The troubles facing most Seattle-area landlords are more like a Puget Sound drizzle than the stormy skies swirling around markets such as Phoenix or Orange County, Calif.

Certainly the economic turmoil buffeting the nation's property markets has touched Seattle. The area's median home prices are falling, and average commercial rent gains are slowing. The volume of large office, retail and warehouse sales has dropped dramatically this year, according to Real Capital Analytics. The area's job growth slipped to 2.3% in July, down from 3% in the year-earlier month, according to the Bureau of Labor Statistics.

Vulcan Real Estate Seattle's South Lake Union neighborhood epitomizes the city's relatively solid weathering of the property storm. Here, renderings of Amazon.com's new headquarters in the former industrial area.

Moreover, tighter economic times are hurting some large employers and real-estate consumers in the region, home to about 3.4 million people. As Starbucks Corp. pulls back from an expansion and closes hundreds of stores nationwide, it is considering selling a downtown office building it is developing and an existing one it owns, both in Seattle's Pioneer Square neighborhood.

Like many markets, Seattle also has supply issues. The national economy is slowing even as developers are delivering a slew of buildings -- including offices, stores and condominiums -- started in better times.

But amid these pressures, the Seattle region's office-, retail- and apartment-leasing markets still have outshined most major U.S. metropolitan areas by some key measures. While retail rents in most markets are falling, average Seattle-area retail rents are expected to rise 3% this year, the highest gain of 54 major markets tracked by Property & Portfolio Research, a real-estate research firm.

Office rents are expected to rise 4.5% this year, the second-biggest gain after Houston, though that will diminish next year as newly constructed space damps landlords' leverage. Average metrowide warehouse rents already are falling.

"I wouldn't say it's recession-proof, but Seattle's going to weather the recession a lot better than most markets," said Stephanie Hession, a real-estate economist with PPR. Still, even with Seattle's rents largely in positive territory, Ms. Hession says inflation will leave most landlords losing ground.

The region, which has some of the lowest-priced real estate of the larger West Coast markets, is home to some corporate behemoths still betting on growth. Microsoft Corp., which hired about 11,500 people globally last year, is continuing to gobble up space, in new buildings at its growing Redmond campus as well as leased space elsewhere in the region.

In Seattle's South Lake Union neighborhood, construction started earlier this year on a new headquarters for Amazon.com Inc. The online retailer will begin moving out of its current Seattle headquarters in 2010.

Vulcan Inc., the investment firm owned by Microsoft co-founder Paul Allen, has built numerous office, residential and mixed-use buildings in the former industrial area. It also is part of a joint venture developing the first phase of Amazon's planned six-block headquarters.

Still, some real-estate developers note a softening. Ada Healey, vice president of Vulcan's real-estate division, says competition for office tenants is getting stiffer in Seattle and concessions to woo them are on the upswing. Looming over the emerging South Lake neighborhood's future is uncertainty over its residential component as Vulcan prepares to deliver more condominiums in the next 18 months.

While Ms. Healey acknowledges that buyers are taking their time committing, she is betting that the arrival of Amazon and more office tenants will highlight the appeal of shorter commutes and help persuade would-be condo buyers to take the plunge. "The people are coming," she said.

By the NumbersSecond Quarter Seattle Metro20082007Office vacancy 12.8% 12.5% Avg. annual rent/s.f. $29.49 $27.37 Retail econ. vacancy 9.3% 7.8% Avg. annual rent/s.f. $18.41 $17.64 Warehouse vacancy 7.8% 7.6% Avg. annual rent/s.f. $4.61 $4.53 Median single-family home price $380,500 $395,300

Sources: Property & Portfolio Research, Natl. Assn. of Realtors

Write to Maura Webber Sadovi at maura.sadovi@wsj.com

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