Office tenants and downtown Seattle residents are capitalizing on new opportunities in the marketplace. With increased foot traffic, mostly due to recent return-to-office mandates, downtown is experiencing a resurgence that is reflected in the evolving real estate market.
Seattle continues to be one of the fastest-growing cities in the country, with 2.2% population growth last year. More than one in 10 residents—roughly 109,000 people— live in the city’s core. Developers have responded to this demand by ramping up construction. Of the almost 8,500 residential units under construction in Seattle in 2025, almost 40% (3,325 units) were located downtown.
Downton Seattle saw 10 building completions in 2025, including residential buildings, affordable housing, and a hotel. Currently, downtown Seattle has 12 active projects that will eventually deliver a substantial number of residential units, 247 hotel rooms, and over a million square feet of commercial space.
Seattle ranks second among peer cities for construction growth, though the pace remained below the 2013-2019 boom. Only Denver had more construction underway, with 15 projects.
Residential construction isn’t the only real estate sector experiencing a resurgence. In the broader Seattle region, office listings dropped 4.9% year over year in December—the fifth-largest decline in the country and a positive start for 2026.
The encouraging news comes at a critical time for the office sector. At the end of 2025, Seattle’s office vacancy rate was 27.2%, the second highest in the country. Downtown bore the brunt of it, with vacancy reaching 39.1% in the fourth quarter.
Analysts do expect supply to stabilize. Last quarter, the Puget Sound office market recorded positive net absorption for the first time in years. With declining availability and no new projects underway, conditions point toward better equilibrium. For prospective tenants, this presents an opportune moment to secure a favorable deal before the market normalizes.
Going forward, growth in both residential and office markets may moderate. High interest rates, remote work, and elevated construction costs have dampened permit activity for long-term projects. Similarly, evolving workplace requirements suggest office markets won’t return to pre-COVID levels, even as the sector positions for growth.
This post was based on information found on Puget Sound Business Journal and Puget Sound Business Journal.
