As we begin 2015 it’s hard to walk the streets of Seattle and not feel a peculiar sense that we are occupying a special time in Seattle’s history. As one that is constantly surveying headlines and capturing data points to better understand the dynamics of Seattle’s apartment investment market, I find myself surprised just how compelling the story is for investment in Seattle right now. Seattle is white hot in 2015.
By the Numbers
Over the course of each year I collect surveys and polls that show Seattle’s position relative to other cities in the nation. It is usually around the 3rd quarter of the year that I find myself with a well-rounded Top 10 list for the current year. In 2014, I posted my 2014 Top Ten List in November. Yet in 2015, we have not seen 30 days click by the calendar and I find Seattle receiving top 5 accolades capable of making any lesser city blush:
We are certain to receive more recognition as the year passes; however, 2015 is off to a start worthy of both mention and celebration.
In the apartment investment world we watch jobs – and we watch them closely. Job growth is a near panacea for all that may ill a commercial real estate market and the sure fire cure for any residual concern in the marketplace is high-paying jobs.
In recent writings I have expressed concern over a somewhat “wage growth-less” recovery – particularly in the context of What Will Happen to Interest Rates. In Seattle, the job creation we are experiencing is like few other markets in the nation (or beyond). As one of the first cities to experience full recovery from the Great Recession, we have been on a tear ever since.
In 2013, Google announced doubling its local workforce to 2,000 employees.
In 2014, Apple announced opening its first engineering office in the Northwest.
In 2015, SpaceX announced plans for more than 1,000 highly skilled (and highly compensated) workers.
These jobs are just a snapshot of a continuous wave of employment growth benefiting the region. Amazon.com announced yesterday global employment of more than 150,000 workers. A have a confidential source indicating that headcount in South Lake Union alone now tops 30,000 Amazon.com workers – with the potentiality to get to over 71,000 by 2019.
The job outlook for 2015 points to a continued upward trend. It was reported earlier this month that Seattle is set for yet another year of stellar job growth, with construction jobs likely leading job growth metrics at 5.3% growth, followed closely by coveted professional jobs. Seattle continues to ride a trend of +50,000 new jobs y-o-y and 2015 is so far no exception.
Where might we put all of these workers, you may ask? Back in 2014, I wrote of how Speculative Office Development might impact the apartment market. At the time I estimated approximately 5 M square feet of speculative office having broken ground or near to doing so (with over 10 M square feet of speculative office proposed). Well, that development continues in the form of actual shovels in the ground.
Earlier this week the PSBJ quoted JLL in tracking over 4 M square feet of office development in Seattle, placing us third highest in the nation – behind only NYC and Houston. Since a broad recovery in the apartment market as early as 2011, Seattle has shone as a healthy commercial real estate market year-over-year primarily in the apartment sector. We can now boast a nascent and significant office development pipeline with 2015 surely marking a break-out year.
Apartment Market Dynamics
Don’t worry, I won’t forget to discuss the apartment market – the focused reason I take the time to collect, study and encapsulate the aforementioned. In 2014, the Seattle apartment investment market saw the greatest activity in its history – 149 apartment transactions totaling nearly $4B. This amount of investment in Seattle surely points to a consensus on the attractiveness of Seattle’s economic fundamentals.
It takes a steady hand to follow the dynamics of the current apartment market. On a daily basis we track apartment news and each year we produce research and analysis to help clients navigate the market. You can review these materials on my Apartments in the News Page and Publications Page. Next week we will launch our 2015 Seattle Apartment Market Study – so keep a watchful eye on your inbox.
We look forward to a fantastic 2015 and especially look forward to helping clients make 2015 their best year ever. Please contact us to discuss Seattle’s apartment market and your particular assets. We specialize in the sale of apartments and development land in the Seattle/Puget Sound region, covering asset sized from 5 units to well over 500 units. I look forward to an opportunity to work with you in 2015.
s click by the calendar and I find Seattle receiving top 5 accolades capable of making any lesser city blush: