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

Market Reports Retail Washington Western Western Market Reports

Seattle’s Retail Market Continues to Grow

by Camren Skelton November 1, 2016

The Puget Sound region may be home to the growing online retail giant of Amazon, but bricks and mortar retail development is in the best shape it’s been in since the beginning of the Great Recession. After five consecutive years of strong employment growth and resultant in-migration of highly paid tech workers, the Seattle market is continuing to enjoy gains in retail sales volumes, which are projected to grow 4.5 percent in 2016. Demand for retail space has pushed overall vacancy rates to 3.7 percent throughout the metro area. For the 12 months ending on June 30, 2016, there were only 500,000 square feet of new space built. This is in contrast to the recent annual absorption that has exceeded 1 million square feet. Overall vacancy rates reflect the demand for new space and asking rents have climbed correspondingly. The majority of new retail construction is occurring in mixed-use projects, such as ground-floor spaces at new residential developments. The largest chunk of retail space currently under construction, however, is within the $1.2 billion expansion of Kemper Freeman’s Bellevue Collection in Downtown Bellevue. In all, the project will add 375,000 square feet of new retail, which is 85 percent pre-leased. The …

November 1, 2016

Market Reports Multifamily Washington Western Western Market Reports

The Sustainability of the Seattle Apartment Building Boom

by Nellie Day June 30, 2015

With all the recent froth in the multifamily markets, knowledgeable observers are expressing concern regarding all of the cranes that are sprouting around Seattle. To assess the apartment market, we have compiled data recently published in the “March 2015 Apartment Development Report” by Dupre + Scott Apartment Advisors. The Seattle Metro area is in the midst of an apartment development boom, with an estimated 17,400 units under construction, 12,000 units to be completed and ready for occupancy in 2015 and 11,000 units to be delivered in 2016. There is an additional 25,000 additional units in various stages of planning for delivery over the next five years. This new construction is in response to low vacancy rates (3.5 percent in the Seattle MSA, excluding vacancies for properties in initial lease-up), job expansion and related in-migration to the area. These trends have resulted in rising rents for new projects, up more than 7.4 percent in the region in the past 12 months (skewed by rents in newly opened projects). The new units under construction or proposed are heavily weighted to the close-in neighborhoods surrounding the Seattle CBD (Belltown, Downtown Seattle, South Lake Union) and close-in neighborhoods north of Lake Union (Ballard, Greenlake/Wallingford, …

June 30, 2015

Market Reports Office Washington Western Western Market Reports

Seattle’s CBD Gains in Popularity With Office Users

by Nellie Day June 16, 2015

The Seattle office market has been a shining example of strength and solidity. Compared to the U.S. job rate, which expanded by 2.4 percent over the past year to drop the unemployment rate to just 5.5 percent, the Seattle-Tacoma-Bellevue Metropolitan Statistical Area is looking good. Seattle added jobs at a rate of 3.1 percent in the first quarter of 2015. It also saw employment gains in every category. The unemployment rate remained in line with the U.S. rate at 5.5 percent. Construction led all job sectors with 12.6 percent growth, followed by professional and business services at 4.2 percent. The Seattle Central Business District office market showed continued improvement as the overall vacancy rate declined by 2.8 percentage points on a year-over-year basis. Asking rents continued to climb in all submarkets with an overall increase of 4 percent, while Class A rents increased by 5.6 percent. Making tech giants feel at home is nothing new to the Seattle area. The largest lease of the past quarter was Facebook’s 274,000-square-foot deal at Dexter Station. With a planned delivery of May 2015, Dexter Station will be a 10-story, 345,992-square foot office building located in the flourishing Lower Queen Anne/Lake Union submarket. Facebook …

June 16, 2015

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