Downtown Seattle falters as jobs and businesses exit city: report

According to data from CoStar, downtown Seattle office vacancy remained at a post-pandemic peak of 25 percent, and the central business district (CBD) was experiencing the highest office vacancy rate downtown, with a rate of more than 32 percent. The most glaring issue is the office market. According to the report, downtown office and retail vacancy is up to a staggering 35 percent, nearly double the worst levels seen during the Great Recession.

Even more troubling, the report confirms that office demand has been in continuous decline since 2020, with negative absorption signaling companies are still shrinking or exiting their space.

Downtown Seattle still lacks a significant portion of its workforce, with worker activity far below pre-pandemic levels. Even optimistic data shows only a partial return, with worker presence hovering well under historical norms. Instead, the report leans heavily on foot traffic driven by events such as Comic Con, Pride festivals, concerts, and protests, rather than consistent daily activity.

The report also admits to “mixed” public safety results. While violent crime declined in the downtown core, it rose sharply in other areas, including a 24 percent increase in Belltown, with the Chinatown-International District continuing to see persistently high levels. Those two areas alone now account for more than a third of downtown’s violent crime.

Perhaps the most alarming trend isn’t just what’s happening downtown, but what’s happening across the city. Downtown Seattle Association President Jon Scholes told KIRO 7 that the Emerald City lost more than 13,000 jobs in 2025 alone, pointing to rising costs as a key factor. He specifically cited high taxes and strict salary requirements as major pressures on employers.

In addition to existing business and payroll taxes, a new 5 percent “Social Housing Tax” on employee compensation exceeding $1 million took effect in 2025. Scholes and other business leaders say policies like this are accelerating an exodus of jobs and investment.

Companies are increasingly choosing to expand, or relocate entirely, to cities like Bellevue, where tax rates and regulatory costs are lower. The consequences are already showing up in the data. Seattle’s payroll tax revenues recently came in tens of millions of dollars below projections, with officials acknowledging the shortfall aligns with companies moving jobs elsewhere.