With Seattle surging, many are wondering when the boom could slow. We asked JLL managing director and office market guru Lori Hill for her take on the momentum of the Seattle office market in 2016.
Bisnow: Investment in Seattle office buildings was up 152% last year, with $4.4B in sales. Do you see this trend continuing in 2016?
Lori Hill: Yes, we will continue to see a very active pace of investment activity this year. Owners of both existing product and new construction will move assets to market to capture the still very robust investor appetite for Seattle.
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Bisnow: Is Seattle getting too expensive for buyers?
Lori Hill: Pricing in Seattle for core CBD office is certainly at its all-time high right now. However, strong underlying market fundamentals and economic drivers continue to make it a good bet for investors seeking stable returns.
Bisnow: Last year was also the most active year for office construction since before the recession. How are investors likely to approach the market now, considering that only 35% of property under development is pre-leased?
Lori Hill: Projects that will deliver in 2016 have a higher level of pre-leasing than those further out in 2017. It’s important to remember that Seattle historically has not been a strong pre-leasing market, but if fundamentals remain strong, we should see occupancy boost in those '17 projects as they get nearer to completion. That said, we're likely to see stronger investor interest in Seattle CBD assets than Bellevue CBD in 2016 precisely because of the amount of construction, relative to the perception of level of demand, for each respective downtown.
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