Seattle’s South Lake Union is undoubtable one of the hottest micro-markets in our region – if not the hottest – for apartment and office development. Excluding the nearly 700 apartments delivered this year, nearly 8,000 units are on the books for future development, as well as 2.6M square feet of office/lab space. And let’s not forget about Amazon.com and its nearly 6M square foot presence. For the sake of clarity, let’s start with some definitions and qualifiers.
Where is South Lake Union?
For the uninitiated, South Lake Union (SLU) is the land mass to the immediate south of Seattle’s Lake Union (you can get a partial history of its nascent development from my article in the DJC earlier this year). As far as its boundaries, that takes some definition and qualification.
South Lake Union is certainly bounded by Denny Way to the south and Interstate 5 to the east. And now is where definitions get a bit strained… As for the western boundary, Highway 99 seems like a natural break point. No one can argue that Lake Union is its northern boundary, yet with so much development occurring on Dexter Ave N and Westlake Ave N, I am admittedly stretching the northern boundary north – let’s call it Hay’s Street. See the map below for a visual.
Why are Developers Continually Using the Term “Residential” Units?
The inevitable question asked is which “residential” units will be apartments and which will be condominiums. Speculation and conjecture rules the day! Development companies with a firm background in condo development (e.g., Onni) are certainly considered likely suspect to build some “for sale” product, yet for now it is a waiting game for them and for us to see what the market will bear.
I estimate that at least 75% of planned residential units in SLU will be built as apartments. As far as the balance, condominium developers are still waiting for the tipping point where condos are worth (on a square foot basis) more than apartments to justify added costs and risk (both economic and legal). Stay tuned!
Let’s Talk Numbers – Apartment Development
A decade ago, SLU had 442 apartment dwellings. Today that number stratospherically jumped to nearly 5,000 units – 10x development in a decade. In 2014, nearly 700 deliveries are planned and from 2015 – 2017, another 2,400 units are planned, about 800 units/year. Once we start talking about future planned units, the conversation gets very interesting. Over 5,500 units are planned from 2018 and beyond. If all are built, the market would grow to nearly 13,000 units (12,934 units to be exact) – eclipsing other established urban residential markets in Seattle.
Let’s Talk Numbers – Office Development
Undoubtably, Amazon.com’s presence in SLU has made this micro-market a Class A destination for office users. The amount of office development complimenting apartment development is both reassuring and daunting – all at the same time. Given the mixture of conventional office development with lab space, University of Washington facilities and other uses – take our calculations for “office space” with a grain of salt. Our intention is to illustrate the scale of growth, not necessarily to quantify usage with exactitude.
Currently, the SLU market contains about 2.5M square feet of existing space and space under construction. In the planning stages, including development slated for delivery as early as 2015, another 2.6M square feet is due for SLU. In any market, this is a remarkable amount of growth. With the diversity of uses – from Amazon.com filled buildings to biomedical space and the Allen Brain Institute for Science – SLU is truly a remarkable market.
No crystal ball can accurately predict what development will occur and how quickly speculative developments will lease and at what rate. Yet, one aspect of SLU is certain – this will remain a market to watch for some time to come.
The following map and key are useful in deciphering where all of the aforementioned development has landed and is planned. We did our best at accuracy – if you have any developments to add, or suggested modifications to increase our accuracy, please contact us. And as always, if you need our services as far as valuation of your land or apartment building – or brokerage services, don’t hesitate to contact me. Our expertise is in understanding urban Seattle micro-markets with an unparalleled level of precision.