Tenant’s Continue to Implement a RTO Mandate Along with Executing Long Term Leases, Reflecting Increased Confidence
The South Puget Sound office market continues to find equilibrium through the third quarter of 2025. Vacancy now sits at 7.89%, slightly improved from last quarter, reflecting strong tenant activity and growing confidence. Average asking rents remain steady at $30.00 PSF Full Service, with concessions finding their balance as positive absorption takes place.
Leasing strength remains the highest in Tacoma and Federal Way, driven by accessibility, parking, and suburban convenience. The trend for renovated and “amenitizied” assets continues, a response to an influx on national tenants entering the South Puget Sound.
Investment activity improved through Q3, with average cap rates near 7.75% and sales pricing around $300 PSF for quality owner-user assets. Private and institutional buyers are reengaging, targeting suburban opportunities with resilient tenant bases and opportunity to attract healthcare tenants.
Nationally recognized tenants, including financial, healthcare, and professional service users, are expanding into the South Puget Sound. These groups are drawn by lower occupancy costs, access to labor, and improved employee satisfaction. Most importantly, companies are listening to their employees and opening locations where the employees want to be. Their commitments reinforce the market’s position as a strong alternative to core urban centers.
The South Puget Sound office market enters Q4 with cautious optimism. Steady demand, solid fundamentals, and a resilient tenant base point toward gradual and sustainable growth into 2026.
South Puget Sound 3Q 2025 Office Insights
| Vacancy | 8.19% |
| Total SF | 43,634,498 |
| Vacant SF | 3,773,788 |
| Average Asking Rent PSF Full Service | $30.00 |
| Average Months to Lease | 4 – 8 Months |
| Average Sale Price PSF | $127 |
| Average Market Cap Rate | 8.00% |
| Months to Sale – Owner/User | 3 – 12 Months |
| Months to Sale – Stabilized | 3 – 9 Months |
The information in this update was composed by the Kidder Mathews healthcare and office brokerage team of Drew Frame, SIOR, Will 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, SIOR, 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 3 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, 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.
Contact
Drew Frame, SIOR, Senior Vice President
Will Frame, Executive Vice President
Ryan Kershaw, Investments Specialist
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