Office Market Trends

Average Rent Per Square Foot

The average per square foot rent for office space in the Pioneer Square District has increased 52 percent ($11.67) from $22.31 NNN in 2011 up to $33.98 NNN in 2023 Q1. Office rent growth peaked in 2021 in the Pioneer Square District and since then has declined to pre-pandemic rents. The onset of the COVID-19 pandemic has increased remote work and as a result, it has created a volatile environment for the office market. Office rents in the Pioneer Square District have remained competitive and are about 7 percent lower than the Downtown/DSA Service area.

Vacancy Rate

Between 2011 and 2018, the Pioneer Square District experienced declining vacancy rates due to increased demand from tenants and many of the programmatic and placemaking investments advanced by the Alliance. However, since the onset of the COVID-19 pandemic, vacancy rates have spiked across the Pioneer Square District and Downtown/DSA Service area. Vacancies are more pronounced in the Pioneer Square District than in the Downtown/DSA Service area, likely due to the lack of large corporate tenants and less available Class A office space. Given these trends, it is likely office vacancies will continue to rise as long-term leases end in the coming years and employers shift their office needs in an environment where hybrid work is here to stay.

Retail Market Trends

Average Rent Per Square Foot

The average per square foot rent for retail space in the Pioneer Square District has increased 66 percent ($7.80) from $11.78 in 2011 up to $19.58 in 2023 Q1. Retail rents began to decrease slightly in 2017 corresponding with a 2017-2019 period that saw slight increases in vacancy rates. Compared to the Downtown/DSA Service area, The Pioneer Square District has experienced higher rent growth in the past decade due to increased demand, shrinking vacancy rates, and programmatic and placemaking investments led by the Alliance. However, retail rents in Pioneer Square are about 31 percent lower than in the Downtown/DSA Service area but that gap is smaller today than it was in 2012.

Vacancy Rate

Given the volatility of the retail market and closure of several businesses in Pioneer Square during the pandemic, vacancy rates according to CoStar have remained somewhat stable. However, on the ground realities paint a different picture. Retail vacancy rates in Pioneer Square are much higher than what data shows with several ground-floor retail stores sitting vacant for years now. One reason why the data is not capturing the entire reality of the retail environment is likely due to the lack of continuous marketing of these retail spaces on the commercial market by property owners.

According to CoStar, as of 2023 Q1, retail vacancy in the Pioneer Square District is 5.5 percent slightly higher than Downtown. Generally, vacancy rates between 5 and 7 percent indicate a well-performing retail market without excessive vacancies but enough slack in inventory to absorb potential tenants and business growth. Given that a large portion of ground-floor retail in the Pioneer Square District caters to office workers, the absence of that worker activity could put ongoing pressures and challenges on these businesses without a consumer substitution from additional residents or visitors.

Current Market Conditions for Multifamily Real Estate

Housing Inventory

According to CoStar, the Pioneer Square District has an inventory of 987 market-rate units across 16 multifamily buildings. A recent housing analysis conducted in March of 2022 by MIG, found that Pioneer Square has a much higher percentage of affordable and subsidized housing than the city as a whole. The high concentration of low-income housing in the area has created challenges for supporting desirable retailers and other uses in the area.

Market-Rate Multifamily Average Rent Per Square Foot

The average per square foot rent for multifamily in the Pioneer Square District has increased 16 percent ($0.43) from $2.61 per square foot in 2011 up to $3.04 in 2023 Q1. Since 2011, Multifamily rents have increased at similar rates for both the Pioneer Square District and the Downtown/DSA Service Area. Multifamily rents have increased around 20% in the Pioneer Square District, compared to the Downtown/DSA Service Area which saw a 24 percent increase in multifamily rents since 2011. In 2023 Q1, average multifamily rents were only 5 percent lower in Pioneer Square than in Downtown/DSA Service. Even in the face of changing tenant preferences in response to the pandemic, average multifamily rents in Pioneer Square have remained relatively stable.

Market-Rate Multifamily Vacancy Rate

Historically, vacancy rates in the Pioneer Square District have remained stable hovering at about 5 percent between 2011 and 2019. The Downtown/DSA Service experienced slightly higher vacancies during this time period. At the onset of the COVID-19 pandemic, vacancies spiked as resident housing location and amenity preferences shifted. Vacancy rates have since declined to 8.4 percent in the Pioneer Square District and are now lower than the vacancy rate in the Downtown/DSA Service area which is around 9.5 percent.