After several years of volatility, Seattle’s office market is starting to show signs of stabilization.
But stabilization doesn’t mean recovery—and for building owners, that distinction matters.
The Market Isn’t Falling Anymore (But It’s Not Fixed Either)
According to a Q1 Kidder Mathews Market Report, the Puget Sound office market ended 2025 with early signs of stabilization, as the rapid increases in vacancy seen over the past few years have begun to slow.
That’s the good news.
The reality is that vacancy remains elevated, and the market is still working through years of disruption.
Even with improving conditions, the fundamentals haven’t fully reset.
Leasing Activity Is Back (But It’s Not Driving Occupancy)
One of the more telling dynamics in the report:
Leasing activity has improved, but it’s not translating into meaningful occupancy gains.
Why?
Because much of that activity is coming from:
- lease renewals
- tenants consolidating space
- companies optimizing existing footprints
Rather than:
- net-new expansion
As the report notes, this has resulted in continued high vacancy levels despite active leasing.
Tech Is Still Driving Demand (Just Differently)
Seattle’s demand hasn’t disappeared—it’s evolved.
Demand is still being driven by AI and advanced technology. In fact, Seattle ranks among the top U.S. markets for AI growth, with job demand significantly outpacing the national average.
But that demand isn’t showing up the way it used to.
Much of the activity is happening in smaller, “plug-and-play” environments—spaces that are already built out, furnished, and ready for immediate use. Owners willing to offer flexibility on term and pricing are capturing that demand.
At the same time:
- many tech companies are consolidating space
- reducing their overall footprint
- prioritizing efficiency over expansion
This creates a market where:
- demand exists
- but it’s more selective
- and far less predictable
A Market Defined by Contradictions
Right now, Seattle’s office market is operating in a strange middle ground:
- Leasing activity is improving
- But vacancy is still high
- Demand is present
- But it’s not translating cleanly into absorption
In fact, the market just recorded its first positive net absorption quarter since 2021, signaling progress—but also highlighting how long the recovery cycle has been.
The Real Shift: From Expansion to Optimization
Companies are no longer asking:
“How much space can we take?”
They’re asking:
“What’s the right amount of space for how we operate now?”
That shift changes everything.
It means:
- fewer large leases
- more fragmented demand
- increased importance on flexibility
Where Opportunity Actually Exists
The opportunity in Seattle right now isn’t just filling space.
It’s aligning with how demand has changed.
Because while:
- traditional leasing is slowing
- large blocks of space remain difficult to fill
There is still demand for:
- smaller footprints
- flexible configurations
- scalable solutions
A Better Way to Look at Seattle Right Now
Seattle doesn’t have a simple supply-and-demand problem.
It has a disconnect between available space and how companies want to use it.
And that gap is what will define:
- which buildings recover
- and which ones continue to struggle
Final Thought
Stabilization is a step forward.
But it’s not the finish line.
For building owners, the question isn’t:
“Is the market improving?”
It’s:
“Is our building aligned with where the market is going?”
If your building isn’t leasing the way it used to, the issue may not be demand—it may be how the space is positioned.
We’re already working with building owners in Seattle to adapt to how tenants are making decisions today. If you’re evaluating what that could look like for your asset, it’s worth a conversation.