The Emerald City has rapidly become one of the fastest growing cities in the United States. For the past eight years, it has experienced record tourism, tax contributions and travel-related employment. Seattle is known for exquisite coffee, breathtaking landscape, misty mornings, and some of the largest and most innovative companies. Starbucks, Amazon, Microsoft and Expedia are all headquartered in this region of Puget Sound. These corporate giants attract some of the best talent in the world, drive the booming market, and heavily contribute to the city’s major millennial population. People are flocking to the vibrant city due to the strong demand for the lifestyle it offers - a robust economy, incredibly passionate residents and a work-hard, play-hard atmosphere. Once largely considered a secondary market, the city has risen to become one of the leading real estate markets in the nation.
Soaring levels of job activity, low unemployment and record-high construction and investment rates have contributed to rising rental costs and declining vacancies across the area, according to CBRE Research. Technology has historically been the largest lessor of office space (both in Seattle and nationally) but coworking companies like WeWork have begun to leave their mark on the city. Downtown Seattle has seen increased interest in Class-A office space and increased pressure on high asking rates due to the influx of major companies. Home to some of the lowest office vacancy numbers in the country, the Puget Sound region ranks among the best markets for new office construction. Additionally, the highly paid workforce behind these companies has increased the demand for adjacent luxury housing. Home to over 700,000 residents, the Seattle housing market is the largest in Washington state and the Pacific Northwest. In the Seattle industrial market, record low vacancies are being seen, as the e-commerce industry's popularity grows.
The state’s economy has been outperforming the rest of the country for the past several years, but recent signs point to the market moving towards a correction in the immediate future, both in the commercial and residential spaces. Seattle has experienced monumental growth in recent years but in 2019 Q1, commercial, absorption was only moderate, and there is fear that the market is too dependent on large tech tenants who contribute to much of the absorption with their large single-tenant leases. In residential, housing prices rose 4.5% on average, the slowest increase in recent years, with some home values declining. Housing affordability has become an issue in Seattle. Even if the region’s economy continues its recent, strong performance, rising home prices could present a significant obstacle to attracting new business. As the region’s huge millennial population ages, they become increasingly interested in owning a home but many struggle to afford one since prices have risen so extensively. A short cooldown seems likely for the immediate future, however, Seattle's strong fundamentals and flourishing market point to continued long-term growth.