2009 Office Market Outlook for Entrepreneurs

Pat Pendergast, of Washington Partners, recently took the time to share his 2009 office market outlook with us. In short, Pat expects big changes and substantial opportunities both in Seattle and Bellevue. While real estate is likely to hit bottom in 2009, the economic shocks we have been hearing about will continue to have their effect on the sublease market throughout the year. In Seattle, almost two million square feet of new developments are expected to reach completion during 2009, most of which has yet to be pre-leased at this time. To make matters worse, corporate downsizing at companies like WaMu, Safeco, and Starbucks is expected to contribute an additional two million square feet of space by 2011.


The result in 2009: High vacancy rates fueled by an oversupply of new and existing office space coupled with corporate downsizing efforts of firms located in Seattle. Pat is predicting office vacancy rates near 17% in Seattle (graph depicts trend from 2000-2008, and 2009 forecast):


While smaller in scale, the situation in Bellevue is expected to be similar with vacancy rates approaching 14% (graph depicts trend from 2000-2008, and 2009 forecast):


Depending on whether you see the glass as being half-full or half-empty, this situation may present a unique opportunity.

Either way, Pat has a few recommendations for entrepreneurs:
1. Position your lease for 2010:
- Consider a short term lease
- 2010 may offer a better outlook for future business and the economy

2. Take advantage of the Sublease Market:
- Offers a flexible lease term
- Lowest rates

3. Or for Subleasing Your Space:
- Be pro-active
- Be flexible on term, rate, and rental square footage

Thanks to our sponsors at Washington Partners for sharing their insights with us!