Seattle Commercial Real Estate has closely monitored the health of Seattle’s retail in the downtown core area as the office vacancy factor evolves. (Link Seattle’s Office Health 2025). Tourism is an important element of retail, as is the potential impact of FIFA in 2026. The picture is mixed. Tourism has increased. The opening of the last phase of the Convention Center and the rising occupancy rates in the downtown hotels are positive. The health of the restaurant industry is a huge negative. Q1 2025 with sales down 5% from the 2023 level. Labor accounts for 41% of restaurants, 29% food/beverage costs, and margins in Washington are 1.5%. Seattle’s minimum wages go up this year. A bad picture for this segment of retail.
Another factor is the 106,000 people who live in Seattle’s core area. There has been a marked slowing in the construction of housing, with higher-end units taking a greater amount of time for absorption. Seattle Commercial is taking careful note of the potential impact on multifamily with the rent control policy instituted in the State’s last legislative session. Yet visitors to the downtown urban core showed 2.9 million people living within 10 miles of downtown. That is the highest number since Covid in 2020.
The downtown area still has not achieved the historical highs of the 2010s. The crime and vacancy on the bus corridor of 3rd Avenue is a concern, with boarded-up store fronts the norm. The city has instituted a policy of fast-tracking permits for these spaces and creating financial incentives. The message of the lack of health in retail is the departure of signature retailers like Macy’s, Columbia Sportswear, Nike, The North Face, and basic retailing such as convenience stores and drug stores. Outdoor brand Himali closed its store, commenting on “challenges in the downtown area”.
Seattle Commercial Real Estate believes that with the coming of FIFA, the opening of the waterfront park, and an increase in the cruise industry going to Alaska, the future may very well be bright, but being cautious in the short term is clearly indicated in the retail segment of Seattle.
