In commercial real estate, the actions of a municipality can favor developers or not. Developers make Las Vegas seem like a sure bet as the timeline for developments can easily run three to five years. Thus the attitudes of local government have a shelf life. The actions to impose and later retract a Head Tax by the Seattle City Council has been a boon to Bellevue.
Bellevue’s office market has over 2,207,000 square feet of office projects in the pipeline as a part of 5,600,000 square feet of space under construction in the central business district against a total inventory of 9,700,000 square feet. These are staggering statistics and the Fat Lady has not even sung yet! Rental office spaces are into the $40 per square foot range and this has compelled most general office users to look for more efficient ways to use their leased spaces. On the other hand, the Internet users are compelled to look for spaces that offer their employees more amenities, such as health clubs, food services, and personal services of all kinds. This is the answer to the competition for employees.
This is not to say that the impact of the Head Tax has totally and absolutely affected commercial real estate in Seattle. In fact, new construction is still going ahead and more projects are proposed in the office rental market almost daily. It does, however, say that big companies– particularly high tech–are sensitive to the nuances of city hall and the outlying areas are paying attention to the impact on commercial real estate for their own welfare and benefit. As long as the trend continues to bring in 1500 people a week, the long term for the commercial real estate investor or developer, is bright and shiny.