Commercial Zoning, Office Space & Retail Corridors in Seattle#

Seattle’s commercial zoning shapes where people shop, eat, and work outside their homes. From walkable neighborhood business districts like Ballard Avenue and Columbia City to the high-rise office towers of downtown, commercial zones determine what gets built, how big it can be, and whether the street feels like a place for people or for cars. This guide covers the types of commercial zoning, how neighborhood business districts are organized and funded, the downtown office vacancy crisis, and what the city is doing about it.

Commercial zoning types#

Seattle’s land use code divides commercial areas into two main families: Neighborhood Commercial (NC) zones designed for walkable, mixed-use districts, and Commercial (C) zones oriented toward auto-accessible uses. Each zone type has height limits appended as a suffix (e.g., NC2-40 means NC2 with a 40-foot height limit). (Seattle SDCI: Zoning)

Neighborhood Commercial (NC) zones#

NC zones are the backbone of Seattle’s walkable commercial areas. They were created in the late 1980s under Ordinance 112777 (1986) and have evolved into the primary zone for mixed-use development. (Seattle City Archives: Researching Land Use and Zoning)

• NC1: Small neighborhood-oriented commercial areas serving immediate surroundings — a coffee shop, hair salon, or corner grocery. Typically one or two stories.
• NC2: Moderately sized pedestrian-oriented shopping areas providing a full range of retail and services — grocery stores, restaurants, medical offices, and housing above. NC2 zones characterize many of Seattle’s established neighborhood business districts.
• NC3: The most intensive neighborhood commercial designation, serving the surrounding neighborhood and a larger community or regional clientele. NC3 zones allow supermarkets, hotels, offices, clothing shops, and dense residential development. Found in places like the University District, Capitol Hill, and Ballard.

All NC zones allow residential uses on upper floors and, unlike residential zones, have no density limits — a feature that made them attractive to apartment developers starting in the 1990s. (Sightline Institute: This Is How You Slow-Walk into a Housing Shortage)

Commercial (C1 and C2) zones#

C1 and C2 zones are auto-oriented districts that serve broader markets:

• C1: Retail and service commercial areas serving neighborhood, citywide, or regional customers. Think large supermarkets, building supply stores, and auto repair shops, often with surface parking lots. Some residential development is permitted.
• C2: Non-retail commercial areas characterized by larger lots, warehousing, wholesale, research and development, and manufacturing. Residential use is generally not allowed except through conditional use approval.

Pedestrian zones (P-zones)#

A Pedestrian Zone designation can be added to any NC zone (shown on zoning maps as a “P” suffix, e.g., NC3P). P-zones are the city’s strongest tool for maintaining walkable, street-oriented commercial character. They prohibit drive-through lanes, restrict parking to behind buildings or inside structures, and discourage driveways crossing sidewalks on principal pedestrian streets. (Seattle OPCD: Pedestrian Retail Areas)

In 2015, Seattle nearly doubled the number of pedestrian zones from 33 to roughly 73 across 42 neighborhoods (Ordinance 124770), significantly expanding the areas where auto-oriented uses are restricted. (The Urbanist: A Big Revision: Seattle’s Pedestrian-Oriented Commercial Districts)

Downtown zones#

Downtown Seattle has its own zoning framework under Chapter 23.49 of the Seattle Municipal Code, with districts including the Downtown Office Core, Downtown Retail Core, Downtown Mixed Commercial, Pike Place Market Mixed, and Pioneer Square Mixed. These zones have separate floor area ratio (FAR) calculations, height limits, and street-level use requirements from the NC and C zones.

Neighborhood business districts#

Seattle has dozens of distinct neighborhood business districts, from major retail corridors like Broadway on Capitol Hill to small clusters of shops at a single intersection. The city supports these districts through several programs.

Business Improvement Areas (BIAs)#

Business Improvement Areas are self-taxing districts where property owners and businesses collectively fund maintenance, marketing, safety, and beautification for their commercial area. Seattle has 11 established BIAs: (Seattle OED: Business Improvement Areas)

The Metropolitan Improvement District (MID), operated by the Downtown Seattle Association, is the largest BIA and provides cleaning crews, ambassadors, and public space activation for over 280 blocks of downtown. (Downtown Seattle Association)

Neighborhood business organizations#

Beyond BIAs, the Office of Economic Development (OED) works with a network of neighborhood business organizations — chambers of commerce, merchant associations, and district alliances — that represent commercial areas citywide. These organizations coordinate events, advocate for infrastructure improvements, and connect businesses to city resources. (Seattle OED: Neighborhood Business Organizations)

Ground-floor retail requirements#

Seattle’s zoning code requires non-residential uses at street level in many commercial zones, particularly in pedestrian zones and downtown districts. This ensures that ground floors stay active with shops, restaurants, and services rather than being converted to residential lobbies or parking. The specific requirements vary by zone, with downtown and NC3P zones having the strictest street-level use mandates. (SMC Chapter 23.47A)

