We are now a month into 2018 and the professionals from Seattle Commercial Real Estate have been digesting the news from the experts. Now is the time when we willing to try to make a little sense out of it all. The facts are many and confusing, so let’s start by setting out the information and then let’s see where it takes us:

  1. Single Family is in short supply and in January alone increased as much as 20% in some areas
  2. Construction in multifamily represents the majority of downtown construction, which has slowed
  3. Construction in downtown commercial real estate and office projects has accelerated
  4. Construction costs and a shortage of labor has lead to rising construction costs
  5. Amazon now employs 566,000 people and owns or leases 254 Million Square feet (and about 30% of downtown office space)
  6. The sages in Olympia for the State of Washington have solved the school funding crisis by raising real estate taxes and the impact is going to hit people squarely in the face this month, with some increases being touted to be as high as 40%
  7. We are in the 104th month of this real estate cycle, a new record
  8. We have a 4% unemployment rate, 3% GDP growth and 2% inflation
  9. The Fed bought $4.2 TRILLION of securities to stimulate the economy and will start selling them off at the rate of $10 Billion in October
  10. We passed major tax reforms and, for example, Boeing alone sent out $300 Million in benefits to its workers, Starbucks $120 Million


What this means for Seattle commercial real estate is that there is room for optimism, but also the absolute need to approach things with an awareness of risk. Be bold, not foolish. The advantage of equity is that it provides a hedge against the risks of change. The guarantee is that there will be change.