In the news, almost every day is the announcement of “Another Big Deal”. This weekend saw the announcement of the expansion of the Costco Headquarters in Issaquah by 1.2 Million square feet including a huge employee amenity package. The historic Smith Tower resold as part of a $750 Million transaction. Office rents across the Eastside rose in Q3 of 2018 anywhere from 8.3% to as high as 33% in Redmond. A luxury tower for students is going up in the University District to a height of 24 stories and the rents are being calculated at about $4.70 per square foot per month. WeWork type spaces now total more than 2 Million square feet in our market and the appetite for this kind of space appears to be almost insatiable.
As Tevya said in the classic, Fiddler On the Roof, “but on the other hand….” Schnitzer West is pulling back on expansion as their new emphasis is going to be on the Denver market and they are unwilling to compete for land prices. Seattle has tumbled from the number one market to the number 16 market according to 2019 Emerging Trends study. Paul Allen (think Microsoft and Vulcan) passed away and what will Vulcan do going forward with their developments?
Seattle Commercial Real Estate and their professionals believe in the long term viability of our market and are excited. We think close-in industrial real estate and retail commercial real estate are two strong “hold” positions. Acquiring land for the next wave of multifamily development has merit if you have interim income to assist in your hold. Take a strong equity position in your acquisitions against rising interest rates and be patient. The future is bright but there are a few clouds in the sky. We are better positioned than almost any other area of the country because of our economic dynamics. Seattle commercial real estate is a great place to be.