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

Taylor Williams — Sat, 10 Aug 2019 12:15:13 +0000

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…

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Seattle’s Multifamily Market Is Firing on All Cylinders

Taylor Williams — Fri, 09 Aug 2019 12:18:46 +0000

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…

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

Taylor Williams — Fri, 02 Aug 2019 12:21:50 +0000

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…

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Pembroke Acquires 14-Story Office Building in Seattle for $338.4M

David Cohen — Wed, 11 Jul 2018 12:00:48 +0000

SEATTLE — Pembroke Real Estate has acquired the 400 Fairview Building in the South Lake Union neighborhood of Seattle for $338.4 million. The 14-story, Class A office building was constructed in 2015 and is currently 98 percent leased. Pembroke purchased the property from a joint partnership between TH Real Estate and Swedish development and construction company Skanska, as well as Skanska’s financial partner, TIAA. TH Real Estate acquired a 90 percent stake in the property for $235 million in 2015 from Skanska, which retained a 10 percent ownership. “400 Fairview is a significant investment for Pembroke,” says Cory Saunders, the company’s vice president. “Not only are we expanding into a new market, but this first acquisition in Seattle demonstrates our continued commitment to our U.S. markets, and the growth of our global portfolio.” “Seattle has been a target market for us due to its long-term growth potential and operational synergies with San Francisco, where we currently manage two assets,” continues Saunders. “400 Fairview’s flexible and efficient work spaces coupled with its dynamic retail mix and curated amenities perfectly complements our global portfolio.” Current tenants at the LEED Gold-certified building include, Delta Dental; technology manufacturer Impinj; lifestyle company Tommy Bahama;…

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Takenaka Corp. Buys 290,573 SF Office Building in Seattle for $268.5M

Nellie Day — Wed, 20 Dec 2017 13:00:43 +0000

SEATTLE — Takenaka Corp. has purchased Tilt49, a 290,573-square-foot office building in Seattle, for $268.5 million. The Class A building is located at 1812 Boren Ave. in the Denny Triangle area of the city. Tilt49 is triple-net leased to Amazon through 2033. The newly constructed project includes 1,646 square feet of retail leased to Mighty-O Donuts. NKF represented the seller, a joint venture between Principal Real Estate Investors and Touchstone. The firm’s Kevin Shannon, Ken White, Rob Hannan, Tim O’Keefe and Michael Moll executed the transaction. The 11-story creative office property is nearby more than 100 restaurants, 3,000 hotel rooms, 28,000 urban residential units and public transit. The Denny Triangle submarket has experienced a 51 percent increase in average asking lease rates over the past three years, according to NKF. Tilt49 sold for $924 per square foot. This is approximately about $40 per square foot more than the recently sold Midtown 21 office property, which is situated adjacent to Tilt49 and also leased to Amazon. “The buyer [was sourced] via an ad hoc Asia/Pacific roadshow to four countries,” Shannon says. “As a result, we identified a strong buyer and achieved record-setting pricing for a Seattle office property. Takenaka is a…

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Tech Growth Fuels Apartment Market All Around Puget Sound

Camren Skelton — Tue, 25 Jul 2017 11:45:45 +0000

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…

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The Changing Face Of Puget Sound Retail

Camren Skelton — Tue, 11 Jul 2017 11:45:18 +0000

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…

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Seattle’s Office Market Remains Healthy

Camren Skelton — Tue, 08 Nov 2016 12:45:05 +0000

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,…

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Seattle’s Retail Market Continues to Grow

Camren Skelton — Tue, 01 Nov 2016 11:45:45 +0000

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…

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Carey Watermark Investors 2 Buys Seattle Marriott Bellevue

Nellie Day — Mon, 25 Jan 2016 16:51:45 +0000

BELLEVUE, WASH. — Carey Watermark Investors 2 has acquired the 384-room Seattle Marriott Bellevue for an undisclosed sum. The 17-story hotel is located at 200 110th Ave. NE. The property opened in July 2015. It includes 21,000 square feet of meeting and event space, a food and beverage outlet, lounge, fitness center and business center. “The opportunity to acquire a recently developed, high-quality urban asset in the Pacific Northwest is a unique opportunity to expand our portfolio into a vibrant growing market,” says Michael Medzigian, the REIT’s CEO. “The acquisition allows us to invest in an attractive location in one of the fastest growing regions of the country, while providing CWI 2 the opportunity to geographically diversify its portfolio.” The hotel will remain under the management of HEI Hotels & Resorts. It is the only full-service Marriott product in the Bellevue market. It is also nearby to two future East Link light rail stations. Bellevue, located approximately 10 miles east of Seattle, is in the midst of a tech boom. The city is home to notable employers such as T-Mobile, Verizon, Eddie Bauer, Puget Sound Energy and PACCAR. Microsoft currently occupies more than 1.1 million square feet of office space…

