The job of the professionals at Seattle Commercial Real Estate is to pay attention to the headlines, but also to look at the implications of news items. Today’s journalism focuses on the headlines. It is a sale of the sizzle, not the steak. We need to look behind the headlines to understand the implications of what is going on in the world. The Corona Virus is a textbook example of the need to look deeper.
Let’s look at the scoreboard as we head into the end of the month of February. Delta has cancelled two flights a day out of Sea Tac. Seventy airlines have currently suspended flights to China; 50 airlines are reducing flights to China and 50 flights out of Sea Tac have been cancelled. The lost revenue to airlines is currently calculated at being between $4-5 Billion.
Holland America has cancelled two months of cruises in Asia, a cruise ship is docked in Japan, 200 visitors to Israel from South America are probably going to be quarantined, Expedia’s volumes are down (estimated to be down $30-40 Million in the first quarter of this year), the border with Italy is closed………..the story seems endless.
Seattle is the nexus for cruises to Alaska and just the impact of each visitor to Seattle is immense, Washington State is building a $1.3 Billion expansion of the State Convention Center; we just opened a 1260 room massive hotel. There are 2,384 rooms in planning, 2,986 rooms across 23 properties in final planning, and 1,845 rooms across 11 properties currently in construction.
Boeing is being tortured by problems with the 737 Max and has planes stored all over the countryside. At the same time, the volume of passengers is shrinking worldwide as well as domestically. Effectively the plant in Renton is shutting down and the impact on the supply chain is immense. But wait, on the other hand with aging planes and a declining number of flights, what will be the implications when Boeing is finally able to put the Max back into service? What is the implication for industrial real estate in South King County, what is the implication of a drop in Alaskan tourism? What is the implication of restrictions on border crossings from Turkey to Syria, of the true number of coronavirus cases in China, Iran, North Korea and other so called “closed” societies? Seattle Commercial Real Estate professionals are constantly evaluating these impacts on our local commercial real estate economy.