Demand Rebounds For Office Space In Downtown Bellingham In Q4 2024

More downtown Bellingham offices filled up in the fourth quarter of 2024, according to a report prepared by Ryan A. Martin, co-owner and broker at Pacific Continental Realty in Bellingham.  

Bellingham’s office sector made a notable rebound last year after a prolonged period of decline, Martin said. The office vacancy rate citywide fell from 4.7% in the fourth quarter of 2023 to 4.1% in last year’s fourth quarter. Also, the average asking rent for office space increased from $18.24 per square foot to $19.69 per square foot.

“Downtown Bellingham’s office market showed particularly encouraging signs, with vacancy rates dropping from 8.2% in the third quarter to 6.1% in the fourth quarter,” Martin said. “Some of the city’s most prominent office buildings — including Crown Plaza, the Bellingham National Bank Building, and the Bellingham Herald Building — welcomed new tenants, contributing to this positive momentum.

“However, Barkley Village diverged from the overall trend, experiencing a significant increase in office vacancy, with more than 30,000 square feet of additional vacant space entering the market by year’s end.”

The fourth quarter wasn’t as positive for Bellingham’s retail space, according to Martin. In a year-to-year comparison, retail space vacancies increased from 3.3% to 3.8% in the fourth quarter while average asking rents declined from $19.78 per square foot to $18.49 per square foot.

“Downtown Bellingham’s retail vacancy climbed to 9.5%, largely influenced by the relocation of Lighthouse Mission’s Base Camp to Old Town,” Martin said. “The former Tube Time/Public Market building, which represents 25,059 square feet of newly available space, has been listed for sale as a redevelopment opportunity. Barkley Village also contributed to the overall vacancy increase, adding 19,131 square feet of unoccupied retail space in last year’s fourth quarter.”

The market for Bellingham’s industrial space changed little in the fourth quarter, finishing at a 2% vacancy rate (up from 1.2% in 2023) and an average asking rate of 99 cents (down 10% from 2023).

“While the industrial market appeared quiet, underlying economic factors could drive significant shifts in 2025,” Martin said. “Ongoing concerns about tariffs on Canadian manufacturers have already sparked increased interest from cross-border businesses exploring relocation or expansion opportunities in the U.S. If demand from Canadian firms accelerates, the limited industrial inventory in Bellingham, Ferndale, and Blaine could tighten rapidly, placing upward pressure on lease rates and availability.”

As 2025 begins, Martin said the trajectory of Bellingham’s commercial real estate market will likely be influenced by broader economic conditions, shifting business dynamics, and regional policy changes.

“The office market’s recovery signals a return of tenant confidence, while the retail sector faces continued uncertainty,” he said. “The industrial market remains poised for potential disruption, particularly if external economic pressures lead to increased demand.”

Martin was a volunteer analyst for several years for the Whatcom Real Estate Research Report, which was discontinued in 2015. He compiled Bellingham commercial real estate data for a Pacific Continental Realty report on market conditions as of Dec. 31, the end of the fourth quarter.