Broderick Group’s most recent Eastside Office Market Report reveals a significant shift in the landscape of Bellevue’s commercial real estate, largely attributed to the planned exodus of Microsoft from the area. The fourth quarter of 2023 saw major vacancies at key locations, including Advanta, 90East, and Lincoln Square North, totaling 1.07 million square feet, according to information shared by Broderick Group.
Much of this is attributed to Microsoft’s decision to opt-out of lease renewals, resulting in the abandonment of spaces totaling 2.7 million square feet in the Bellevue CBD and I-90 corridor by 2025. Historically a major driver of office demand in the Eastside, Microsoft is now focusing on consolidating employees to its Redmond Campus, currently undergoing a $5 billion renovation and expansion. However, this project has been partially paused, leaving several planned buildings unfinished.
To counterbalance the rising vacancy rates, the Eastside saw 1.4 million square feet of new construction fully leased to Amazon and Meta during the same period. Amazon, currently with over 11,000 employees in Bellevue, plans to grow its headcount to 25,000 in the coming years. The company’s hybrid work mandate has significantly increased occupancy in both Bellevue and Seattle, with commitments to nearly 5.5 million square feet of office space in Downtown Bellevue alone.
Despite these efforts, Eastside vacancy rates have steadily increased from an all-time low of 5.9% in 2019 to 17.1% at the beginning of 2023. Bellevue’s Central Business District has seen its vacancy rates triple from 3.6% in 2019 to 10.9%. The I-90 Corridor, hit the hardest, faces a staggering 39.1% vacancy rate, with 44.4% of the submarket listed as available.
Broderick’s Eastside Office Market Overview emphasizes the concentration of pending leases in the Bellevue CBD, particularly in Downtown Bellevue, where approximately 30.1% of the area is marketed as available. This includes former Microsoft spaces at Lincoln Square North, City Center Plaza, and office space at The Bravern, contributing to a total of 4.5 million square feet of available space in the Bellevue Business District.
The future trajectory of Bellevue’s office market depends on consistent expansion and new tenant demand, as mentioned in Broderick’s market overview, to counteract the unprecedented supply levels on the Eastside.
