Looking back at 2020

What We Got Right:

WeWork will give back 20% of their office space by subleasing underperforming locations. This will slow direct leasing in Seattle.

WeWork had a tough 2020. They worked to restructures leases across the world with a focus on profitability. WeWork shuttered non-essential business lines and an effort is underway to sublease or terminate excess space.

Companies will expand outside of Seattle to alternative markets like Arizona, Denver and Utah. Lower cost of living, wages & rent, with desirable living conditions.

Covid made office moves difficult, however, we did see employees expand outside of Seattle. Working from home or even taking residence outside the state and working remotely.

Major technology companies will continue to focus on Bellevue as it is a more business friendly city. Bellevue is not as saturated.

Nailed this one. Amazon committed to millions of square feet of new space, Facebook and Google both acquired their own building – All in Bellevue. None of these companies grew in Seattle, in fact, Amazon chose to let certain leases lapse and vacate the buildings entirely.

Renton, Burien, White Center will see double-digit growth. Investors will pursue these markets as they still offer strong yield. We are most bullish on submarkets with mass transit (current or future).

The industrial sector pushed the South End market into record territory that likely continues. Further, companies like Amazon are looking at a “hub and spoke” model where they put offices into the South region to accommodate employees in the area. Look to rumors of Tacoma and Lakewood for example.

What We Got Wrong:

Leases will become 3 party transactions: one tenant vacating space, one tenant backfilling the space, and the Landlord signing a termination agreement and new lease congruently.

The intention of this guess was that the market would get so tight, trading space would be the only tactical way to right size. Instead, we saw a flood of high-quality sublease space hit the market, creating a far more tenant-friendly market than 2019.

At least five regional professional service firms will be acquired or merge. Seattle’s cost of operating has been difficult for mid-size groups. We expect continued mergers and acquisitions.

We should stick to real estate! Looking back, a better guess would have been continued VC funding to the region as a way to comment on increased funding and bullishness to our region from outside investors or businesses.