(The Center Square) – The office building vacancy rate in downtown Seattle reached 35.6% in the last three months of 2025, a record high rate that the head of the Downtown Seattle Association said is directly attributable to an increase in the number of local taxes on businesses.
DSA President and CEO Jon Scholes said Amazon has relocated thousands of employees from Seattle to Bellevue and other King County locations due to Seattle’s increasingly aggressive tax burden.
“These taxes that have been proposed and adopted over the last three or four years have been articulated as progressive revenue,” he said at the annual State of Downtown event on Wednesday.
But Scholes said the results are only forcing businesses out of the city and shifting the tax burden to renters, homeowners and small businesses.
“What we need is more businesses in Seattle paying taxes,” he said. “That’s how we strengthen the tax base.”
Businesses in the city face several taxes.
The newest tax in the Emerald City, which began being collected earlier this year, is the Social Housing Tax, a 5% levy on employee compensation exceeding $1 million.
This tax is in addition to the existing JumpStart Payroll Expense Tax, which applies to companies with employees making more than $150,000 annually, which has been inflation-adjusted to approximately $194,452 for 2026.
Major changes to the city’s business and occupation tax took effect on Jan. 1, increasing rates on overall gross company revenue for many businesses while raising the exemption threshold.
Scholes address came on the same day the state Senate gave final approval to a new income tax by passing Senate Bill 6346. Known as the “millionaire’s tax” – a nearly 10% tax on income over $1 million – the legislation has now cleared both chambers of the Legislature and is headed to Gov. Bob Ferguson for his expected signature.
Scholes said the office vacancy rate has spiked in Seattle because employers are choosing to go to Bellevue because of lower taxes in the latter location.
“This, along with hybrid work and some of the continuing slowdown in the tech economy, has contributed to an office vacancy rate in downtown Seattle – plus 30%,” he said.
Real Estate broker Cushman & Wakefield in its report detailing the downtown Seattle office market put the vacancy rate of 35.6% for the fourth quarter of 2025, up from the 32.3% rate reported at the end of 2024.
The office vacancy rate has been steadily rising in Seattle, according to Cushman & Wakefield statistics, after a recovery following the pandemic when vacancy rates also exceeded 30%.
At the end of 2023, the real estate broker said the downtown Seattle office vacancy rate was just above 25%.
Cushman & Wakefield noted in its report that not one new office building was built in downtown Seattle in 2025.
In Bellevue, meanwhile, Amazon has continued to grow its workforce, increasing from a few hundred employees around five years ago to about 15,000 today, said Joe Fain, president of the Bellevue Chamber of Commerce.
Amazon has around 50,000 employes in downtown Seattle, down from more than 60,000 before the pandemic.
Fain said construction has also resumed in recent months on a 25-story building for Amazon in downtown Bellevue called Artise Tower. Construction on the building had stopped in 2022, he noted.
An Amazon spokesperson did not respond to requests for comment on the transfer of jobs to Bellevue.
Fain said not all the Amazon employees are transferred from Seattle. Some have also been directly hired by Amazon for its Bellevue offices, which are in several buildings.
Shannon Affholter, chair of the Runstad Department of Real Estate at The University of Washington, said a variety of factors are causing companies to shift jobs from Seattle to Bellevue, beyond avoiding Seattle business taxes.
He said those include visible homelessness and safety concerns.
Fain said it costs renting prime office space in downtown Bellevue – around $60 per square foot, twice what it costs to rent space in Seattle. Yet Bellevue currently has a lower office vacancy rate of 22%.
“Companies don’t want to pay the Seattle taxes,” he said.
