Seattle Office Loans: Commercial Office Building Financing [2026 Guide]

Seattle's office market is at a historic inflection point. With downtown vacancy at 35.6%, AI-driven leasing surging nearly 50% year over year, and the city launching an ambitious office-to-residential conversion program, the landscape for office building investors has never been more complex or more full of opportunity.

Whether you are acquiring a repositioning candidate in the CBD, refinancing a tech-leased asset in South Lake Union, or purchasing a stabilized building in Bellevue, choosing the right financing structure is essential. This guide covers everything borrowers need to know about securing office building loans in Seattle, including current rates, loan programs, submarket dynamics, and strategies for navigating the market in 2026.

Why Is Seattle's Office Market Creating Unique Financing Opportunities?

Seattle's office market tells two very different stories depending on where you look. The headline numbers are sobering: overall downtown vacancy reached 35.6% in Q4 2025, up 330 basis points from 32.3% at year end 2024. The broader metro area sits at roughly 27.6% vacancy, the highest rate on record and well above the national average of 18.5%.

But beneath those numbers, a powerful recovery is building. Q4 2025 produced the region's first positive net absorption since 2021, recording over 190,000 square feet of net new occupancy. AI companies are fueling a leasing boom that grew nearly 50% year over year in 2025. OpenAI more than quadrupled its Seattle hub by finalizing a deal for over 272,000 square feet in downtown Bellevue. Apple signed the city's largest office lease since 2019, taking nearly 193,000 square feet at Arbor Blocks West in South Lake Union.

Rents have declined significantly, with Seattle experiencing faster rent drops than any other major U.S. city. Yet that repricing is attracting new tenants and investors. Landlords are offering aggressive concessions including larger tenant improvement budgets, extended free rent, and flexible lease terms.

For borrowers, this dislocation creates a rare window. Properties are trading below replacement cost and tenants are signing at rents that leave significant upside. CoStar projects vacancy will peak over the next year and begin a slow recovery in 2027, meaning today's acquisitions stand to benefit from the bottom of the cycle.

What Loan Programs Are Available for Seattle Office Buildings?

Seattle office investors can access a broad spectrum of financing options depending on the property profile, occupancy level, borrower experience, and investment strategy. Here is an overview of the primary loan types used for office acquisitions and refinances in the Puget Sound market.

Conventional Commercial Mortgages remain the standard path for stabilized office buildings with occupancy above 75% to 80%. Banks and life insurance companies offer fixed-rate terms of 5 to 10 years with 25 to 30 year amortization. LTV ratios for Seattle office properties range from 60% to 70%, though well-located assets in South Lake Union or Bellevue with strong tenancy may qualify for higher leverage.

CMBS (Conduit) Loans work well for larger office transactions, typically $3 million and above. These non-recourse loans are securitized and sold on the secondary market. Fixed rates, interest-only periods, and assumability make conduit loans attractive for investors seeking long-term holds.

SBA 504 Loans are designed for owner-occupants using at least 51% of the building for their own business. The program offers up to 90% financing with below-market fixed rates on the CDC portion, making it the most affordable option for businesses purchasing their own Seattle office space.

Bridge Loans are critical given the volume of transitional opportunities. If you are acquiring a building with significant vacancy or planning renovations, a bridge loan provides short-term capital (12 to 36 months) with flexible terms while you execute your business plan.

Permanent Loans offer long-term stability for investors who have stabilized their assets and want to lock in favorable terms for the next 5 to 25 years. Permanent loan programs from life companies and agencies provide the lowest rates and longest terms for well-performing office properties.

What Are Current Seattle Office Loan Rates and Terms?

Office loan rates in Seattle reflect national capital market conditions and the elevated risk premiums lenders assign to high-vacancy office markets. As of early 2026, Seattle commercial mortgage rates start as low as 5.18%, though most office deals price higher depending on property fundamentals.

Here is where rates are landing for different loan types on Seattle office properties:

Conventional bank loans for stabilized office buildings carry rates from 5.75% to 6.75%, with the lower end reserved for fully leased assets in premier locations like South Lake Union and Bellevue. Buildings with near-term rollover risk or downtown locations may price at the higher end or face reduced proceeds rather than higher rates.

