As you may have seen in the PSBJ and confirmed by our contacts in the industry, Amazon will not be moving into their new Rainier Tower development as originally planned and will be placing it on the sublease market instead.. While the paper has touted this as a “blow” to the commercial real estate market, with exception to a few individual parties, we could not disagree more.
Who this hurts:
Real Estate Developers with planned development.
Real Estate Owners with big blocks of vacant space – 3-4 groups at most – and two of those developments are likely leased by the time Rainier Delivers.
Who this helps:
Literally everyone else.
A quick review in economics:
Seattle’s record demand for office space coupled with a dwindling supply of office options has pushed our rental rates higher than ever before.
Our expectations for 2019 was demand that outpaced available inventory.This environment would have created an almost impossible atmosphere for office users.
A 722,000 square foot block of desirable space should give temporary relief to increasing rental rates.
How this impacts you:
The building will not be an option for most companies.
Rainier Tower will likely only consider very large users – companies with space needs exceeding 100,000 square feet.
However, pricing in Seattle is largely determined by the inventory of big block space. Rainier Tower will alleviate the aggressive price hikes we anticipated for at least another 12 months.
This is very positive news for those with lease considerations in the coming year.
Comments