A recent report paints a gloomy picture of the office market in Bellevue, Seattle’s eastern tech satellite, describing a stubborn slowdown as the tech giants that propelled the city's meteoric rise pull back.

At the heart of the report, published by Bellevue-based brokerage Broderick Group, is the matter of remote work arrangements, which tech companies, including Microsoft and Amazon, were among the first to embrace and are now proving reluctant to discontinue. The embrace of remote work has led the brokerage to estimate that vacancies downtown are likely to break 9% in 2023 and 10% in 2024.

"We're in a position right now where employers don't really have a lot of power as it relates to encouraging employees back in," Clayton Holm, a Broderick Group broker, said in an interview.

“It's tough to go into an office that's 80% vacant," Holm added. "I think it's going to take some momentum and getting that occupancy number higher before people are seeing the value of being back in the office."

Seattle-based Amazon, which arguably sparked Bellevue's boom by declaring in 2020 that it would expand to 25,000 workers there by 2025, has maintained that its plans remain unchanged. Still, after suspending work on millions of square feet of space, it may be reevaluating how much room those workers will need.

“If [work from home] remains the workplace structure of choice by the majority of tenants moving forward,” the authors of the report wrote, “then the Eastside is clearly oversupplied and may take years before there is a demand for new construction again.”

Elliott Krivenko, CoStar’s director of market analytics for Seattle, pointed to the contrast between greater Bellevue's current 5.2% vacancy rate and the amount of space coming to market.

He said space equivalent to 11.5% of the total office inventory in greater Bellevue is being marketed as available for lease, a sign that a significant glut of nonrenewals is potentially on the way in the area.

On top of already-significant announcements by Amazon and Microsoft earlier in the year in which they paused work on or declined to renew leases for millions of square feet of office space, the report said the pair have already or are expected to let go of at least an additional 636,000 square feet through nonrenewals and subleases.

A Microsoft spokesperson confirmed via email Thursday that the company would not be renewing its leases at the Sammamish Park office complex outside of downtown Bellevue. It leases about 396,000 square feet there, set to expire in 2023, according to the Broderick report.

Additionally, the Microsoft spokesperson, who declined to be named, confirmed the company would not renew “a portion” of its lease at Lincoln Square in downtown Bellevue.

For Microsoft, continued contraction in its lease commitments extends an earlier move to consolidate its footprint in the area ahead of roughly 2.5 million square feet of new space coming online at its Redmond headquarters campus in early 2023.

Microsoft on July 6 confirmed it was planning to make available for sublease 585,000 square feet in the Advanta Office Commons at 3007 160th Ave. SE, an office park south of Bellevue, when it expires in September 2023.

An Amazon spokesperson did not immediately respond to a request to verify or comment on the report’s figures.

But the retail and internet services giant sent waves of its own through the region little more than a week after Microsoft’s July announcement when it announced it was pausing at shell-stage the buildout on roughly half the 6 million feet it had underway in the market.

According to Broderick, Amazon is contracting its presence in the Skyline tower in Bellevue by a total of 130,000 square feet, including 75,000 square feet on which it won’t renew its contract — and which is already on the market — and 55,000 square feet it plans to sublet.