Economy: Job Count And Unemployment Both Rise
The Seattle metro area added 14,600 jobs year-over-year (YOY), with the latest total figure at over 2.1 million. The unemployment rate, however, also rose, up 40 basis points (bps) YOY to 5.0%, above the U.S. rate of 4.2%. As measured by the Consumer Price Index for All Urban Consumers, Seattle metro area prices advanced 4.4% YOY, driven by higher energy (+15.9%) and food (+5.3%) costs. Minus food and energy, the index rose 3.3% YOY, mainly due to cost increases to recreation (+7.0%) and shelter (+2.6%).
Supply And Demand: Vacancy Up, Absorption Recovers
Overall vacancy in the Seattle Suburban office market rose to 23.2% in the third quarter of 2026, up 130 bps from the 21.9% reported one year ago. Direct vacancy reached 3.8 million square feet (msf), up 8.3% YOY; sublease vacancy shrank 11.3% to nearly 203,000 square feet (sf). Class A overall vacancy grew 90 bps YOY to 24.8%, whereas overall vacancy for Classes B & C combined jumped 170 bps YOY to 20.3%.
Overall absorption for the quarter was recorded at positive 18,000 sf, an improvement from the negative 143,000-sf figure from a year ago. Year-to-date (YTD) absorption reached negative 52,000 sf, an improvement from the negative 252,000 sf reported at this time last year. Absorption will continue to progress as move-ins outweigh vacancies.
Pricing: Rents Continue Dropping Yoy
The Seattle Suburban office market third quarter average asking rent was $34.80 per square foot (psf) on an annual gross basis, down 2.6% YOY. Class A rents averaged $39.65 psf, down 1.8% YOY. The North Seattle/Northgate and Renton submarkets continued to offer the highest rents in the suburban submarkets, with averages in the low-$40s psf; the remaining submarkets averaged nearly $30.00 psf. These lower costs have been essential in enticing tenants away from the higher-priced urban submarkets.
Construction: Pipeline Remains Dormant
No office space has been delivered in the suburban market since 615,000 sf of new inventory was added in 2024. There is one 48,000-sf proposed project in the pipeline; however, construction is not expected to commence until the project is preleased.
Leasing Activity: Leases Up Big Yoy
Nearly 101,000 sf of new leases were signed in the suburban office market in the third quarter, down 29.8% from a year ago. The Tukwila and Kent/Auburn submarkets recorded the most activity, combining for just over 46,000 sf leased. The YTD total reached nearly 740,000 sf, up 74.2% YOY. The suburban market had a strong first quarter of leasing (nearly 407,000 sf), which accounted for the meteoric rise YOY, as only one new lease signed during the third quarter was at or above 10,000 sf.
Approximately 14,000 sf of space was renewed during the quarter, bringing the YTD total to just over 239,000 sf.
Sales: Sales Down Significantly Yoy
Nearly $66.2 million (M) has been traded in the suburban submarkets since the start of the year. This was a 59.4% YOY decrease from the $163.3M that sold at this point in 2025. In the most significant transaction of the quarter, Realty Income Corporation sold 32275 32nd Ave S, located in the Federal Way submarket, to Fred Hutch for $18.0M ($95.94 psf). The cancer research institute plans to occupy the entire 188,000-sf property.
The Seattle MSA reported $443.0M in office sales through three quarters of 2026, down 56.8% from the $1.0 billion that traded at this point a year ago.
