A lengthy article at the first of the year in the Puget Sound Business Journal dealt with a decision made in Chicago by the Boeing Company. The article started out by noting that Boeing had accrued debt of $60 Billion as a result of the Covid downturn and the 737 Max grounding. In King County, the real estate holdings for Boeing over ten dozen parcels, according to a special report from the King County Assessor, totaled over $2 Billion. When you add the holdings in Snohomish County the value jumps to $4 Billion. The article pointed out that Boeing’s goal is to reduce its real estate footprint by thirty per cent. A year ago, they sold 54 acres in Kent for development of an 808,000 square foot industrial park.
Seattle area rental statistics trending downward
This was followed by two other articles. One compared traffic at Sea Tac Airport from 2019 versus 2020. In this article Alaska was down 59%, Delta 71.8% and similar results for United and Southwest. American, which only has 5.2% of the traffic was down only 55.7%. The good news continued by an article giving material information on the multi-family rental market in Seattle. Here are a few of the statistics sited in the article: 11% fewer rental applications, 24% fewer tenants looking in the marketplace, 15% more people leaving the city, and an 8.5% decrease in rents. What is more significant about the latter statistic is that is does not reflect “free” rent, reduced deposits and/or any other forms of inducement to rent. Seattle Commercial Real Estate LLC projects the potential of 4-7 years, depending upon what happens with government in the City of Seattle, to return to the vibrancy of the last decade.
Multi-family units in demand in Pierce and Thurston counties
At the same time rents outside of Seattle are increasing, vacancies decreasing and demand increasing. This is particularly true in Pierce and Thurston Counties (Thurston County’s inventory of single family is approximately 840 units, or a 90-day supply). The inference is clear for commercial real estate professionals. There are targeted opportunities in the City of Seattle, but in the office market and multi- family markets the bottom has clearly not been reached. The opening of an Amazon office facility in south Pierce County heralds a shift and the targeting of opportunities on the Eastside, Snohomish County and south to Thurston and Pierce counties are worth the effort and time. Opportunity is there, so, look outward.
Seattle Commercial Real Estate tries to look past the headlines to draw inferences that will give information to our clients about the commercial real estate market. Recent headlines, if taken superficially, are just another thing, but when looked at critically, the implications are potentially significant.