Seattle Commercial Real Estate LLC closely follows the multi-family, office rental and commercial real estate industry in the greater Seattle marketplace. We note signs pointing in different directions and this tells us that there is the potential for change in our market. Following the visit of Chinese President Xi Jinping to Seattle on his way to Washington D.C., there were several announcements of significance, from new collaboration with Boeing to news of a proposed 101 story project which would be one of the tallest buildings in the United States. Washington State, driven mostly by the Seattle Market, is the seventh fastest growing state in the US.
In previous articles we have taken the position that the Multi-family Market has indicated a movement of the pendulum to the overbuilt side of the developments which are proliferating. The rate of rental increases has started to flatten and soon, with the addition of projects in the pipeline, rent concessions and move-in incentives will be offered. The recent rate increase through Federal Monetary Policy and the typical knee jerk reaction of the banks will guarantee that the costs of development will be even greater, with more equity required.
The risks of development in Seattle are increased as a function of the direction of the political climate with the recent election under a new District Election format which may bring further changes in the policy towards “affordable” housing and credits and debits to developers.
At the same time that an international developer announces a proposed project of 101 stories encompassing multi-family residential, retail and office leasing and a hotel, Macy’s has sold the top four floors of their historically designated site for redevelopment as office space. These are strength indices for the long term.
It is an interesting time in the Seattle and in the Commercial Real Estate business in our area.