From WSJ: Tech companies can’t get enough of this picturesque Seattle suburb

When the data and artificial-intelligence firm Snowflake looked at finding larger office space this year, it considered moving to downtown Seattle. But instead, in June it expanded in nearby Bellevue, Wash., taking 326,000 square feet in a glass office building with sweeping views of the natural surroundings.

“You can look out the window of our building and see the mountains,” said Warrick Taylor, a Snowflake vice president.

For years, most companies favored Seattle over surrounding suburban locations. But today, tech firms are increasingly opting for Bellevue with its modern architecture, highly rated schools and luxury boutique stores. Crime and other quality-of-life issues, meanwhile, are causing more companies to move or stay away from Seattle’s downtown, where vacancy of top-quality office space is at a near-record 34.6%.

Since 2021, Bellevue has added close to 3.9 million square feet of office space, compared with 2.6 million square feet in downtown Seattle, according to real-estate firm Cushman & Wakefield. Bellevue is attracting big names such as TikTok, Robinhood and OpenAI.

Amazon.com’s workforce in Bellevue has swelled to more than 14,000 from nearly nothing a decade ago. The company projects its Bellevue workforce will climb to 25,000 in the coming years.

Seattle’s glory days of economic expansion have ended, said Peter Steinbrueck, an architect and former member of the Seattle City Council. “The pendulum has swung to the east side,” to Bellevue.

The East Link light rail’s opening last year has helped ease congestion and enhanced the appeal of Bellevue, where the population has grown to 155,000. Next year, the light-rail network will extend across Lake Washington, creating the first direct rail link between Seattle and Bellevue.

Bellevue’s most recent wave of development also reflects a souring on Seattle. Companies shifted thousands of workers across the lake after Seattle increased taxes on businesses, while rising crime and homelessness heightened concerns about worker safety.

“Clean and safe is everything and Seattle is not that,” said Steve Luthman, global head of real estate at Hines, a developer and manager in Bellevue.

Bellevue office rents are more than $64 a square foot compared with about $51 in Seattle—a sharp reversal from early 2018 when downtown owners commanded higher rents at $47 versus $44.

How the Pendulum Shifted

Seattle for years overshadowed Bellevue—and nearby Redmond, home to Microsoft—thanks to the Emerald City’s younger, hipper nightlife and cultural scene. That changed as young tech workers started families and the appeal of Bellevue’s strong school system outweighed Seattle’s nightlife. The trend accelerated in 2019, when Amazon, Seattle’s largest employer, said it would shift thousands of jobs to Bellevue.

Amazon’s decision followed deepening tensions between the retail giant and Seattle after the City Council in 2018 approved a “head tax” of $275 per employee. Though that measure was quickly repealed, the episode underscored Amazon’s unease with Seattle’s political climate and the appeal of Bellevue’s business-friendly policies.

Pandemic Shock, Slower Recovery

In 2020, Covid-19 largely closed Seattle’s downtown business district, from which it is still struggling to recover. Homelessness, crime and remote work turned what was expected to be a temporary disruption into a long-term problem—similar to those that have played out in cities such as San Francisco, Portland, Ore., and Denver.

That same year, Meta acquired a 400,000-square-foot Bellevue campus. Since then, much of its growth in the region has been at its new Eastside location.

Vacancy, Return-to-Office and Outlook

Both Bellevue and Seattle have suffered this year from the slowdown now hitting the tech industry. Bellevue’s office-vacancy rate has more than tripled to 15.5% since 2019, according to Cushman & Wakefield.

But all corners of the Puget Sound market are expected to get a lift from the growing push by major tech employers to bring workers back more days each week. Amazon started a five-day-a-week policy at the beginning of this year. Starbucks increased the time requirement for corporate employees to four days.

Don’t Count Seattle Out

Some say don’t count Seattle out. It offers distinctive neighborhoods, direct access to the waterfront, and a cultural scene far richer than Bellevue’s. Seattle boosters point out that some cities, such as New York, have rebounded strongly after confronting serious crime and poverty-related problems that drove out employers.

“Cities rise and fall and rise again,” said Steinbrueck.

Retail Contrast

For now, the contrast between the cities extends to its shopping districts. Seattle’s downtown has been gutted by the departure of Macy’s, Nike and Lululemon.

Bellevue’s largest shopping-center landlord, Kemper Development, boasts malls that are more than 95%-leased and takes particular pride in its near 100-member security force—which Kemper says is nearly the size of nearby Redmond’s police department.

“We have an FBI-level command center,” said Kemper McQuaid, executive vice president.

Write to Peter Grant at peter.grant@wsj.com.