Seattle Q2 2025: Flight to Quality Drives Activity Amid Rising Vacancy

Seattle’s office market continued to evolve through Q2 2025, characterized by rising vacancies, cautious leasing behavior, and a strong preference for high-quality, well-located space. Although fundamentals remain soft, early signs of stabilization are emerging. 

Vacancy across the Seattle market has surged, reaching 32.4% overall, according to the Colliers Q2 2025 Seattle Office Market Report. The Cushman & Wakefield Marketbeat sees Downtown Seattle climbed higher to 34.6%, a 400 basis-point increase year-over-year. Class A space is equally impacted, with direct vacancies over 30% in nearly all downtown submarkets. 

Notably, Casey Family Programs leased 79,189 SF at 800 5th Avenue—the largest new lease of the quarter—reinforcing that demand is still alive for premium downtown spaces. 

Takeaway: 

Seattle’s office market is still challenged by negative absorption and high vacancy, but interest in Class A space is helping limit further decline. Companies aren’t expanding broadly—but when they move, they’re choosing quality. 

Leasing Trends and Tenant Behavior 

The “flight to quality” remains the dominant theme. Tenants are consolidating into fewer, higher-quality buildings, and trophy and Class A properties accounted for 77.6% of leasing activity in Q2. 

Sublease activity, while still elevated, saw a quarter-over-quarter decrease. In the Seattle CBD, sublease availability dropped from 6.1% to 5.0%, suggesting some tenants are absorbing unused space . Demand is increasingly fragmented—smaller tenants are active, but large tenants (25,000 SF+) have not shown action. 

Nationally, this mirrors a broader trend. According to Avison Young, 71% of all U.S. office leasing volume was concentrated in Class A and trophy assets, while large lease signings fell 7% from H1 2024. 

Takeaway: 

Tenants want modern, amenity-rich buildings. Class A space continues to dominate leasing activity. However, large tenants remain hesitant to make long-term commitments, contributing to ongoing market stagnation. 

Construction & Investment Activity 

The Seattle CBD has no new office projects under construction, reflecting how elevated vacancy and economic uncertainty have sidelined development. One of the only major developments is Four106 in Bellevue, which will add 480,000 SF of new space without preleasing. 

On the investment front, sales in downtown Seattle were quiet. Just $19.7 million worth of office property traded in H1 2025, a steep drop from $131.8 million during the same time in 2024 . However, the broader Seattle MSA posted $672.1 million in office transactions, showing that investor interest hasn’t disappeared. 

Takeaway: 

There’s little risk of oversupply due to the construction pause, but that also signals deep market caution. Investment is happening, but buyers are targeting only the best-located and most flexible buildings, often for repositioning or conversion. 

Rents & Rates 

Despite rising vacancy, rents are largely holding steady—or even ticking upward—in the best buildings. Downtown Seattle’s average asking rent was $46.85/SF, while Class A space averaged $50.87/SF, up 0.4% YoY. 

In contrast, Seattle CBD Class A asking rents fell slightly to $54.81/SF, down from $56.05 a year ago. These mild fluctuations reflect ample concessions and tenant improvement allowances that help keep base rents looking stable. 

Across the Puget Sound region, availability reached 29.6%, up from 27.7% a year ago, and Class A asking rents averaged $51.09/SF, slightly down from $51.45/SF. 

Takeaway: 

Asking rents aren’t collapsing, but concessions remain elevated. Landlords are trying to preserve pricing power, especially in high-end buildings, while quietly negotiating deal sweeteners behind the scenes.  

Final Thoughts 

Seattle is still in reset mode. RTO policies from major employers are increasing office utilization, but space planning lags behind. Don’t expect a quick rebound—but look for gradual improvements in late 2025 and beyond, especially in desirable submarkets. 

The Q2 2025 office landscape in Seattle is best described as uneven. Class A space is performing reasonably well given the headwinds, but the broader market is challenged by vacancy, negative absorption, and weak demand from large tenants. 

For landlords, success will come from doubling down on amenities, flexibility, and service. For tenants, the current market offers leverage—particularly for those seeking high-end space in prime locations.