A classic TV commercial from years ago sent a clear message: “Where’s the Beef?” To all who are involved in Seattle commercial real estate, the messages we are now seeing on listings tell a story if you read them carefully. Here are a few examples from actual commercial real estate listings: 50% Vacant – Fully Rented – Value Added – Two Month Free Rent – Free Parking- Full 5% Commission – One Year Free Rent – Prime Seattle Waterfront Office Building 65% Vacant (with no rent stated). The proliferation of these messages, particularly in multi-family clearly tell the story of rentals in the City of Seattle.
Another article takes pains to point out that nearly half of all jobs that existed in the US pre-pandemic were small business owners. With most small businesses lacking liquidity, strong credit, and an inability to predict a future operating environment, this does not paint a pretty picture. The last congressional bill attempts to insert $1.9 Trillion into the economy and forgivable PPP loans, but the real key is local elected officials.
The Downtown Seattle Association sites statistics that show a drop in convention center revenue from $616 M to a mere $221M. Hotel room nights dropped from 307,000 to 82,500 last year. They are projecting at least two years to turn things around. If we expect big business to stimulate the system and fifty per cent of all employment is through small business who feed off the momentum of Big Business and if we can’t reasonably rely on the local government to provide stimulus, financing, and a collaborative business tax environment, then the outlook for commercial real estate is grim.
Seattle office real estate vacancies now top 17% and another 17% of business owners have closed permanently. 30.8% of business have downsized. Pacific Northwest business owners believe that in addition to Covid, taxes are the biggest negative in the business environment. Statistics like these don’t lie and with the current political environment in the City of Seattle, the storm flags are fluttering in commercial real estate. The future will be determined by the elections coming in 2022, but the time to watch is May of 2021 when the process for filing to run in the elections closes. Look then at who is running and their philosophies and that will tell you the future of Seattle commercial real estate.