Life insurance company loans for core assets in top-tier locations are quoting 5.25% to 5.75%, though these lenders are highly selective in the Seattle office market right now and typically require occupancy above 85% with investment-grade tenancy.

CMBS loans are pricing in the 6.00% to 7.00% range for Seattle office properties, with spreads widening compared to multifamily and industrial. The non-recourse structure and interest-only options make CMBS competitive despite the higher rate.

Bridge loans for transitional office deals range from 8.00% to 10.50%, with pricing driven by the sponsor's experience, the exit strategy, in-place cash flow, and the submarket. Well-structured bridge deals in Bellevue or South Lake Union can price below 9%.

SBA 504 loans offer the CDC portion at roughly 5.00% to 5.50% fixed for 25 years, blended with the bank first-mortgage portion. This remains the lowest-cost option for qualifying owner-occupants.

A critical factor is that expiring office loans average 4.59% to 4.91%, while new rates exceed 6.0%, creating a significant gap for refinance scenarios. Use our commercial mortgage calculator to model different rate and leverage scenarios.

How Do Seattle Submarkets Compare for Office Investment?

Not all Seattle-area office submarkets are created equal, and lenders underwrite accordingly. Understanding the differences is critical for both choosing where to invest and securing the best possible financing terms.

South Lake Union remains the premier tech-driven office submarket in the Pacific Northwest. Amazon's massive campus anchors the neighborhood, and Apple's recent 193,000 square foot lease at Arbor Blocks West signals continued institutional confidence. The area is also seeing 1.5 million square feet of life sciences space under construction. Lenders view South Lake Union favorably due to well-capitalized tech tenants, walkability, and transit access.

Bellevue CBD has emerged as the hottest office submarket in the metro, attracting tech companies migrating across Lake Washington. TikTok has leased roughly 450,000 square feet. OpenAI expanded to over 272,000 square feet at City Center Plaza. Walmart and Snapchat both expanded their Bellevue offices in 2025. Vacancy sits around 21%, and average rents exceed $64 per square foot. Lenders are most aggressive on Bellevue deals, offering higher leverage and lower rates than anywhere else in the metro.

Downtown Seattle CBD faces the toughest conditions with 35.6% vacancy. However, this is where the most compelling value-add and conversion opportunities exist. The city has passed legislation to incentivize office-to-residential conversions, and investors acquiring assets at deep discounts are finding interest from bridge lenders and debt funds.

Eastside Suburban (Kirkland, Redmond, Woodinville) benefits from proximity to Microsoft's Redmond campus and the growing cluster of gaming and tech companies. These smaller suburban office markets tend to have lower vacancy than downtown and attract local bank and credit union financing with competitive terms.

What Role Is AI Playing in Seattle's Office Recovery?

Artificial intelligence is arguably the single most important demand driver reshaping Seattle's office market, and it directly impacts how lenders evaluate office deals in the region.

The tech-dominated Seattle market saw office demand grow nearly 50% year over year in 2025, fueled primarily by AI companies establishing and expanding their Puget Sound presence. OpenAI, which chose Seattle as a key expansion hub outside San Francisco, quadrupled its local footprint. Amazon continues to invest heavily in AI talent across its South Lake Union and Bellevue campuses. Microsoft's Copilot and Azure AI divisions are expanding headcount in Redmond and Bellevue.

Seattle launched a Responsible AI Plan in 2025 and opened an AI Incubator to support AI entrepreneurs. This institutional commitment creates a feedback loop: more companies, more talent, more office demand.

For borrowers, the AI tenant story is a powerful underwriting tool. Buildings that have signed or are courting AI and machine learning tenants tell a fundamentally different story than buildings reliant on traditional office users who may be downsizing. Lenders are paying attention to tenant industry mix, and a rent roll weighted toward AI, cloud computing, and related tech sectors can unlock better terms.

The key risk is concentration. While AI demand is booming, it remains concentrated among a few large companies. Lenders prefer diversification across multiple AI and tech tenants over single-tenant exposure.

What Should Borrowers Know About Seattle's Office-to-Residential Conversion Program?

Seattle passed Council Bill 120937 in February 2025, creating one of the most ambitious office-to-residential conversion programs in the country. Understanding this program is essential for office building investors because it fundamentally changes the exit strategy calculus for certain properties.

