The Seattle region is the leading U.S. market for large tech office space leases, eclipsing the San Francisco Bay Area for the first time since 2013.
According to a new report from CBRE, the regions move to the top spot in 2020 was cemented by 14 megaleases accounting for a for a cumulative 3.4 million square feet. CBRE declined to name which companies make up specific leases, but tech giants such as Amazon, Google and Facebook are among those who made big real estate moves in 2020, especially across Lake Washington in Bellevue and Kirkland.
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The report comes after a year in which the COVID-19 pandemic drastically altered where employees, especially across the tech industry, do their jobs. As remote work took hold, speculation became rampant about whether companies would continue to need to occupy large physical office spaces.
Although tech companies leased more office space than any other industry last year, both the aggregate square footage they leased and their share of total office leasing declined from 2019 levels, CBRE reported. Total U.S. office leasing activity decreased by 36% year-over-year in 2020, with tech leasing down by 48% to 26 million square feet.
But as vaccine distribution takes hold, schools reopen and work-from-home fatigue further sets in, optimism has returned for those who wish to see workers back in office buildings and central business districts. Redmond, Wash.-based Microsoft, for instance, announced this month that it would start allowing some employees to return to campuses as part of its new hybrid work model.
CBRE said that once in-office work returns more broadly in the second half of 2021, companies will have greater insight into their space needs, leading to increased leasing activity.
CBREs racking of the top 100 office leases for 2020 was dominated by new transactions representing expansions and relocations by tech companies. The Puget Sound region was ahead of Manhattan, Washington, D.C., Atlanta and Austin among the top five largest space leases by tech firms.
This region is home to some of the worlds top tech companies and talent,John Miller, CBREs senior managing director for the Pacific Northwest, said in a statement. While we know the San Francisco Bay Area will remain a leader in tech, its encouraging to see the Puget Sound area claiming a larger share of the pie.
Activity in the regions Eastside was particularly strong throughout 2020, CBRE said in another report last week, which said tech demand for Eastside office space stands at 1.25 million square feet as of this month.
The Eastside holds the attention of the regions largest office-using industry, CBRE said, calling out the Bellevue central business district in particular.
Bellevue has certainly attracted the attention of Amazon, which is planning to locate 25,000 employees in the city east of its Seattle home, signing leases at a variety of locations. With more than 75,000 employees in the region, Amazons lease agreements away from Seattle have it poised to become downtown Bellevues largest tenant at roughly 5.5 million square feet, doubling the footprint of Microsoft.
Facebook is also expanding its regional engineering presence outside of the South Lake Union tech hub where it has offices. The social media giant paid $367.6 million in September to purchase a brand new 6-acre, 400,000 square-foot complex from REI at the new Spring District development in Bellevue.
Google also expanded its Eastside footprint with more leased space at the Kirkland Urban development in Kirkland, Wash.