Seattle office market struggles with high vacancy rates

Proposal to convert office buildings to housing set to hold vote

Today, Seattle's land use committee will vote on legislation to allow existing office buildings to be converted into residential spaces.

SEATTLE - Seattle’s office vacancy rate reached 23.2% in July, according to a recent report by CommercialEdge Research, highlighting the city’s struggle to adapt to post-pandemic market conditions. This marks a substantial increase in vacancy as the city contends with a slowdown in new construction and ongoing shifts to remote and hybrid work.

According to the report, Seattle’s construction pipeline experienced a significant reduction over the past year, shrinking from 6.6 million square feet in July 2023 to just 2 million square feet in July 2024. The report attributes this decline to a broader slowdown in the life sciences sector, which had previously fueled much of the city’s office development.

The Downtown Seattle Association reported in August that more than 90,000 workers per weekday returned to offices in July — the second-highest figure since March 2020. This represents a 14% increase from July 2023 and 62% of the daily worker foot traffic seen in July 2019. However, many offices are still sitting empty.

While Seattle’s office market faces challenges, the city has not been alone in experiencing increased vacancy rates. Nationwide, the average vacancy rate stood at 18.1% in July, a 100 basis point increase from the previous year.

Amid the downturn, interest in converting vacant office spaces to residential use has grown. Seattle is among the cities exploring potential conversions, though no significant projects have been reported yet. This trend reflects a broader national movement as cities look for ways to adapt to declining demand for traditional office space.

Despite the current report, industry experts remain optimistic that Seattle’s robust tech sector and strategic location will eventually support a market rebound, although the timing remains uncertain.