The program is projected to create 1,000 to 2,000 new housing units over seven years, with potential to reach 3,000 to 6,000 units when combined with the Multifamily Tax Exemption (MFTE) program. Conversion projects must designate at least 10% of units as affordable housing.

The legislation includes strategic rezoning, relaxed design regulations, and streamlined approvals for qualifying conversions. From a financing perspective, conversion opportunities require a different loan structure. Bridge and construction lenders who specialize in adaptive reuse are the primary capital sources, with typical terms of 60% to 70% loan-to-cost ratios, 18 to 36 month durations, and rates in the 8% to 11% range.

Not every office building is a good conversion candidate. Buildings constructed before the 1960s with smaller floor plates convert most economically. Modern towers with deep floor plates and sealed windows are expensive to convert. Lenders will scrutinize the feasibility study and per-unit conversion cost relative to achievable residential rents.

How Does the Loan Application Process Work for Seattle Office Properties?

Securing financing for a Seattle office building follows a structured process. Understanding each stage helps you move faster and avoid common delays.

The first step is assembling your loan package. Lenders will want to see a current rent roll, trailing 12-month operating statements, property tax records, insurance certificates, and a building condition assessment. For acquisitions, include your purchase agreement, sources-and-uses statement, and a narrative describing your investment thesis and business plan.

Given elevated vacancy, lenders will pay particular attention to your lease rollover schedule, tenant credit quality, and strategy for addressing near-term expirations.

Next, submit to multiple lenders simultaneously. Working with a commercial mortgage broker who has relationships across banks, life companies, CMBS lenders, bridge lenders, and debt funds ensures you see the full range of options.

Once you receive term sheets, compare them on rate, leverage, prepayment flexibility, recourse, and reserves. After selecting a lender, enter the formal application process, which includes ordering a third-party appraisal, Phase I environmental, and property condition report.

Underwriting typically takes 30 to 45 days for conventional loans and 45 to 60 days for CMBS. SBA 504 loans may take 60 to 90 days. Bridge loans can close in as little as 2 to 3 weeks when speed is critical.

What Are the Key Risks Lenders Evaluate for Seattle Office Deals?

Lenders underwriting Seattle office loans are scrutinizing several risk factors more closely than in other markets. Borrowers who address these issues proactively will secure better terms.

Vacancy and Absorption Risk is the primary concern. With downtown vacancy at 35.6% and the metro at 27.6%, lenders want evidence that your property can maintain or improve occupancy. Buildings in South Lake Union or Bellevue with below-market rents and tech-sector demand have a compelling story. Downtown buildings without a clear tenant pipeline face tougher underwriting.

Tech Industry Concentration cuts both ways in Seattle. The market's dependence on a handful of major tech employers (Amazon, Microsoft, Google, Meta) means that any single company's decision to expand or contract has outsized impact. Lenders prefer diversified rent rolls across multiple tech and non-tech tenants.

Remote Work Persistence remains a factor, though return-to-office mandates from Amazon and others have increased downtown foot traffic. Lenders favor buildings where tenants demonstrate consistent in-person attendance.

Interest Rate Refinance Risk is acute in Seattle. With expiring loan rates averaging 4.59% to 4.91% and new rates exceeding 6%, many borrowers face negative leverage on refinance. Lenders want to see that your property's cash flow can support higher debt service costs.

Environmental and Seismic Considerations are unique to the Pacific Northwest. Seattle's active seismic zone means lenders require thorough structural assessments for older buildings. The city's energy efficiency standards also create compliance costs that affect underwriting.

What Opportunities Exist for Value-Add Office Investors in Seattle?

The current dislocation creates compelling value-add opportunities. With downtown vacancy at 35.6% and properties trading below replacement cost, investors who can execute repositioning strategies are finding deals that would not exist in a balanced market.

The most successful value-add strategies in Seattle right now include converting older Class B downtown buildings to residential under the city's new conversion program, repositioning buildings with modern amenities and sustainability upgrades to attract AI and tech tenants, acquiring deeply discounted downtown assets and holding for the recovery cycle projected to begin in 2027, and upgrading building systems to meet Seattle's energy performance requirements.

