For the first time in several years, there are indications that the worst may be over for the Seattle region’s battered office market — and artificial intelligence companies appear to be playing a leading role.
The regional office market (spanning Seattle, Bellevue and the surrounding Eastside) posted positive net absorption during the second quarter, meaning companies occupied more office space than they vacated, according to a new report from commercial real estate firm JLL. It’s a notable shift after years of downsizing driven by remote work, layoffs and corporate cost-cutting.
Technology companies accounted for 42.5% of all leasing activity during the quarter, easily outpacing every other industry. JLL said AI-related leasing is on track for a strong year as companies establish engineering hubs in the Seattle region to tap its deep talent pool while taking advantage of office costs that remain well below San Francisco and New York.
The quarter’s largest deals reflected that trend.
- Databricks signed a 142,000-square-foot lease at Four106 in downtown Bellevue, the biggest office transaction of the quarter.
- DocuSign committed to 116,000 square feet at Seattle’s JPMorgan Chase Center.
- Pokémon moved into The Eight office tower in Bellevue, taking 369,800 square feet of space.
The Pokémon deal helped push the region to 372,000 square feet of positive net absorption for the quarter — reversing a run of quarters in which tenants gave back more space than they took.
The numbers offer an encouraging change after years of gloomy office market reports, but they hardly signal a full recovery. Regional vacancy remains elevated at 23.9%, while overall availability sits at 25%.
Companies continue to consolidate space, landlords are still offering concessions, and asking rents remain under pressure as tenants retain significant negotiating leverage, JLL said in the report
Still, there are indications the market’s fundamentals are improving.
Availability has now declined for two consecutive quarters and has fallen from a peak of 26.5% a year ago. At the same time, JLL reports there is currently no new speculative office construction under way — buildings started without tenants committed — meaning even modest growth in demand could have a greater impact on occupancy than in previous years.
Rather than signaling a broad-based office comeback, the latest leasing data suggests a more nuanced story: AI companies and other fast-growing technology firms are helping stabilize a market that had spent years moving in the opposite direction.
The report reinforces a trend GeekWire has been tracking over the past year as AI companies expand their presence across the Seattle region. Alongside Microsoft and Amazon, companies including OpenAI, Anthropic, xAI, Armada and Anduril have been building engineering teams in the area, drawn by one of the country’s deepest concentrations of AI and cloud computing talent.
Whether that momentum continues will depend on how quickly AI hiring expands and whether more companies decide they need additional space for a new generation of engineers. But after several years defined by shrinking footprints and empty offices, the second quarter offered the first meaningful indication that Seattle’s office market may finally be finding its footing.
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