comments and links to news articles and other topics relevant to the Seattle
office space market from the month of March 2019.
Office projects along the waterfront are ramping up as values in the area have skyrocketed due to the demolition of the Alaskan Way Viaduct. For example, Martin Selig paid $44 million dollars for the run down Commuter Building on the 800 block of Western Ave. He is planning to demolish the existing building in order to build an 18-story office and apartment project. Similarly, an East Coast investor spent $50 million dollars for the neglected Maritime Building and subsequently renovated it, leased it to Big Fish Games, and then sold it for $186 million. The area currently looks like a battle zone with debris and construction noise everywhere, but once the viaduct is removed the buildings will have unobstructed views of Elliott Bay, West Seattle, and the Olympic Mountains. In addition, a waterfront park is scheduled for completion in a few years. To read more about the changing waterfront and soaring property values click here.
On Monday, March 18th Seattle City Council voted 9-0 to upzone 27 neighborhoods for commercial development extending the Mandatory Housing Affordability program. The MHA allows developers to build larger projects if they include affordable housing units in their projects or give money to an affordable housing fund.
The Net, a new office tower is planned at 801 Third Ave is proceeding through the design review process. The site is owned by Urban Visions and the architect will be NBBJ. The design of the tower has been changed a few times, but the latest design highlights the terraced roof and the way the tower meets the street. There will be an estimated 800,000 to 820,000 square feet of office space, 387 parking spaces, 212 bikes space and 32 shower stalls. The typically floor plates will be 24,000 square feet. According to Greg Smith of Urban Visions, construction will not start without a pre-lease.
Google’s new campus in South Lake Union is taking shape and will be ready to open this summer. The site consists of 607,000 square feet of office space and 149 apartments. Seattle is now Google’s third largest market behind only Mountain View and New York.
A historical building in South Lake Union at 425 Westlake Ave is in preliminary planning stages to add a mixed use tower on the site. The limited liability owner of the building appears to be Cameron Smith the owner of Product Creation Studio who has space on the second floor. Zoning allows a height of up to 280 feet on the site.
Onni Group has applied for a shoring and excavation permit for its two tower mixed use project at 1120 John Street in the Denny triangle neighborhood. The total project will have nearly 960,000 square feet of office space and 54,000 square feet of retail. Construction could be started as early as the end of this year.
Business texting company Zipwhip continues to expand and has just leased 72,000 square feet at the Elliott Bay Office Park building along the waterfront at 300 Elliott Ave W. Zipwhip current has 275 employees and the new space can accommodate 225 more.
Rover leased over 90,000 square feet of office space at 8th +Olive building. The space has room for 700 employees. The Seattle-based dog-sitting company filed a permit in March that shows they plan to make $2.6 million dollars of tenant improvements on 60,000 square feet. The company has 350 employees in Seattle which means they have enough space to double their workforce. Other companies in the building located at 720 Olive Way include Avvo, Airbnb, Skilljar and various technology companies.
WeWork has been on a massive growth trajectory in Seattle and now leases 1.7 million square feet in the city. With over 19 locations, the company claims that it is the fourth largest occupier of space in the area.
Bay area company Square signed a new lease in downtown Seattle at 1215 Fourth Avenue that could house up to 100 people. The company just leased 14,000 square feet at the Financial Center where they will have room to grow its current staff of about twenty.
An Amazon occupied office project in South Lake Union at 300 Boren Ave N sold for $740 Million in March. Seattle based Touchstone sold the 800,000 square foot office building to Ponte Gadea out of Miami. The deal was worth about $925 per square foot.
The Alaska Trade Building near pike place market sold for $11.5 million. The buyer was Azose Commercial Properties out of Mercer Island and the seller was Zarett Properties. The sale equated to just over $423 per square foot for the 27,277 retail and office building located at 1917 First Ave.
Seattle has been the fastest growing city in the U.S. since 2010 and the cost of living has risen faster here than anywhere else. However, the amount of new resident to King County may be slowing down. The Department of Licensing records show for the second year the number of driver’s licenses issued to new residents has declined. Another indication of a slowdown is the decline in residential real estate prices. They average has dropped more than $100,000 and there are several more homes for sale than there were last year. Although the DOL shows less residents coming to Seattle ,that is only party of the story as the DOL only includes people who apply for a driver’s license which excludes people who do not drive and children.
The price of a single-family house in the Seattle region bounced back in February after last year’s market slowdown. The market typically returns in February as spring approaches, but there was uncertainty due to the marketing softening. According to J. Lennox Scott, “the housing market is back on hot as we head into spring.”
Since the housing market has picked back up people are questioning if the home-shopping season may be another nightmare for buyers. Even though home prices are increasing again, the market is much calmer than it was a year ago. The median price of a single-family home fell $116,000 from May to January, but in February prices rose $45,000 and it was the biggest one-month increase ever.
Zillow reported in March that Seattle is the second toughest housing market for first time buyers, second only to San Francisco.
The new Seattle waterfront park hopes to retain tech talent. The park is estimated to generate an estimated annual economic impact of $288 million dollars, 2,385 full-time jobs and $10 million a year in local taxes. Additionally, park construction will create 6,240 full-time jobs, $30 million in local taxes and $1.1 billion economic impact. The tech workers value urban places with lots of amenities according to surveys, and with the waterfront park investment it is assumed 10-20 percent of people could be retained. However, to break even on the park Seattle has to retain just 1,400 tech employees out of the estimated 83,300 tech workers that may be looking to leave Seattle.
Geekwire took a look at how Silicon Valley has changed Seattle. In 2005 Google first opened an engineering outpost in Kirkland and was easily swooping up Microsoft employees. Now nearly 120 out of town tech companies have a presence in the city. Facebook is nearing 3,000 employees in the region and local companies are also continuing to surge. According to Fuel Talent there are more than 65,000 software engineers in the region. Although there are undoubtedly more engineers and resources for the technology world some in the start-up scene worry that the massive bay area companies with outposts here snuff out smaller start-ups who are looking for talent.
A new study by WalletHub ranked Washington as the second Most Innovative state in the nation during the tech era. The study took into account the number of STEM professionals, projected STEM job demand, 8th grade math and science performance, amount of technology companies, R&D spending, and Venture capital funding per capita.
The Columbia Street onramp consisting of about 5.7 million pounds of concrete was the first piece to go in the demolition of the Alaskan Way Viaduct. The WSDOT said 50 people work on the $93.7 million dollar viaduct removal project from about 7am-5pm on weekdays. The project is on schedule with the demolition of the central waterfront scheduled to be completed by June 1 and the rest of the demolition to be done over summer. The concrete from the viaduct is being stored at Terminal 25 and will be recycled and used to fill the Battery Street Tunnel. Additionally, Thomas and John streets across Aurora will be reconnected. Lastly, Columbia Street between Alaskan Way and First Avenue will become a two-way street serving buses in 2020.
In the next saga of the so called “Period of Maximum Constraint”, busses will no longer be using the transit tunnel. This is a result of the new convention center expansion and also preparation for the light rail expansion. The move is permanent and the hope is that over time some bus routes will be replaced by light rail to alleviate some of the traffic on the streets. There will be new traffic revisions on fifth and Sixth Avenue to make room for the new busses. Riders and drivers alike can expect significant delays and unfortunately this is expected to be the new norm for the foreseeable. For more updated information on route changes and schedules please click here.