As we drive through the vacant boarded up streets of downtown Seattle, we have to wonder as we head into the last 60 days of the 2020 election cycle, where the world of commercial real estate in Seattle and the Greater Seattle commercial real estate market is heading. Here are some random thoughts for your consideration.
Some “experts” (we define an Expert as a guy from out of town with a briefcase) see some glimmers of an economic upturn. The optimistic prediction with the fall of unemployment is a V shaped cycle with our already having experienced a precipitous drop and an equally fast return to upside. On the other hand, commercial real estate is historically cyclical, and this upwards spiral has been historical in terms of length, depth and strength. Here are some statistics for consideration. Tourism is a mainstay in Seattle’s economy. In our State it is a $3.8 Billion dollar industry. Of the unemployed in our State, 500,000 workers, which represents 42% of all those unemployed, work in tourism related fields. Yes, Amazon just leases another 2 Million square feet in Bellevue, but our hotels are running at or below 20% occupancy. $1.3 Billion of construction is still going into our Convention Center expansion that will run out of money supposedly next Spring. The fact is that tourism in King County brings in $8M a day in income, or it used to, now that tourism is down 77%.
We have conjectured before and will continue to do so. For Seattle specifically, the answer is jobs, for Bellevue and the Eastside, they already have jobs. From a commercial real estate investment perspective, Thurston and Pierce Counties have to be given consideration. Seattle industrial is in exceptionally short demand, office demand is a function of returning to work instead of remoting from home. The picture is still not clear. The professionals of Seattle Commercial Real Estate clearly feel that targeted opportunities will become available and the EQUITY is the answer to ride through the coming days. Will Seattle descend to become another Portland, or will it rise to its greatest days going forward? Time will tell but there are clearly opportunities in the areas surrounding downtown commercial real estate and we are looking for them aggressively.