20 Scotsman Guide Commercial Edition | scotsmanguide.com | March 2014
the evergreen state is Continuing to grow.
Washington has been riding a wave of tech-industry growth, declining unemployment, a booming
multifamily market and Puget Sound-area construction projects.
After falling further than most regions during the recession — in part because it had outperformed
most of the nation economically before the downturn — Washington has made a steady comeback that
picked up momentum in 2011. Despite the state’s steady economic growth, there is an overall sense of
guarded optimism because a disproportionate amount of Washington’s gains has come from the surging Seattle/Puget Sound region. Much of the rest of the state remains stagnant in terms of economic
growth and employment, however.
Washington’s gross domestic product (GDP) has been one of the fastest-growing in the nation. In 2012,
the state’s real GDP growth rate was 3. 6 percent, fourth greatest in the nation, according to the Bureau of
Economic Analysis, and more than 60 percent greater than the national GDP growth rate of 2. 5 percent.
Seattle office market
The office market in the greater
Seattle/Puget Sound area has been
performing strongly, with the total
commercial office vacancy rate dropping to 14 percent this past fourth
quarter, a significant decline from its
peak of 21.1 percent in 2010. Although
vacancy rates have dipped encouragingly, the average rental asking
rates flattened out following a healthy
jump from $27.06 per square foot in
December ’ 12 to $28.27 per square
foot in January ’ 13, according to data
from Cushman & Wakefield.
The 202 Westlake Avenue office building, leased by Amazon.com, made headlines this past September
when it sold for an area-record of $745 per square foot to GLL Westlake 202 LLC. The sale easily eclipsed
the previous Seattle record of $641 set in 2012 with Amazon.com’s purchase of its 11-building downtown
campus, according to a CBRE report.
Focus: Technology and aerospace
Technology and aerospace companies have long been key drivers in Washington’s economy, but the
forecast is mixed for their growth this year and beyond. Although Amazon.com continues to grow at a
fast clip and expand its holdings in the downtown Seattle office market, Boeing Co. and Microsoft Corp.
are expected to be flat in terms of hiring this year, with uncertainty relating to production plans and
organizational structure, respectively.
The region breathed a collective sigh of relief this past January when Boeing’s Machinist union voted to
approve the company’s latest eight-year contract proposal, which secured assembly of the company’s
new 777X airplane for Washington.
Overall, the region is well above the national average in its concentration of technology sectors such as
information technology, aerospace, and interactive media, all of which are driving economic expansion.
Washington’s unemployment rate has
gradually declined since hitting double digits in January 2010, standing
at 6. 8 percent as of this past November. Washington’s unemployment rate
has consistently remained near the
national unemployment rate, which
was 7 percent for the same month. The
unemployment rate had climbed to
and held at a peak of 10. 2 percent in
late 2009 through early 2010, but has
since made a steady decline, mostly
driven by the booming north Puget
Sound region, particularly King County, with its 5 percent unemployment. Much of the rest of the state’s unemployment hovered considerably higher than the national rate, however.
The Washington State Economic and Revenue Forecast Council expects the state’s employment to grow at
an annual average of 1.8 percent through 2017.
BY IVANNA C. SUKKAR BY KURT STEPHAN
3 Cities to Watch
Although businesses remain generally pessimistic
about the economy in Eastern Washington according
to a survey by G Squared, the greater Spokane area
was declared recently one of the nation’s top 100
metro markets by the U.S. Office of Management and
Budget. Local civic leaders are optimistic that this
milestone as a growing market will help drive new
retail and other business expansion into the region.
The city’s renovation of its historic district has led to
major multifamily deals. This past January California
developer ColRich closed a deal on the Albers Mill
property, following its purchase of Chelsea Heights
this past May. Meanwhile, the city is aggressively
courting retail and multifamily developers for areas
such as a 1.5-acre vacant lot in the Hilltop business
district, contingent on a “transit-oriented plan.”
This year and beyond, the Emerald City shines
bright with about $10 billion in current projects
under construction and another $20 billion more
in the pipeline. The expansion of tech companies
such as Amazon.com, combined with a number of
transportation projects and a surge in multifamily
construction, are leading a development boom that
is expected to last for at least four years.
sources: CBRE, Cushman & Wakefield, G Squared, Puget Sound Business
Journal, Seattle Building & Construction Trades Council, Spokane Journal
of Business, Tacoma News Tribune, The Olympian, U.S Bureau of Economic
Analysis, U.S. Department of Labor, Washington State Economic and
Revenue Forecast Council
“The Seattle-area commercial market is incredibly
strong now, and there’s a real entrepreneurial spirit in
the community. Regermination of apartment properties
is booming, including many core locations in office markets. The management of interest-rate risk is probably
the biggest impediment to growth in the future because
there’s nowhere to go but up for interest rates.”
Kurt Stephan is an associate editor at Scotsman Guide. Reach him at (800) 297-6061 or firstname.lastname@example.org.
SEAT TLE-AREA OFFICE MARKET
Source: Cushman & Wakefield | Commerce
Source: U. S. Department of Labor
Overall asking rental rate
(per square foot)
Overall vacancy rate