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Seattle Tech Boom Creates Next-Generation, Culture-Focused Campuses

Nellie Day — Tue, 01 Dec 2015 06:41:47 +0000

Developers are doing everything they can to make their projects attractive to corporations and their brokers as competition in Seattle continues to increase for high-growth tech tenants. And they’re doing it with good reason: Seattle was recently ranked the No. 1 city in the country for technology jobs. Seattle’s tech industry has grown by 12 percent over the past two years, according to Forbes, outpacing Silicon Valley, Boston and other tech markets. Experts point to a diverse local economy – Microsoft, Amazon and Boeing – and more-affordable housing that, together, enabled Seattle to fare better than other technology hubs. With tech business booming, Seattle’s real estate market is simply trying to keep up. Projects are starting every week, it seems, by developers looking to capture the unprecedented supply of tech businesses. Some are trying to attract anchor tenants with equity, naming rights or aggressive TI allowances. No matter the approach, smart owners realize their buildings must be created in a way that enables tenants to gain a competitive advantage in attracting top industry talent. Surveys show culture is by far the biggest draw when it comes to recruiting and retaining tech workers. How a company’s owners and employees think, feel…

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Sound Market Fundamentals: The Source of Seattle’s Multifamily Strength

Nellie Day — Tue, 17 Nov 2015 06:35:30 +0000

The underlying forces bolstering the strength of the Seattle metro multifamily marketplace are robust job growth, new development projects and the short supply of single-family houses. While these factors also slightly impact vacancy levels, property prices and sales activity are expected to continue to rise. New and expanding companies, particularly in the tech sector, have sustained job growth in the Seattle-Tacoma region over the past five years. They have put more than 115,000 people to work since the pre-recession peak. This influx of workers, strong housing demand and a number of new development projects contributed to the construction sector posting the region’s strongest 12-month job gain of 14,600 new jobs. Company expansions are anticipated to generate an additional 65,000 jobs this year alone. Construction of both single-family and multifamily housing projects is expected to continue at an accelerated pace over the next several years. Limited inventory and affordability issues associated with single-family houses are preventing many people from transitioning to homeownership, thus fostering intense demand for apartment rentals. Roughly 12,000 rentals are expected to come online this year – with about 2,600 apartments delivered in the second quarter of 2015 alone. This represents the second-largest quarterly gain in more than…

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The Sustainability of the Seattle Apartment Building Boom

Nellie Day — Tue, 30 Jun 2015 05:21:03 +0000

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,…

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Seattle’s CBD Gains in Popularity With Office Users

Nellie Day — Tue, 16 Jun 2015 05:32:50 +0000

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…

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CBRE Global Investors Fund Buys Metropolitan Park East, West in Seattle

Nellie Day — Wed, 08 Apr 2015 15:01:33 +0000

SEATTLE — A fund sponsored by CBRE Global Investors has acquired Metropolitan Park East and West in Seattle for a reported $273 million. The Class A office portfolio contains a total of 708,283 square feet in two buildings. The 370,849-square-foot, 20-story Metropolitan Park East is located at 1730 Minor Ave. The 337,434-square-foot, 18-story Metropolitan Park West is located at 1100 Olive Way. The property is situated at the convergence of the South Lake Union, Central Business District and Capitol Hill submarkets. The area boasts a high population of technology and healthcare users. The portfolio is 93.6 percent leased. Notable tenants include Facebook, Swedish Health Services and the Virginia Mason Medical Center. “The South Lake Union submarket has experienced tremendous growth as a result of the influx of technology and biotechnology tenants,” says Vance Maddocks, president of strategic partners U.S. for CBRE Global Investors. “Since 2010, the submarket has posted one million square feet of net absorption, and vacancy has decreased from 14.7 percent to 8 percent.” Metropolitan Park amenities include restaurants, a conference center, electric vehicle charging stations, bike storage and locker rooms. The property also offers attractive views, balcony decks on select floors and 867 parking spaces. CBRE Global…

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Expedia to Purchase Amgen Campus in Seattle for New Headquarters

