Why is Seattle’s commercial real estate so expensive? The City of Seattle ranks as the sixth wealthiest city in the US and 23rd in the world. Tech wages compared to all markets in the US are in the top three running about $105,186 per year. In-migration of tech workers to our area was the highest in the nation with one of the highest in the nation cost of living with rents and gas prices leading.
At the same time, the job market saw a general decline in employment impacting all areas of commercial real estate. Forty-four percent of manufacturers have job vacancies as there are not enough young workers replacing an aging employment base, even with an average manufacturing worker earning $113,828.
The leisure and hospitality industries are hurting. Our tourism industry in the state supports 145,000 jobs and is a $22 Billion dollar industry. This season hotel occupancies skyrocketed to almost full pre-pandemic levels and yet, there is a shortage of the essential workers to staff these facilities.
“Affordable Housing”, as measured by rising housing costs in the multifamily industry, is caught in a cost-benefit loop slowed to a snail’s pace by administrative overload. The statewide demand is for over one million housing units, and the backlog is due to the current economy and the cost of money added to the lengthy, arduous, and costly approval process. Recent state and local energy code “savings” changes are further driving cost which will forever change the term “affordable.” The elimination of natural gas and a heat pump requirement will further cool the production of housing. Will tax exemptions and other incentives from the government be enough? Not in the opinion of Seattle Commercial Real Estate.
Seattle Commercial Real Estate and our clients see problems as opportunities. If we think creatively, use common sense, and are patient, then our clients and investors will inevitably come out on the positive side. Awareness of commercial real estate issues provides the base for good decision-making.