Commercial real estate loves job growth. Jobs fill office buildings, apartments and retail stores alike. Job growth drives competition for employee talent, which in turn increases wages and consumer spending power – the best of all virtuous cycles.
Our region is truly in the best of times when it comes to job growth. Year-over-year, as of May 2015 the Seattle-Bellevue-Everett MSA posted job growth totaling 61,700 jobs. To put this figure in perspective, job growth from 2012 – 2014 took our region out of recession, absorbed over 10,000 new apartment units and drove the apartment vacancy rate sub-4%. However, in each of those years jobs increased by 42,700 and 38,7000 jobs respectively – as of last month we bested the ‘best’ of those years by 19,000 additional jobs.
The heights of our region have truly ascended into rarified air. Employment growth continues to escalate, unemployment figures are far better than the rest of the nation and all of this growth is accretive to the dynamics of the region’s apartment market.
In this post we will take a summary look at the following:
- Unemployment in Seattle vs. Washington vs. United States
- Job Growth in the Seattle-Bellevue-Everett MSA
- Quality [Tech] Jobs Continue to Pour into Seattle
Unemployment in Seattle vs. Washington vs. United States
Unemployment rates are often the first measure of employment health and for our region we have stayed a healthy course vis-à-vis unemployment since 2012. Yet, as of May 2015 the King County unemployment rate is at a nation-leading 3.7 percent. Viewing the trend lines, Seattle has bested the nation and Washington State for all of the last 4 ½ years.
Seattle – Bellevue – Everett MSA Unemployment
Washington Employment Security Department; US Bureau of Labor Statistics
In the last year Seattle metro employed an additional 9,000 persons that were otherwise unemployed a year earlier. Although the nation is at an acceptable level of unemployment at 5.5% (the FOMC/Federal Reserve target rate of unemployment in 2014 was 6.5%), Seattle is an amazingly low rate, and one not seen since June 2008. Nearly equally as impressive, Snohomish County’s unemployment rate dropped to 4.0% last month.
Washington Employment Security Department
Job Growth in the Seattle-Bellevue-Everett MSA
The other measure of the stick is actual job growth – real jobs added to the economy. Seattle continues to post equally staggering job growth metrics as well. As discussed above, as of May 2015 year-over-year the region added 61,700 jobs – besting 2013/2014 forecasts in the mid to low 50,000 range for the current year.
Based on early predictions of job growth versus apartment delivers, it is likely we will absorb all units planned for delivery in 2015 while growing rents and maintaining historically low sub-4% vacancy rates.
Seattle – Bellevue – Everett MSA Job Growth
Washington Employment Security Department
Quality [Tech] Jobs Continue to Pour into Seattle
The icing on the region’s job cake is the quality of jobs the region is adding to its employment base. According to a Redfin analysis of LinkedIn data, the number of tech workers in Seattle climbed 21% in May from a year earlier. Think about it, of the over 60,000 jobs added in the last year, over 20% of them likely pay at or near $100,000/year.
If we examine the employment growth cast of characters, it looks something like:
- Uber
- Zillow
- Tableau
- Zuliliy
- HBO
- Oracle
- Redfin
- Sonos
- Amazon.com
I couldn’t credibly assemble a list of hot tech-based employers in the Seattle region and not name Amazon.com, yet it is a pretty incredible list even when Amazon.com is purposely placed on the list last.
The employers above are just a snapshot of the employers fueling high-wage-growth-type employment in our region. Next post I will cover where the great majority of these employers have clustered – and the dynamics of how these locations are redrawing the map of great opportunities for apartment investors. Stay tuned!