Market Reports

Puget Sound’s Industrial Leasing Activity is Explosive in 2021

by Jeff Shaw August 9, 2021

By Brian Cagayat, Research Analyst, Cushman & Wakefield Washington officially reopened at the end of the second quarter of 2021, lifting most of the COVID-19 restrictions that had been in place for more than a year and bringing a mixture of relief and uncertainty to residents and businesses. Workers in the industrial sector were mostly considered essential, so many continued to work onsite through the pandemic. The industrial sector was also instrumental in helping aid and support everyone through the pandemic conditions, with some of those leading industrial users based here in the Puget Sound. New leasing activity in the Puget Sound region has been explosive in 2021, totaling 14.1 million square feet in the first half of the year. This has nearly equaled the 15 million square feet of annual activity tracked in all of 2020. Net occupancy growth still remains a bit in the red through the first half of 2021 with a negative 423,000 square feet of absorption. However, we expect a considerable portion (of over 10 percent) of the 29.1 million square feet of leasing activity signed since 2020 to translate into net growth in future quarters once those companies officially take occupancy. Ecommerce and 3PL firms have been …

August 9, 2021

Market Reports Retail Washington Western Western Market Reports

Seattle Companies Are Watching Three Top Retail Trends

by Jeff Shaw May 24, 2021

By Tory Glossip, Managing Director, Colliers Puget Sound has 553,566 square feet of retail under construction, comprising 0.4 percent of existing inventory. The market dynamic will keep retail property values in the Pacific Northwest higher than most U.S. markets that are overbuilt. Puget Sound’s retail market posts rents 30 percent above the national average at $20.71 per square foot. Pricing is traditionally a function of supply and demand. In the retail world, that demand relies partially on income. The most expensive markets to lease retail space also happen to have the highest incomes…by far. Despite ideas in some circles that retail is dead, physical footprints will continue to be an important part of the retail landscape, although less so in downtown areas until workers return to the office. Most consumers have retreated to submarkets, leaving retailers to explore alternative options to use their property more effectively. Brands are expanding their reach with small-format stores and cross-promoting their products and services in showrooms. Many are leveraging smaller footprints into touch-and-feel locations that seamlessly blend online browsing and in-store purchasing. The shopping mall as we know it will have a different look and feel post-COVID. With big box retail reallocating existing space into localized …

May 24, 2021

Industrial Market Reports Washington Western Western Market Reports

Strong Market Fundamentals, Ecommerce Expansion Fueled Seattle’s Industrial Market in 2020

by Jeff Shaw May 10, 2021

By Kaden Eichmeier, Director, JLL Capital Markets Strong economic fundamentals bolstered market dynamics in the Puget Sound over the past 12 months. This market is driven in part by significant amounts of capital targeting industrial, the availability of low-cost debt and strong tenant demand. There were 125 industrial transactions totaling nearly $1.9 billion closed last year, and the outlook for 2021 looks even brighter. Competition has stiffened through the first quarter of 2021. Investors have increased allocation requirements, and the list of new entrants targeting the Seattle industrial market continues to expand. With growing demand, the core market is growing geographically as supply constraints push investors and developers further north and south. For example, Panattoni recently announced it will build a 2.1-million-square-foot, five-story warehouse for an ecommerce company on a 75-acre site just south of the Arlington Airport. Northpoint Development also announced the 4.1-million-square-foot Cascade Business Park in Arlington. To the south, Panattoni is also developing Big Freddy Logistics, a three-building park that will total 771,855 square feet, while Logistics Property Co. is developing the 352,801-square-foot Frederickson One speculative project. There is currently nearly 7.5 million square feet under construction. This includes 3.2 million square feet in Pierce County and …

May 10, 2021

Market Reports Multifamily Washington Western Western Market Reports

Multifamily Market Signals Stability in Seattle

by Jeff Shaw May 3, 2021

By Dylan Simon, Kidder Mathews As we left 2020 behind, we collectively hoped that turning the calendar to 2021 would stem to tide of COVID and bring about a V-shaped economic recovery. Alas, we enter this spring with many of the same hold-over concerns from a very rocky 2020. Thankfully, stability is right around the corner! A comprehensive and broad recovery may not be immediately recognizable, but there are signs economic stability is imminent for the Seattle apartment market. Big Tech is Getting Back to Work Big Tech evacuated urban centers in March 2020, taking with it urban-dwelling apartment renters. Apartment rental rates across Seattle, San Francisco and New York City plummeted more than 30 percent in the ensuing months. Once these “occupiers” return, that light-switch will once again flip in the positive-growth position. Facebook announced in March that it is reopening its Seattle offices. Just as Big Tech was quick (and smart) to shut down in-office operations at the outset of COVID-19, it will act similarly quickly (and intelligently) in reopening its offices. Expect the reopening trend to spread throughout Big Tech in a coordinated and swift fashion as that industry tends to know it is more innovative and competitive …

May 3, 2021

Industrial Market Reports Washington Western Western Market Reports

Seattle’s Demographics, Economy Make It Attractive to Industrial Users

by Taylor Williams August 10, 2019

Seattle has always been a strong industrial market, known for its busy ports and, more recently, its position as one of the most successful tech hubs outside of Silicon Valley. As the global economy continues to shift toward the Internet of things (IoT), Seattle industrial space is catapulting into a new category of demand. That growth is spurred on by companies like Microsoft, Amazon and Google, which continue to expand their footprints here and generate a growing inflow of technology, population and industrial requirements. The ports of Seattle and Tacoma were ranked among the busiest in the nation at the end of 2018. They collectively processed nearly 3 million TEUs (or 20-foot equivalent shipping container unit) in volume. Year-over-year, Seattle’s TEU has also grown by 27.5 percent, one of the fastest growth rates of all U.S ports. This activity has kept the Puget Sound industrial vacancy rate at 4.9 percent as of the second quarter of 2019. Industrial inventory in close-in areas of South Seattle like the Georgetown submarket has tightened to an even lower 1 percent vacancy rate. Rents, meanwhile, have increased north of $1.20 per square foot as more and more buildings are converted to creative office and …

August 10, 2019

Market Reports Multifamily Washington Western Western Market Reports

Seattle’s Multifamily Market Is Firing on All Cylinders

by Taylor Williams August 9, 2019

Notions of Seattle as a grunge-rock town with logging roots are in the rear-view mirror. While Seattle’s past is marked by the 1850s Klondike Gold Rush, 1970s Boeing Bust and 1990s Microsoft Millionaires run, today’s economy is dotted with news of exceptional growth from Apple, Amazon, Facebook, Google and Salesforce. To say that Seattle’s economy is both booming and diversified is an understatement. A benefactor of such continued growth is the regional rental market. Jobs, Jobs, Jobs Ecommerce juggernaut Amazon has assembled 12 million square feet of Class A office space in Downtown Seattle over the past several years. Now, Bellevue — not more than 10 miles from Downtown Seattle — is receiving attention from Amazon with commitments for 2 million square feet. Adding to that, Apple is committing to more than 625,000 square feet of office space; Facebook’s footprint is around 2.7 million square feet; and Salesforce has chosen Seattle as its second global headquarters. Given high wages and more economical for-rent and for-sale office and housing space (on a relative basis), it’s no surprise Seattle still has runway for sustainable economic growth. Development Pipeline Apartment developers seized upon Seattle’s modern day Gold Rush. Developers added 55,000 apartment units …

August 9, 2019

Market Reports Office Washington Western Western Market Reports

Lack of New Office Supply Pushes Large Users to Tertiary Puget Sound Markets

by Taylor Williams August 2, 2019

A decade ago, the Seattle office market was still reeling from the effects of the global recession. Total downtown vacancy had reached 14.9 percent with nearly every submarket from the Central Business District (CBD) to Lake Union experiencing some form of negative absorption. Total vacancy today is slightly more than half of what it was back then, hovering at around 7.7 percent. This is despite the total net rentable area growing by more than 11 million square feet. Seattle has also shifted from largely being considered a secondary market to one of the leading real estate hubs in the nation, thanks to consistent talent and demand from the engineering, aerospace and technology industries. Seattle currently ranks second behind San Francisco in our annual Scoring Tech Talent report. And yet, while our extensive growth has been a benefit to the office market, a new problem has cropped up in the face of this progress: availability. The rise of coworking, as well as the surplus of partial floor spaces, has been a benefit to smaller companies in the midst of early stage growth and expansion. In fact, there are more than 700 options in Downtown Seattle for smaller tenants, primarily under 15,000 …

August 2, 2019

Market Reports Multifamily Washington Western Western Market Reports

Tech Growth Fuels Apartment Market All Around Puget Sound

by Camren Skelton July 25, 2017

From the hottest commercial submarkets, such as Downtown Seattle’s South Lake Union neighborhood, to far-flung suburbs like Lynnwood, the Puget Sound multifamily market has been firing on all cylinders lately. A major reason for this is the huge growth in tech employment throughout the Puget Sound region. Tech employment in the region has grown almost 87 percent since 2001, and more than 80 tech-based companies have opened engineering offices in Seattle in the past five years. Demand for engineering and creative talent has pushed salaries up. Salaries for tech workers in Seattle are 9 percent higher than the national average. Seattle offers the highest salaries in the nation for positions like vice president of engineering ($253,488) and director of product ($228,482). Demand for talent is also having a major impact on demand for apartments. In South Lake Union, where vacancy is 3.5 percent, demand among renters for apartment units continues to be strong. This is driving tremendous interest among multifamily investors. Newly built, high-quality properties like the 282-unit Radius apartment community lease up very quickly. A joint venture between Kennedy Wilson and Lefrak purchased the just-completed asset in February for $141 million. Radius is a prime example of the quality …

July 25, 2017

Market Reports Retail Washington Western Western Market Reports

The Changing Face Of Puget Sound Retail

by Camren Skelton July 11, 2017

The Puget Sound region is one of the fastest growing areas in the U.S. We are seeing that reflected in the retail landscape, with innovation and expansion throughout the area. We are at the forefront of retail evolution, thanks to having some of the best-known retail innovators in our back yard who have turned the world of retail upside down by giving every consumer access to virtually every product available via home delivery. And yet, they are also innovating into brick and mortar experiences. Retailers are continually looking for ways to improve the consumer experience, not only through product offerings, but in forward-thinking store concepts that focus on experience and social community. REI’s focus is providing quality outdoor products at approachable price points in an interactive environment. While the most active/desirable retail areas (based on sales per square foot potential and residential and daytime populations) are the CBD, South Lake Union, Capitol Hill, University Village and downtown Bellevue, the demand for quality/value, experience, fitness and food remain consistent trends in the market. Nordstrom Rack has been expanding throughout the U.S. and will soon be opening a new store in Bellevue’s Phase II at Lincoln Square to meet this desire for …

July 11, 2017

Market Reports Office Washington Western Western Market Reports

Seattle’s Office Market Remains Healthy

by Camren Skelton November 8, 2016

Seattle is on the rise, and companies are thriving in the downtown core and surrounding submarkets. Seattle’s office market is one of the healthiest in the country. Leasing continues to be led by a robust technology sector that’s fueled by both the expansion of homegrown companies and the addition of engineering offices from mostly California-based companies. These companies have established significant footprints in Seattle as they have been able to attract, hire and retain workers from a talented employee pool. Institutions like the University of Washington continue to produce additional engineering graduates from an expanding computer science program, and companies have had great success recruiting talent eager to move from across the country and internationally to the Puget Sound region. Traditional brick-and-mortar companies like Sears, Best Buy and Starbucks are all working in Seattle to monetize the use of electronic devices. Many new companies to the market like Snapchat, Airbnb and, most recently, Pinterest, have opened their first Seattle locations in co-working spaces. The collaborative nature of the co-working environment is also popular among startups. These companies are often created by former employees of some of the region’s longstanding heavyweights. Amazon has had a significant ripple effect on the region, …

November 8, 2016

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