Nellie Day — Fri, 03 Apr 2015 16:28:47 +0000

SEATTLE — Expedia (NASDAQ: EXPE) has announced its plan to purchase Amgen’s waterfront campus in Seattle for $228.9 million. The online travel company will use the 40-acre campus for its new headquarters. Expedia plans to update the 750,000-square-foot space with a new modern design. The acquisition includes additional land that could be used for future expansion. The campus is located at 1201 Amgen Court W. The new headquarters features views of downtown Seattle, Mt. Rainier, the Puget Sound and the Olympic Mountains. Expedia will be relocating from its current space at 333 108th Ave. NE in nearby Bellevue. Expedia CEO Dara Khosrowshahi and Seattle Mayor Ed Murray made the announcement Thursday, April 2, during a press conference. “It has been a tough decision to leave Bellevue, which has been a welcoming and supportive home to Expedia for many years,” said Khosrowshahi. “Owning an iconic waterfront headquarters will position us well in the competition for top talent and aligns with the ‘work hard, play hard’ culture that defines Expedia. We are thrilled to make Seattle our permanent home with a new headquarters befitting the growing global technology company we are.” Biotech firm Amgen announced its plans to vacate the campus in…

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Presbyterian Retirement Communities Northwest Welcomes New Team Members

Nellie Day — Tue, 27 Jan 2015 16:41:07 +0000

SEATTLE – Presbyterian Retirement Communities Northwest (PRCN) has added two new members to its team. Paul Aigner will serve as vice president of development and Eve Jakoboski will act as corporate human resources director. Aigner has more than 30 years of experience in real estate design, construction and development within seniors living and healthcare industries. Jakoboski has 19 years of human resources and executive management experience. She spent the majority of that time in the hospitality and healthcare sectors. PRCN is a not-for-profit, faith-based organization with more than 50 years of experience.

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Iron Gate Mill Plain Self-Storage Facility in Vancouver Receives $4M

Nellie Day — Tue, 16 Dec 2014 13:16:19 +0000

VANCOUVER, WASH. – The 520-unit Iron Gate Mill Plain Self-Storage facility in Vancouver has received $4 million in long-term financing. The facility is located at 12406 SE 5th Street. It was built in 2010. The loan features a 10-year term and a 25-year amortization schedule. It was arranged by Peter C. Norrie of Cohen Financial. The funds were provided by a correspondent life insurance company.

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Apartments Still in Demand in Seattle’s Core

Nellie Day — Tue, 25 Nov 2014 11:03:56 +0000

The Seattle-Tacoma metro area is one of the top-performing multifamily commercial real estate markets in the nation. Locally, employers are adding jobs at one of the fastest paces in the country, supporting a strong rental market in the region. In Tacoma, State Farm and other companies have energized the area’s economy and strengthened its apartment operations. In Seattle, companies like Amazon, Zillow and Julep Beauty are supporting new job growth, and many of these new job opportunities are attracting young workers who need apartments. There were 8,800 jobs were created in the metro in the beginning of the year. About 130,000 workers were added to payrolls over the past three years. The primary renter cohort of residents between the ages of 20 and 34 years old grew nearly twice as fast as the metro population in 2013, greatly increasing the need for apartments. This year, strong job growth will also support demand for area rentals as the total jobs in the metro will rise nearly 4 percent above the pre-recession high. While there are plenty of new jobs, the median household income needed to qualify for a mortgage on a median-priced home in the metro is $83,150, assuming a 20…

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Retailers Continue Pacific Northwest Expansion Plans

Nellie Day — Tue, 18 Nov 2014 06:41:25 +0000

Seattle has come a long way since the 1971 billboard reading “will the last person leaving Seattle turn the lights off?” The greater Seattle economy and real estate market has continued to be one of the nation’s top- performing locales, even exceeding its prior 2007 peak. Large corporations such as Amazon, Boeing, Microsoft and Starbucks, along with many independent startup companies, have rapidly reduced the unemployment rate, which has dropped to 4.8 percent. The construction pipeline in Seattle remains robust. With more than 20 cranes working on new developments, the market has the most active projects underway since the Downtown Seattle Associations started tracking development in 2005. Nearly two-thirds of construction in Seattle is residential, with more than 5,000 new apartment units opening since January 2013, and more than 6,000 new units to be completed in the next three years, according to the DSA report. During the past year, the amount of office space under construction has nearly doubled from 1.7 million square feet to more than 3.2 million square feet. A large contributor to this is Amazon’s revitalization of the South Lake Union area. Amazon’s global workforce has doubled in the past two years, and the company is reportedly…

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