Microsoft’s decision to vacate its 1.9 million square feet of office space in downtown Bellevue, Wash., marks a significant transition for the city’s office market. The tech giant announced last year that it would not renew its lease in the 26-story City Center Plaza office tower, and employees have already moved out, according to public records.

The departure of Microsoft has left a significant vacancy in Bellevue’s office market, which has historically depended on large tenants. In response, building owners have swiftly adapted by securing new leases for about 48,000 square feet with accounting firm Clark Nuber and 49,000 square feet with HDR Engineering. Additionally, significant renovations are underway, including a new conference center, gym, bike storage, EV charging stations, and an outdoor plaza, which are expected to attract more tenants.

Broader Market Trends

The broader Seattle office market, encompassing Bellevue, has also seen an increase in office vacancies, largely driven by tech companies downsizing due to the rise of remote work post-COVID-19. In fact, CommercialEdge’s latest office report shows that Seattle’s office vacancy rate has risen by 310 basis points, now at 23.2%, which is higher than the national average of 18.1%. This trend reflects a broader pattern of increased office vacancies in tech hubs, with San Francisco and the Bay Area also experiencing significant increases.

The substantial vacancy left by Microsoft has posed a challenge for Bellevue’s office market, which has historically been reliant on large tenants. However, several significant deals have taken place that may help fill the void and represent future potential replacements.

Future Prospects

One notable transaction is Pokémon’s 374,000-square-foot office lease in The Eight, a new tower set to consolidate its operations next year. This move will see Pokémon relinquish 155,000 square feet of space in Lincoln Square and market nine floors for sublease as part of its consolidation strategy. The Eight — a LEED Gold building at Eighth Street and 108th Avenue — will offer 540,000 square feet of offices and 10,000 square feet of ground-floor retail space.

Another potential key — and even larger — player in Bellevue’s office market is ByteDance’s TikTok. The social media giant leased seven floors in Lincoln Square North tower last quarter, in addition to six floors earlier this year, all of which were formerly occupied by Microsoft. TikTok is also expanding into Bellevue’s Key Center, taking over offices previously held by SAP Concur and Meta. This expansion is part of TikTok’s strategy to establish a hub for its e-commerce venture, TikTok Shop, with around 880 open roles.

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