History#

1923: Seattle’s first zoning ordinance#

Seattle City Council passed its first zoning ordinance, dividing the city into use districts: first residence, second residence, business, commercial, manufacturing, and industrial. This established the fundamental separation of commercial and residential areas that persists in modified form today. (Seattle City Archives: Researching Land Use and Zoning)

1986: Neighborhood Commercial zones created#

The city adopted new commercial zoning regulations under Ordinance 112777, creating the NC1, NC2, and NC3 zone types that still form the foundation of Seattle’s neighborhood commercial framework. The original intent was to allow residential development in commercial zones only in limited circumstances, but the lack of density limits soon made NC zones the primary location for apartment construction. (Sightline Institute)

1994: Urban village framework#

Seattle’s comprehensive plan established the urban village system, concentrating commercial and multifamily zoning in designated centers while preserving single-family zoning across most of the city. This framework directed growth — and commercial activity — to a relatively small share of the city’s land area for the next 30 years. A Sightline Institute analysis found that from 2000 to 2020 Seattle achieved the highest rate of urban infill population growth among large U.S. metros, with neighborhoods like South Lake Union quintupling in population through concentrated development rather than outward expansion. (Seattle OPCD: One Seattle Plan Background)

2015: Pedestrian zone expansion#

The city adopted Ordinance 124770, adding or expanding pedestrian designations in 42 neighborhoods. The expansion nearly doubled the number of P-zones citywide, strengthening protections for walkable commercial character in areas like Greenwood, Lake City, Rainier Beach, and West Seattle Junction. (Seattle OPCD: Pedestrian Retail Areas)

2016: Commercial Affordability Advisory Committee#

Mayor Ed Murray formed the Commercial Affordability Advisory Committee to address rising commercial rents and small business displacement during Seattle’s tech-driven growth boom. The committee’s September 2016 report found that about 94% of Seattle businesses had 50 or fewer employees and that rapid redevelopment was replacing small-scale leasable spaces with larger, less affordable ones. Key recommendations included a commercial affordability fund, zoning changes to promote small-scale commercial pockets, and stronger design guidelines encouraging small storefronts. The committee rejected commercial rent control. (Seattle OED: Commercial Affordability Advisory Committee Report (PDF))

2021: Seattle Restored program launches#

Mayor Jenny Durkan and OED launched Seattle Restored, a program that matches small business owners, artists, and entrepreneurs with vacant commercial storefronts for pop-up shops, art installations, and artist residencies. The program prioritizes BIPOC and women-owned businesses. By 2025, Seattle Restored had activated over 100 vacant storefronts. (Seattle OED: Seattle Restored)

2023: Downtown Activation Plan rezones#

The City Council approved Mayor Harrell’s Downtown Activation Plan rezones in a 6-3 vote, allowing highrise residential towers (up to 40 stories) along Third Avenue in the Retail Core and new hotel zoning in Belltown. The rezones aimed to bring residents downtown to support struggling retail and reduce office dependence. (The Urbanist: Seattle Council Approves Downtown Activation Plan Rezones)

2025: Office-to-residential conversion incentives#

Seattle adopted Council Bill 120937, creating a sales and use tax deferral for converting underutilized commercial buildings to residential housing. The program waives design review, exempts MHA requirements, and provides land-use relief for qualifying conversions. The city projects the program will create 1,000–2,000 new housing units over seven years. (Seattle OPCD: Office to Residential)

In May 2025, Mayor Harrell signed additional legislation expanding street-level uses in Downtown, Belltown, South Lake Union, and Uptown, making it easier to fill vacant storefronts with a wider variety of tenants including childcare facilities, community spaces, and less traditional retail uses. (Seattle Mayor’s Office: Downtown Activation Plan Legislation)

Also in 2025, Seattle amended its building code to exempt tenant spaces of 7,000 square feet or less from substantial alteration requirements, removing a barrier that had kept many small storefronts vacant. (Schwabe: Seattle Aims to Revive Vacant Storefronts)

2026: One Seattle Plan centers and corridors zoning#

Mayor Wilson released the final Centers and Corridors zoning legislation in January 2026, implementing Phase 2 of the One Seattle Comprehensive Plan update. The legislation rezones 30 new Neighborhood Centers, expands existing Urban Centers, and adds mixed-use zoning along frequent transit corridors. Neighborhood Centers are designated for 3- to 6-story buildings with ground-floor commercial and apartments above. (Seattle OPCD: One Seattle Plan | One Seattle Plan Zoning Map)

The office vacancy crisis#

The scale of the problem#

Downtown Seattle’s office vacancy rate reached 35.6% in the fourth quarter of 2025, up from 32.3% at the end of 2024, according to Cushman & Wakefield. The broader Seattle market ended 2025 at 27.6% vacancy — well above the national average of 18.5%. (Axios Seattle: Office Slump Hits Hard in Downtown Seattle | GeekWire: Office Vacancy Hits Another Record)

