Seattle's tech exodus is slowing, but the city isn't filling the gap

Seattle lost roughly 9,000 tech-sector jobs in the 12 months through June, city data shows. That is half the 14,000 it shed in the prior period. The outflow is decelerating, not reversing.

Amazon's second headquarters in Arlington, Virginia, and the expansion of its Bellevue campus pulled thousands of employees out of Seattle proper since 2020. The company added more than 8,000 workers in Bellevue and Arlington combined over the last year, mostly relocations from its hometown, company filings show.

Microsoft, based in nearby Redmond, has not cut its Seattle-area headcount as aggressively. Its hiring has slowed sharply. The company added 2% to its Washington state workforce over the last 12 months, down from 8% growth two years earlier.

The city's office vacancy rate hit 22% in the second quarter, the highest since the dot-com bust, according to CBRE. Rents for Class A space fell another 3% from the prior quarter.

Smaller tech employers are less tied to the region. Stripe opened a Seattle engineering office in 2018 with plans for 200 employees. It now lists 45 open roles in the city. The rest of its engineering growth has gone to San Francisco, Dublin, and Singapore.

Some workers stay for the same reason they came: the density of engineering talent. "If I want to hire for a niche infrastructure role, I can find three candidates in a week here," said Sarah Kim, a recruiter at a Series B cloud company. "I wouldn't have that in Austin."

The companies hiring in Seattle are mostly outside the big five tech employers. Cloud infrastructure, cybersecurity, and AI startups accounted for 60% of new tech job postings in the city last quarter, according to Indeed data.

The mayor's office pointed to that shift as evidence the city's tech economy is diversifying. City data shows the number of tech job postings from companies with fewer than 500 employees rose 12% over the year.

Seattle is not in a free fall. It is not in a recovery either. The tech workforce is roughly where it was in early 2021, before the pandemic hiring frenzy.

Landlords, retailers, and restaurants that expanded into downtown during the boom years are still waiting for the return of foot traffic. Lunchtime occupancy at downtown restaurants is about 60% of what it was in 2019, according to data from the Downtown Seattle Association.

Amazon returns to office five days a week starting January. That will bring more people to its South Lake Union campus. The company has already said it will not require workers to relocate from the suburbs or other cities. The five-day mandate applies only to those whose official work location is Seattle.

A landlord who owns two towers in the Denny Triangle neighborhood said the RTO policy might slow the exodus. It would not reverse it. "We're not getting the 2019 back," he said. "The question is whether we stabilize at 2022 levels or fall further."