Looking Back at 2021

What we got Wrong:

4 out of 5 of the largest lease transactions in 2021 will be subleases.

Only 1 of the top 5 largest leases in 2021 was a sublease (Bungie for 60,000 feet). While this surprised me, upon reflection it made sense. By 2021, most companies were able to sign short-term extensions to push off decision-making while the pandemic slows. Larger leases typically require tenant improvement dollars to customize their space, funds you would not typically receive through a sublease.

Labor Day will see 50% of the labor force back in the office and by January 2022, we will see 75% of the labor force return.

I’d like to point out that if not for Delta (or Omicron), our projections would have been more accurate… But as Covid has taught us time and again, having expectations around this pandemic is a sure-fire way to be wrong or let down.

What we got Right:

Amazon, Facebook, and Google will expand BUT not in Seattle.

Our major tech players continue to favor Bellevue over Seattle. The commitments from these three employers alone made Bellevue one of the hottest office markets in the country. As the new office developments are complete and the city feels the impacts of this sudden employee growth, it will be interesting to see what kind of growing pains the city suffers (traffic, cost of living, politics, etc.)

Biotech will be the new darling.

2021 was the year of Life Science. Office buildings considered conversions to biotech, vacancy rates of under 1% in South Lake Union and unprecedented expansion in the Bothell market made 2021 the single biggest life science expansion the Puget Sound has experienced.

Co-working will continue to consolidate with subleases and early terminations. No new direct co-working leases will be signed in 2021.

We saw a quick and deliberate termination of non-performing co-working spaces this year. Interestingly, demand for this type of space has picked up as companies look for temporary offices as they wait out the pandemic. Landlords currently do not show any interest in signing leases with co-working operators. The WeWork bubble is too recent of memory to consider the risk – despite a slow leasing market and demand for the product type.

Our team is always here to chat through this further, discuss best practices or outline your firm’s position as it relates to the market. Contact us if we can ever be a resource.