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Bellingham office space demand improves, retail suffers

Q4 2024 report cites changes citywide and downtown

By Frank Catalano CDN Business Contributor

If demand for space is an indicator of business health, Bellingham businesses that needed offices were feeling better in the last part of 2024. Those that needed retail storefronts, not so much.

A new commercial real estate report released by Ryan A. Martin, co-owner and broker at Pacific Continental Realty in Bellingham, found that in the fourth quarter of 2024 the vacancy rate for office space citywide fell from the same quarter in 2023, down from 4.7% to 4.1%. Downtown mirrored the broader Bellingham year-end trend, dropping to a 6.1% office vacancy rate in Q4 and reversing several 2024 quarters of increases that peaked at 8.2% in the third quarter. 

In a statement accompanying the report, Martin credited the improvements in downtown office occupancy to new tenants in “some of the city’s most prominent office buildings — including Crown Plaza, the Bellingham National Bank Building, and the Bellingham Herald Building.” 

Among the attractions? Martin said one example is in the building housing his own office, the Crown Plaza. 

“The elevators had been broken for a few years and were just fixed,” he said, “which made a big improvement in filling a near-empty building.”

It’s an office space reversal welcomed by the nonprofit Downtown Bellingham Partnership.

“With more professionals working downtown, we see renewed energy that benefits employers and our business community,” said Jenny Hagemann, the DBP’s development and communications director. “From cafes and restaurants serving lunch to retailers and services businesses, having workers in proximity is an essential driver for foot traffic and transactions.”

Retail vacancies increase

Bellingham retail space, however, is a different story. Martin’s fourth-quarter analysis saw retail vacancies climb overall from 3.3% a year earlier to 3.8%, and downtown’s retail vacancy rate continued to rise from 6.4% in the final quarter of 2023 to 9.5% in the fourth quarter of 2024.

Martin said a large factor in the downtown retail increase was the relocation of Lighthouse Mission Ministries’ Base Camp from downtown to the Lettered Streets neighborhood, emptying more than 25,000 square feet on Cornwall Avenue in the former Tube Time/Public Market building. That building, he said, has been listed for sale as “a redevelopment opportunity.”


Despite well-publicized efforts by city officials to address issues such as trash and crime downtown, Martin said improvements in retail occupancy tend to lag improvements on the street. While he said he’s seen fewer homeless people downtown in the last several weeks as well, any positive changes in downtown retail numbers won’t be reflected “for another quarter or two.”

The city, too, in August promised its own study of how to eliminate vacancies and encourage redevelopment of “underutilized” downtown buildings. But Ryan Key-Wynne, communications and community engagement manager for Planning and Community Development with the City of Bellingham, said that study has not yet begun as it evaluates data sources.

“We anticipate launching our study within the next six months,” Key-Wynne said, adding the city is “working with partner agencies to identify what types of data to collect to serve our mutual needs.”

A Barkley Village surprise

Beyond downtown Bellingham and the city as a whole, Martin said one notable neighborhood outlier — the one he found “the most surprising” — was Barkley Village. He said in the fourth quarter it experienced a significant increase in office vacancy, bucking the downward city trend, as well as an increase in unoccupied retail space. 

Yet generally in Bellingham, Martin’s analysis concluded, “the office market’s recovery signals a return of tenant confidence, while the retail sector faces continued uncertainty.”

Frank Catalano writes about business and related topics for CDN; reach him at frankcatalano@cascadiadaily.com.

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