Causes#

The vacancy crisis stems primarily from the post-pandemic shift to remote and hybrid work. Large tech employers that drove downtown’s office market — including Amazon, Google, and Meta — have consolidated space even as they enforced return-to-office policies. Some companies relocated operations to the Eastside, with Bellevue gaining over 4,000 jobs while Seattle lost nearly 6,000. (MyNorthwest: Seattle Has Second-Highest Office Vacancy Rate)

Impact on retail#

High office vacancy directly affects ground-floor retail. Downtown storefronts that depend on office worker foot traffic have seen reduced demand, and buildings with upper-floor vacancies often have empty retail levels as well. However, the metropolitan retail vacancy rate remains moderate at 3.8% (Q3 2025), suggesting that neighborhood commercial districts outside downtown are performing significantly better than the central business district. (Kidder Mathews: Seattle Retail Market Report)

Policy responses#

The city has pursued multiple strategies to address commercial vacancy:

• Office-to-residential conversions: Tax deferrals, design review waivers, and regulatory relief to encourage adaptive reuse of vacant office buildings (Seattle OPCD: Office to Residential)
• Expanded street-level uses: Legislation allowing a broader range of ground-floor tenants in downtown zones (Seattle Mayor’s Office)
• Seattle Restored: Pop-up shops and art installations in vacant storefronts (Seattle OED: Seattle Restored)
• Proposed vacancy tax: Mayor Katie Wilson, who took office in 2026, campaigned on a “well-designed vacancy tax or fine” on empty commercial space. Business groups including the Downtown Seattle Association have cautioned that additional taxes could accelerate company relocations to the suburbs. (MyNorthwest: Wilson Office Vacancy Tax)

How the city manages commercial areas#

Planning and zoning#

The Office of Planning and Community Development (OPCD) creates the comprehensive plan and future land use map that determine where commercial zoning is applied. SDCI administers the zoning code, issues permits, and enforces land use regulations in commercial zones. The zoning code for commercial areas is found in SMC Chapter 23.47A (neighborhood commercial) and SMC Chapter 23.49 (downtown).

Economic development#

The Office of Economic Development (OED) supports commercial districts through BIA administration, neighborhood business organization partnerships, the Seattle Restored program, and small business technical assistance. OED also administers the Legacy Business Program, which identifies and supports long-standing businesses at risk of displacement. (Seattle OED)

MHA in commercial zones#

Commercial development in Seattle is subject to Mandatory Housing Affordability (MHA) requirements through linkage fees, which charge commercial developers a per-square-foot fee based on the premise that new offices and retail generate demand for worker housing. Linkage fee revenue goes into the city’s affordable housing fund. (Seattle Office of Housing: MHA Program)

Advocacy and business organizations#

• Downtown Seattle Association: Operates the Metropolitan Improvement District (downtown’s BIA), produces research on downtown economic health, and advocates for policies supporting the urban core.
• Alliance for Pioneer Square: BIA and community development organization for Pioneer Square, managing clean and safe programs.
• Ballard Alliance: Manages the Ballard BIA, coordinates events, and advocates for Ballard’s business district.
• Capitol Hill Seattle: Neighborhood news and advocacy covering Capitol Hill’s commercial districts.
• Seattle Metropolitan Chamber of Commerce: Citywide business advocacy, policy positions on commercial zoning and tax issues.

Data sources#

Seattle GeoData — Zoning Maps#

Interactive zoning map layers showing all commercial, residential, industrial, and downtown zoning designations. Downloadable as GIS data.

Access: Seattle GeoData: Current Land Use Zoning Detail

One Seattle Plan Zoning Map#

The proposed and adopted zoning changes under the One Seattle Plan, including new Neighborhood Centers and corridor rezones.

Access: One Seattle Plan Zoning Map

SDCI Building Permits#

Monthly summaries of issued building permits, including commercial construction and tenant improvements. Track new development by neighborhood and building type.

Access: SDCI Issued Building Permit Stats

Office Market Reports#

Commercial brokerage firms publish quarterly reports on Seattle’s office, retail, and industrial markets with vacancy rates, absorption data, and rental trends.

Access: Kidder Mathews: Seattle Office Market Report | Cushman & Wakefield: Seattle-Bellevue MarketBeats

Key statistics#

Sources: Cushman & Wakefield MarketBeats | Kidder Mathews Retail Report | Seattle OED: BIAs | Seattle OPCD: Office to Residential

Related resources#

• Land Use & Planning Glossary — Zoning, comprehensive plan, form-based code, and other land use terms
• Funding & Policy Glossary — MHA, linkage fees, MFTE, and other funding tools
• Station Area Planning & TOD — Transit-oriented development and its intersection with commercial zoning
• Historic Preservation & Landmarks — Landmark districts and their effect on commercial areas like Pioneer Square
• Environmental Justice & Equitable Development — Anti-displacement strategies for commercial tenants

Last updated: February 2026