For the first time in 5 years Downtown Seattle leases see an uptick

It is a milestone for Downtown Seattle. Third-quarter results from CBRE show Downtown Seattle has seen positive leasing activity since 2021. The bottom line? Occupancy finally outpaced vacancy.

CBRE noted Downtown Seattle added 300,000 square feet of occupied office space in the latest quarter, with 197,000 square feet coming from Seattle’s Central Business District. CBRE pointed to one notable downtown Seattle investment deal: Orton Development’s purchase of Plaza 600, which sold for about $58 per square foot. The overall sale totaled $12.5 million.

Class A buildings took up more than 80% of new leasing activity across the Puget Sound region, The Puget Sound Business Journal reported. Class A buildings are known as the highest quality category of commercial real estate.

Significant downtown leases in the third quarter include the renewal of law firm Davis Wright Tremaine’s 112,000-square-foot lease in Madison Center and Anthropic’s 46,000-square-foot expansion in Dexter Yard, according to The Puget Sound Business Journal.

Laura Ford, a broker for CBRE, told The Puget Sound Business Journal that the upward trend is an impact of employers trying to entice workers with a hybrid workplace. The nicest amenities must be desirable to encourage employees to come into the office.

A Kidder Mathews report suggested AI-related growth is boosting office leasing demand, with many companies moving past their post-pandemic workplace adjustments. The report highlighted gains across the Puget Sound region, not just in Seattle. Investment activity is expected to build momentum for the rest of 2026 as pricing becomes more transparent, according to the report.

CBRE and Kidder Matthews said Downtown Seattle vacancy is around 35%.

Shifting the Skyline

The City of Seattle found 10% of unused office space in Downtown Seattle could be ideal for residential conversion, according to KING 5. In August, a commercial space in Queen Anne was the first of five major conversion projects in Seattle. The project, titled the “Rejuvenate” project, will transform the office space into 75 residential units for lease.

Rico Quirindongo, the director of the Seattle Office of Planning and Community Development, told KING 5 that Rejuvenate is a key tool to reignite the city. Demand for residential is high, with about 20% of the Queen Anne building already leased before move-in day.

Beyond Seattle

Just down the road, Renton recorded more than 309,000 square feet of positive absorption, largely driven by a confidential healthcare tenant. Meanwhile, the Eastside office market gave back about 145,000 square feet after three straight quarters of gains. Bellevue saw the biggest decline in the Bel-Red Road Corridor, where occupancy dropped by roughly 96,000 square feet, according to CBRE.