Seattle Q1 2025: Signs of Stabilization

Seattle’s office market sees selective demand, driven by renewals and relocations within high-quality properties—primarily Class A spaces in well-located submarkets. Sublease space has dropped significantly from its 2023 peak, helping landlords regain some pricing power. 

Although headwinds persist, including negative absorption and limited new construction, there are early signs of stabilization as companies adjust to hybrid work realities and increasingly prioritize space as a tool for retention and culture. 

Vacancy & Availability: Vacancy Rises, but at a Slower Pace 

• Overall vacancy increased to 31.2%, up from 30.1% in Q4 and 28.1% YoY—marking the smallest annual increase in two years. 

• Seattle CBD vacancy hit 36.1% when including subleases, with Class A direct vacancy at 29.2%. 

• Sublease space dropped to 4.2% of inventory, its lowest level since Q3 2022. 

• Available sublease space declined by 1.5M SF YoY, suggesting a slow reabsorption of prebuilt space. 

Takeaway: Vacancy is still climbing, but at a slower pace. The steep drop in sublease inventory may indicate a maturing market and possible shift toward landlord-favorable dynamics in select submarkets. 

Leasing Activity: Quiet but Concentrated 

• Q1 leasing volume totaled 1.1M SF, below the 3-year average of 1.5M SF. 

• 49.3% of leases were renewals or “blend-and-extend” deals—highlighting a focus on flexibility. 

According to Savills USA research, major transactions included: 

• Tommy Bahama: 126K SF renewal at 400 Fairview (Seattle CBD) 

• Walmart: 94K SF new lease in Bellevue CBD 

• PSE: 134K SF renewal in Bellevue CBD 

Submarkets capturing the most activity: Lake Union, Fremont, and Ballard/U District—not the CBD. 

Takeaway: While the market isn’t yet in rebound mode, occupiers are being intentional. Flexible deals in Class A buildings are in demand, and edge submarkets are outperforming the core. 

Rental Rates: Stability with Pockets of Decline 

• Seattle metro average asking rent: $45.43/SF, down 1.8% YoY. 

• Seattle CBD Class A asking rent: $55.36/SF, down 1.8% from Q1 2024. 

• Ballard/U District and Lake Union showed stronger absorption despite lower asking rents. 

Takeaway: Rates have generally held, especially for premium space. Landlords are holding firm on pricing but are more flexible on concessions and TI allowances. 

Sublease Space: Retreating but Still a Factor 

• Sublease availability dropped to 15.9% of total availability, with only 4.2% of total inventory remaining as sublease. 

• Large blocks (like the 75K SF at Symetra Center) are set to revert to landlords in 2025, reshaping direct vacancy rates. 

Takeaway: The rapid decline in sublease space is rebalancing the market. It signals that the “discount era” of subleasing may be winding down in some areas. 

Submarket Focus: Flight to Core… But Not CBD 

• Lake Union posted positive absorption in Q1, driven by University of Washington’s move-in to the Gateway Building. 

• Ballard/U District was one of the few areas with positive net absorption (+60K SF). 

• Belltown/Denny Regrade saw Class A vacancy at 38.4%, the highest of all core submarkets. 

Takeaway: The term “flight to quality” is more accurately a “shuffle within quality.” Tenants are moving between premium spaces rather than upgrading from B to A. 

Outlook: Slow Recovery with Pockets of Resilience 

Seattle continues to see negative absorption (–265K SF in Q1), but a long-term recovery may be underway. The metro’s population grew 1.9% in 2024, among the top growth rates nationally. With most large-scale construction halted, vacancy pressure may gradually ease. 

Firms are beginning to see real estate as a strategic tool—not just a cost center. As hybrid norms settle, we’ll likely see more investment in high-performing spaces that foster flexibility, wellness, and connection.