Seattle Commercial Real Estate, in a recent article, explored the potential impact of legislative decisions on commercial real estate taxation. This subject is garnering more attention following national movement trends and recent studies here in Washington State. On a Competitive Index, Washington rated 45th overall. While we do not have a state income tax, we have substantially raised the Business and Occupation tax. We have passed a 17% Capital Gains tax and an income tax on earnings over $1 Million, and increased the State sales tax.
Washington ranks as the 5th most expensive state in the US. Multifamily rents, the cost of single-family homes, office rents, and industrial rents chase the national leader, California, and #4, Hawaii. Within Washington State itself, the Seattle Metropolitan Statistical area, which covers Everett in the North all the way South to Tacoma, and includes Bellevue and Redmond, is in the top 12th Quartile for cost.
The implications of these statistics warrant a broader perspective for Seattle Commercial Real Estate professionals, rather than simply focusing on Seattle as a mecca for commercial real estate investment. The historical drivers of business success in Washington have been the ability to attract high-caliber employees and the quality of life and affordability it offers. The increase in population and pressure on our arterial system, lax enforcement of crime laws, high taxes, and the erosion of incentives for the growth of our tax base dictate that commercial real estate investment should be based on sound economics and a conservative approach rather than rampant enthusiasm.
