^ The office market is pretty tight in Seattle (and even tighter in Bellevue.) Downtown Seattle has over 3 million sq. ft. of office space under construction right now, including a 500' tower (which is not even worth posting a rendering of, it's that "blah".) Also, Amazon is about to begin construction of a new HQ complex (4 towers I think) in the northern part of downtown. Microsoft is also taking space in the same area.
As for what the office vacancy rate is I'm not entirely sure, but I know it's dropped significantly in the last 3 years to under 10% and it's probably well under that by now. That number could get a wee bit smaller if the Smith Tower gets converted to condominiums as is expected. But that'd be a minor blip as the Smith Tower is only a couple hundred square feet max.
As for this tower, according to
THIS link, the tower has passed the Design Review Board, and Land Use is expected to be approved in "the next few weeks." I don't know where they are at in the building permit phase but I know they have a permit to tear down the church annex (just the annex, the beautiful church is being saved) starting in April. The developer has claimed a mid 2010 completion date, so maybe they expect to start construction right after demolition. *crossing fingers*