Abstract
Puget Sound available sublease space finished at 7 million square feet at the end of Q1 2026, a decline of 5.3% year-over-year as well as down 6.6% quarter-over quarter. However, this decline in sublease square footage is not from space being leased and absorbed, but rather subleases turning direct.
Puget Sound
AVAILABLE SUBLEASE SPACE
Total available sublease space in the Puget Sound market finished Q1 2026 at 7 million square feet (M SF), down 6.6% quarter-over-quarter (QOQ) as well as down 5.3% year-over-year (YOY). This represents a swing in the right direction as available sublease SF hit multiple record highs throughout 2025, up 175.4% from the long-term average (2005+) of 2.5M SF as well as up 258.1% when compared to the pre-pandemic (2005-2019) average of 1.6M SF. The market welcomes this modest YOY decrease, which was the first quarter since Q3 2022 that saw total available sublease lower than a year prior. At first glance, the decline in sublease SF may suggest the market is beginning to correct after several years of elevated sublease availability. However, that does not appear to be the case. Rather than being absorbed through leasing activity, much of this space has simply rolled back into the market as direct availabilities. In fact, this quarter alone saw four availabilities totaling 947,726 SF transition to a direct, all of which had an original lease commencement in 2020 or 2021.
When evaluating as a percentage of inventory, available sublease space accounts for 1.8% of the total inventory. This represents a 10-basis point (bp) decrease YOY as well as QOQ. In comparison to the long-term average of sublease space as a percentage of inventory dating back to 2005, Q1 2026 finished up 110 bps.
Vacant available sublease SF ended Q1 2026 at 3.5M SF, a decrease of 10.3% over the past year as well as down 16.8% QOQ. This marks the lowest vacant available sublease SF the Puget Sound market has seen since Q2 2024, prior to the massive surge throughout 2025 that peaked at 4.3M SF in Q4 2025. However, the Puget Sound still sits 158.9% above the pre-pandemic (2005-2019) average vacant available sublease SF of 1.4M SF. As a percent of total vacant available space, vacant available sublease space accounts for 9.6%.
Pierce County continues to be the most prominent host of available sublease SF, finishing Q1 2026 at 3.5M SF, a significant 49.7% of market wide sublease inventory. This marks a 4.6% decline over the past year as well as down 9.1% just over the last quarter. Currently, Pierce County alone has 13 subleases over 100,000 SF totaling 2.9M SF, accounting for 41.2% of all market wide available sublease space. When compared to the previous cycle peak of 1.2M SF in Q2 2011, Pierce County sublease space in Q1 2026 came in 194% higher.
Kent Valley, the largest submarket, finished Q1 2026 with 1.6M SF of available sublease space, a 16% decrease QOQ. This is a 13.2% decrease from the same period last year, while also bucking the trend of seven continuous QOQ increases. Of the 59 spaces available for sublease, only five eclipse the 100,000 SF mark totaling 662,161 SF. The remaining 54 availabilities total 1M SF, further highlighting the sheer volume of smaller options available.
The Northend submarket saw the biggest QOQ increase in sublease space finishing Q1 2026 at 717,700 SF, a 19.2% increase yet down 23.2% from the same period last year. The Seattle Close-In submarket finished down 15.4% YOY at 450,228 SF and down 13.5% over the last quarter, marking the second quarter in a row of a declines. While the Eastside submarket saw a modest 1.4% decrease QOQ coming in at 251,587 SF, it is still hovering around record highs. Thurston County has now reached an all time high of 488,196 SF.
