Booming tech expansion in the increasingly crowded Seattle and King County office market has some advisers suggesting it is time to think about the South Sound for alternatives.

A new Office Investment Forecast from national commercial real estate advisory firm Marcus & Millichap reports seemingly endless demand for new office space by Amazon, Facebook, and many other locally-grown tech firms is being met by unprecedented new construction. In 2017, new project completions will be at their highest level since 2009.

“The robust office market is attracting a wide range of investors from around the globe,” reads the Marcus & Millichap report. “Towers in the (Seattle) core are being targeted by international and institutional capital at cap rates that can dip into the 3 percent area. Cap rate compression is moving yield-seeking buyers farther from downtown. 

“In Tacoma, historic office buildings that can be repurposed exchange hands at cap rates beginning in the low-8 percent area,” the report concludes. 

The recent decision by Seattle property giant Unico to buy downtown Tacoma’s Washington (office) Building for conversion to apartments might be an example of capital chasing better rates of return than can be found in today’s Seattle core neighborhoods.

You can read the full report at this link.