Financing these strategies typically involves a two-phase approach. A bridge loan covers the acquisition and renovation period, followed by a permanent loan once the property is stabilized. The bridge-to-perm strategy works well in Seattle because the improving demand fundamentals, particularly from AI companies, support realistic lease-up timelines.

Lenders financing value-add deals want to see sponsor experience with similar projects, a renovation budget with 10% to 15% contingency reserves, a market study supporting post-renovation rents, and evidence of pre-leasing interest or tenant letters of intent.

What Are the Most Common Questions About Seattle Office Loans?

What is the minimum down payment for a Seattle office building loan?

Most conventional lenders require 30% to 40% down for Seattle office acquisitions in the current market, reflecting the elevated vacancy environment. This translates to 60% to 70% loan-to-value ratios. SBA 504 loans allow as little as 10% down for owner-occupants, making them the most leveraged option. Bridge lenders typically cap at 65% to 70% of as-is value for transitional Seattle office assets.

Can I get non-recourse financing on a Seattle office building?

Yes, though options are more limited than in lower-vacancy markets. CMBS loans and select life insurance company programs offer non-recourse structures on stabilized Seattle office buildings with a minimum loan amount of $3 million to $5 million. The property must demonstrate strong occupancy, creditworthy tenancy, and limited near-term rollover. Bridge loans in the current market almost always require at least partial recourse.

How do lenders evaluate tenant credit for Seattle office buildings?

Lenders assess each tenant's financial strength, remaining lease term, and industry sector. In Seattle, particular attention goes to tech tenant stability, since the market is heavily weighted toward technology companies. Investment-grade tenants receive the most favorable underwriting treatment. For startups and smaller tech firms, lenders review funding history, revenue trajectory, and personal guarantees on the lease. A diversified rent roll across multiple industries is viewed as lower risk than concentration in a single sector.

What debt service coverage ratio do lenders require for Seattle office loans?

Most lenders require a minimum DSCR of 1.25x to 1.35x for Seattle office properties, slightly higher than the national average due to the elevated vacancy risk in the market. For value-add or transitional deals, lenders may underwrite to a pro forma DSCR of 1.15x to 1.20x while requiring interest reserves to cover the stabilization period. Some bridge lenders will fund based on as-is value rather than cash flow for deeply transitional assets.

Are there incentives for office building investors in Seattle?

Seattle offers several programs that can improve office investment economics. The office-to-residential conversion program provides streamlined approvals and tax incentives for qualifying projects. The Multifamily Tax Exemption (MFTE) program offers 12 to 20 year property tax exemptions for conversion projects that include affordable housing. King County also offers property tax abatements for buildings that meet high-performance sustainability standards.

How long does it take to close an office building loan in Seattle?

Bridge loans can close in 2 to 3 weeks for experienced borrowers. Conventional bank loans typically require 30 to 45 days. CMBS loans take 45 to 60 days, and SBA 504 loans may need 60 to 90 days. In Seattle's current market, lenders are taking extra time on due diligence for office properties, so building in an additional 1 to 2 weeks beyond standard timelines is wise.

How Can You Get Started With Seattle Office Financing?

Seattle's office market offers a rare combination of deep value, emerging demand catalysts, and institutional support for creative investment strategies. Whether you are targeting a core asset in Bellevue, a tech-driven play in South Lake Union, a value-add repositioning in downtown, or a conversion opportunity under the city's new program, the right financing structure will determine your success.

Start by defining your investment thesis. Are you seeking stable cash flow from a fully leased Bellevue building, or pursuing higher returns through a downtown repositioning? Your strategy determines whether a conventional permanent loan, bridge financing, SBA program, or conversion-focused construction loan is the best fit.

Assemble your documentation before approaching lenders. A thorough loan package that addresses tenant quality, submarket fundamentals, and your value-creation plan will set you apart.

Work with a lender who understands the Puget Sound market. Seattle's unique dynamics require local expertise that national lenders may not possess.

Contact our team to discuss your Seattle office building financing needs. We work with borrowers across all property types and investment strategies throughout the Puget Sound region, connecting you with the optimal loan structure for your next deal. Explore our Seattle commercial loans page for additional resources on financing opportunities across the metro area.