President: John Black
Rejoice — it’s a great time to be a tenant.
That’s the word from Paul Sweeney, a principal with the Broderick Group.
The brokerage firm, which specializes in Eastside commercial properties, has seen office tenants catch all sorts of breaks from building owners enduring the sluggish leasing market.
Sweeney said the firm has been busy taking care of tenants jockeying for bigger spaces and tonier addresses. “Tenants are asking for the world right now, and in many instances they’re getting it,” he said.
Sagging occupancy rates around the Eastside haven’t stopped the Broderick Group from filling trophy properties such as Bellevue Place, Carillon Point and One Twelfth@Twelfth, but Sweeney said the firm has had to work hard at it.
“The best buildings are not doing well, but at least they’re doing activity,” he said.
The occupancy picture has been grimmer for other Eastside office buildings, which remain in the doldrums.
“I think people are going to look back on this fall and over the next eight months as the bottom of the market,” Sweeney said. Vacancies have stabilized, but a recovery is at least three years away, he predicted.
A combination of low interest rates and few attractive investments elsewhere have served to drive up real estate prices.
“There’s been very little inventory to sell, and what’s been coming on the market has been above what you’d expect,” Sweeney said. “Sales prices versus lease rates are the biggest disparity in the market right now.”
The Broderick Group has brokered several big leases over the year, including 100,000 square feet for Hines’ One Twelfth@Twelfth, signed by CH2M Hill. Another engineering firm, Parametrix, signed a lease for 36,000 square feet in Bellevue. IBM and Bank of America have both renewed leases for 60,000 square feet.
The firm’s biggest deal was the leasing of a 476,000-square-foot building in Everett that had been a Boeing manufacturing facility. The Broderick Group represented Travis Industries, the building’s new tenant.
But the future of the Eastside market could mirror its recent past. Sweeney pointed to companies like 180Solutions, a high-tech firm that recently signed a 45,000-square-foot lease after clawing its way out of near-bankruptcy last year.
“New technology companies will drive the Eastside market in the coming years,” Sweeney said. The sort of office-warehouse spaces that high-tech companies favor have proven popular in places like Redmond, Woodinville and Bothell.
The biggest wild card in the market, aside from the economy, is Microsoft.
“In 1999 and 2000, they leased huge amounts of space and drove the market to its peak in 2000,” Sweeney said. If the software giant — which has held off on building a long-planned Issaquah campus — returns to its space-leasing ways, the Eastside could turn around more quickly, he predicted.
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