Does anyone remember when downtown Bellevue didn’t have reflective glass high-rise office buildings or corporate headquarters? Millennials walking down the streets at lunch, wearing tech company badges? New buildings soaring at every corner?
Clearly, time has brought a lot of change to downtown Bellevue. It is a true city now – a growing and diverse regional economic center. There are high-rise buildings, a city skyline and amenities that draw businesses and employees to live and work, and it is home to major retailers and corporate headquarters. And there is more growth and change to come.
The tech factor
The impact that large technology companies, in particular, have had and are having in the Bellevue CBD can’t be denied. In 2019, the largest percentage of office space was absorbed by companies such as Amazon, Facebook, Google and WeWork. Each of them leased full or multi-floor spaces, or more.
Like the impact it had in Seattle and South Lake Union, Amazon is showing a similar trend in Bellevue. It’s current expansion into Bellevue is setting off an unprecedented pace of new construction. It has been estimated that the amount of space it will ultimately occupy in downtown Bellevue rivals what was once planned for “HQ2”, on the east coast.
What does this mean for tenants in downtown Bellevue?
For one, it is pushing rental rates for larger spaces upward and changing the dynamic of lease negotiations. These large tech tenants desire the highest quality buildings and spaces, and money and budget aren’t generally an issue. It is a different mindset, and as a result, creates challenges for others who might not have resources on the same scale.
Traditional tenants requiring spaces in the 3,000-7,000 square foot size range – such as professional services firms – aren’t driving demand, and those smaller spaces are generally staying on the market longer today. In spite of this, landlords are still holding firm on asking rates.
Trends to watch
Over the next 24 months, the number of workers and daytime population in downtown Bellevue is expected to soar. By some estimates, it is forecast that Amazon alone might occupy up to 60% of the office space in Bellevue, and the percentage of workers in the tech sector will dominate all other tenant types in the market.
This will continue to create hype in the market, so we will be watching for the impact this might have for smaller, traditional tenants.