Amazon.com Inc. (Nasdaq: AMZN) will let an office lease expire in Bellevue next year in a move seen as a worrying sign for the city’s downtown office market.
According to the Broderick Group’s third quarter Eastside market report, the Seattle-based tech giant plans not to renew a 75,000-square-foot lease in Bellevue’s Skyline Tower in early 2023, and is looking to sublease its remaining 55,000 square feet in the Kilroy Realty-owned building.
The employees based in Skyline are relocating to Hines’ nearby Summit 3, according to a person familiar with the matter. Amazon’s space in the new 17-story tower, at 320 108th Ave. NE, was delivered to the company in the third quarter of 2021. The company hasn’t disclosed how many employees will move to Summit 3.
Amazon said the Skyline space, which the company leased in 2020, was always intended as a stopgap while development was completed on other downtown Bellevue towers like Summit 3.
The company has said it’s committed to expanding in Bellevue, but the Covid-19 pandemic has made its plans more uncertain with fewer workers coming to offices to work. This summer, Amazon said it was pausing development on several towers and completely halting plans to build one of its own towers.
Amazon has over 10,000 employees in Bellevue, a number that has quickly climbed since it first opened a 450-employee outpost in 2017. The company is Washington’s largest employer, with over 85,000 employees.
Though the Skyline lease was never expected to be long term, the Broderick Group’s report still flagged Amazon’s move as worrying for downtown Bellevue’s development future.
The departure introduces more vacant office space into a market that’s already beginning to tip into dangerous levels of vacancy. Coupled with Microsoft’s shift away from Bellevue, the Broderick Group said Amazon’s move to a different space, but without accompanying growth, suggests “the brakes have been slammed on the five-year party of relentless Big Tech expansion on the Eastside.”
As a result of tech’s growth pause on the Eastside, the Broderick Group said subleases are hitting the market at levels rivaling the pandemic high of late 2020, but with a concerning wrinkle: “We do not expect a repeat burst of tenant demand to soak up this sublease space similar to the first half of 2021,” the Broderick Group wrote. “Large tenant demand has been tepid at best since November 2021.”
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