As the professionals of Seattle Commercial Real Estate LLC started predicting a couple of years ago, mixed use rents have stabilized, fallen slightly and vacancies in our market are now touted as being 5.2%. The pace of construction of multi-family has been about 12,000 units annually since 2014 and year-to-date for 2018 has been about 5,500 units with a total projected of 13,200 for the year. Another 22,500 units are under construction. Of the projected units, downtown Seattle is projected at 3,975 units and South Lake Union at 3,342 units.
The “up” of the multi-family market and the “down” of multi-family rents with lower move-in fees, free rent and/or parking concessions was followed by the additional “down” in terms of the number of construction cranes dotting the landscape in Seattle. We actually dropped to a low of 45 construction cranes and temporarily lost our national lead. Not to worry, we are back up to 65 cranes dotting the skyline, making us the first place city in the United States for activity. Chicago is trailing us for second place with a paltry 40 cranes. Portland has 30 cranes and San Francisco has a mere 26 cranes.
For the first time since 2014, we see projects that have gone through the approval process being marketed with MUP (Master Use Permit) approvals. The unit cost of land has fallen an estimated twenty per cent.
Offices are booming for those that were in the pipeline, but anticipated construction is leveling out. Institutional investors seeking safe havens for money are grabbing Class A offices in all markets, but interestingly, the Bellevue market has surpassed Seattle for shear volume of sales.
The bottom line is that the professionals from Seattle Commercial Real Estate see some small flags of caution waving but against most of the rest of the country, we are in a unique and blessed position should the country fall into any form of recession.