This is the time of the year in Seattle that Spring heralds Cherry Blossoms on the University of Washington campus, clouds, sun, and freezing weather overnight. The same may be said for Seattle commercial real estate. Multi-family vacancies are growing, commercial rentals are slowing, and vacancies in office real estate are growing. Recent articles touting Seattle’s ability to draw top tech talent at the expense of areas like San Francisco, L.A. and New York, bodes well. The sun says that our cost of living is less, but still too high. The clouds come in when Seattle starts to take tech for granted.
A spate of articles covering the future of downtown Seattle and a seminar online from the Puget Sound Business Journal featured the CEO of Highspot, a $2.3B software startup. His focus was that Seattle is part of a regional growth in tech, one of the true bright spots in our economy during the Covid pandemic. His central point was worth noting. When you have a dynamic environment with a hub of tech workers, not just a draw, this in turn fosters start-ups and start-ups foster growth. The hub must have a quality of life that retains essential workers who then stay to start up companies of their own. That is not currently the case for the City of Seattle where the effect of the policies of City Hall are not fostering a safe environment for living and working. But the Hub has spread and now we need to look regionally.
The sun rises in the east and that is certainly the case for commercial real estate in the City of Bellevue. The move out of Seattle has clearly sown the seeds of success for the city and finally, mass media such as Jon Talton, the business columnist for the Seattle Times has noted, the trend is clear. While Seattle’s homeless population has mushroomed and demonstrations take place with regularity, Bellevue had one experience with a demonstration gone wild in 2020. That was enough. Civil law was the precedent, emergency notices went out by phone to Bellevue residents to stay home, the word was out that violence, as well as homelessness and camping on city streets and parks will simply not be tolerated. Talton points out that Seattle’s City Council has angst to spend $7.8M in needed bridge repairs and yet spends hundreds of millions of dollars addressing the homeless crisis.
The Sunday Seattle Times celebrated Spring by (finally) taking a position against further cutting of the police budget even after Seattle had lost 200 members of its police department last year. The green tulip coming out of the ground shows an awakening (why is it always so slow?) to the need for reality. Commercial real estate is like a plant in Spring. You work hard to find a place to plant the seeds for growth, you water them diligently, you wait patiently for your project(s) to come out of the ground and after all this wait your Spring-time optimism is rewarded. Your crop, as in commercial real estate, now needs fair weather, faithful tendering, sunlight, and patience to grow. Will or can Seattle real estate prosper? The current weather report: a downpour with intermittent showers, hail, and freezing nights. The next election cycle for City Council will tell us more. Commercial real estate investors are still waiting and watching. The weather report this Spring, so far, is ugly.