Login

1Q 2025 South Puget Sound Healthcare Insights

Tenant demand continues to rise, promoting positive momentum

Posted In — Market Research | Trend Article

Expansion into new markets is fueling a tremendous amount of leasing activity.

Leasing activity continues to gain momentum as health systems aggressively expand into new markets following years of pandemic-related stagnation. With a renewed focus on growth and patient outreach, healthcare providers are actively pursuing strategic locations to enhance their service delivery. At the same time, private equity investment remains strong, injecting capital into the marketplace and accelerating expansion efforts across multiple sectors. This influx of demand is driving competition for quality space and placing upward pressure on occupancy levels.

This elevated level of leasing activity is directly fueling a surge in investor demand, as owners and investors can now approach these markets with greater confidence. Strong tenant activity, coupled with rising rental rates, has created a more predictable and attractive investment environment. Investors are increasingly targeting assets in high-demand submarkets where stabilized occupancy and positive absorption trends provide strong underwriting fundamentals. The combination of steady tenant expansion, limited new supply, and upward rent pressure is enhancing asset valuations and compressing cap rates in select areas. As market fundamentals continue to improve, investor competition is expected to intensify throughout the remainder of 2025.

South Puget Sound 1Q25 Insights

Total SF 8,753,858
Vacancy 2.97%
Vacant SF 260,204
Average Class A Asking Rent PSF NNN $32.00
Average Class B Asking Rent PSF NNN $25.00
Average Months to Lease 6-9 Months
Average Market Sale Price PSF $300.00 PSF
Average Market Cap Rate 6.75%
Average Months to Sale 4 – 9 Months

 

The information in this update was composed by the Kidder Mathews healthcare and office brokerage team of Will Frame, Drew Frame, and Ryan Kershaw.

Data source: CoStar 

 


About the Frame Team
As members of the Kidder Mathews Healthcare and Office groups, Will Frame, Drew Frame, and Ryan Kershaw are experts in healthcare and office services, specializing in landlord and tenant representation, as well as sales, including investment and owner/user.  The team has completed over $243,000,000 in sales in the last 24 months and actively represent more than 7 million square feet of property. For more information, visit kmteamframe.com.

About Kidder Mathews
Kidder Mathews is the largest fully independent commercial real estate firm in the Western U.S., with over 900 professionals in 19 offices across Washington, Oregon, California, Idaho, Nevada, and Arizona. We offer a complete range of brokerage, appraisal, asset services, consulting, and debt & equity finance services for all property types. Kidder Mathews averages over $9 billion in transaction volume, manages more than 58 million square feet of space, and conducts 2,400 appraisal, consulting, and cost segregation assignments annually. For more information, visit kidder.com.

Read the full report at the link below.

Download PDF

Contact

Will Frame, Executive Vice President
Drew Frame, Senior Vice President
Ryan Kershaw, Investments Specialist

 

Stay in the know and subscribe to our monthly Western U.S. Market Trends report and our quarterly market research.

Share This Post