Equity Office
Specialty: Seattle and the nation’s largest publicly held office building owner and manager
Management: Senior Vice President Patrick Callahan
Founded: 1976
Regional headquarters: Seattle
Current projects: City Center II, a proposed office tower in downtown Bellevue
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Downtown Seattle will absorb the 1.1 million square feet of office scheduled to come online with the completion of Washington Mutual Center. But it’s Bellevue, with low vacancy rates and several sizable mixed-use and office developments, that will see the biggest changes.
Employment growth is so strong that early next year the region is expected to surpass its former 2001 jobs peak. More jobs means an increased demand for office space. And increased demand equals declining vacancy rates.
Bellevue’s starring role
“Bellevue continues to be the regional starlet with vacancies down to about 8.2 percent,” says Callahan. As a result, rents are approaching $30 a foot. That’s almost a 20 percent increase since 2003.
That’s still not high enough to kick off construction. In general, rents have to be about $35 per square foot to launch construction. Callahan says the market will see upward pressure on rents, and it will be enough to start some projects.
“Clearly there’s going to be a wave of development in downtown Bellevue. The only question is how many buildings.”
Equity Office has proposed City Center II. The company has been talking about downsizing the downtown Bellevue project from 800,000 to 500,000 square feet. Callahan earlier this fall said he expects to make an announcement on the project soon.
Mass transit is key
There’s more to Callahan’s optimism than the growth projections. Unlike the last upturn in the late 1990s, companies are approaching expansions cautiously. “They’re only growing when they really, really need to. That bodes well for pent-up demand.”
He adds a key piece of the recovery has less to do with the marketplace than public policy surrounding rapid mass transit. It’s critical to finish the light-rail line from Sea-Tac Airport to Northgate. After that, the region should work on building a line from downtown Seattle to downtown Bellevue.