In terms of fully vaccinated populations, Washington State has impressive percentages. As a result, the full re-opening of businesses took place in second quarter following 15 months of restrictions from the pandemic.

As businesses ramp up, there is optimism for a return to strong retail demand but there are challenges including staffing and supply chain disruptions. Urban core daytime employment is still well below pre-pandemic levels with employees slowly returning to offices due to work from home options. 

Vacancy increased during the pandemic and is now lowering as restrictions end. In the second quarter, the direct vacancy rate decreased 11 basis points to 2.96 percent, according to Kidder Mathews’ second quarter retail report. King and Thurston counties had vacancy decreases of 18 and 24 basis points, respectively. Meanwhile, Pierce and Snohomish had mild vacancy increases.

That said, small tenants were buoyed by government assistance programs such as PPP. Without these there would have been further increases. As restrictions end, so will assistance and there may be some lag in business failures, says the report.

Rent growth was 4.3 percent year-over-year in the second quarter 2021 as the impact of the pandemic eases. CoStar is projecting growth of 3.3 to 4 percent in the next three quarters before returning to a steadier pace of 2 to 3 percent.