estate brokers avoid working with these folks altogether. OfficeSpace.com is focused on disrupting the current business model in commercial real estate so that tenants of all sizes do not need to depend on brokers for all of their office space needs. The new service launches today in the Portland Oregon metro area and plans on serving several additional cities within the coming year.

About OfficeSpace.com

Experienced Internet entrepreneurs Susie Algard and Alex Algard purchased OfficeSpace.com in late 2010.  Frustrated by some of the trials and tribulations of their own experiences trying to find office space for companies that they were involved in, they decided that it was time to make a change in the commercial real estate space. Susie, CEO of OfficeSpace.com, was previously a senior executive and founding member at WhitePages.com, a top 30 Internet property.  Alex is the founder and chairman of CarDomain Network as well as founder and CEO of WhitePages.com.

OfficeSpace.com also operates one of the leading commercial real estate marketing and analytics services in Seattle, Spokane, Denver, Minneapolis, Cincinnati and Columbus.

Check out the site at www.officespace.com.

Half of our tenants think they have to pay a broker hourly, like an attorney

Tenants use OfficeSpace.com to do their own space searches and learn about the commercial real estate market.  These are typically business owners and entrepreneurs.  We talk to them regularly and one thing that always amazes us is that about half of our tenants looking for space believe that their broker will charge them an hourly rate, like an attorney.

When we hear this, we explain to them that actually, there’s no out of pocket expenses and that the landlords pay out a commission once a lease has been signed.  However, since we know what the downfalls are with respect to skewed incentives because the landlord is paying commissions to your broker, the question arises, why don’t we make a change and properly align clients interests with broker incentives?

What would happen if this were the norm?  Would deals get done faster because the tire kickers would go away and we’d work with only the serious and motivated?  Would tenants pay less in rent, receive better terms or get a bigger TI budget because the landlords wouldn’t have to pay the tenant brokers commission?

Would this reduce a lot of frustration that brokers have when a tenant just goes silent.  We’ve experienced or heard of the horror stories of the broker who is left at the alter.  In the real estate world, this means that the broker diligently worked on a deal for the tenant:  the tours are done, negotiations concluded and a deal is reached.  And just when the lease is supposed to be signed, the tenant disappears, just goes silent.  At least in this scenario, the broker would get compensated for their work which seems fair.

What do you think?  Why isn’t the industry moving this way, especially since some tenants already think this is the way the industry works.