comments and links to news articles and other topics relevant to the Seattle
office space market from the month of September 2019.
The Downtown Seattle Association released data earlier this month that shows residential and retail construction are holding strong and office development is falling to a four-year low. Office development peaked in 2015 led by Amazon with 7.1 million square feet under construction. This year there has been only 4.2 million square feet under construction. The top projects under construction include Expedia Phase 1 with 1.19 million square feet, Amazon Tower 4 with 834,000 square feet, and the Rainier Square redevelopment with 722,000 square feet. There are 133 projects in the pipeline in Seattle neighborhoods and only 25 of the projects are office buildings. To learn more about upcoming office, retail and apartment projects click here.
New details were revealed in September regarding one of the planned Seattle office towers in South Lake Union. Alexandria Real Estate Equities Hess Callahan Partners and Stephen C Grey and Associates, are developing a mid block 13 story building at 219 Terry avenue. Many are curious if the development team will try to make Terry Thomas the building next door at 225 Terry Ave N part of planned 13-story project. According to Kristen Scott of Weber Thompson “We haven’t talked about whether it will be life sciences or just general office. I think everything is kind of on the table in terms of a tenant, just as you see in the neighborhood here.”
The Mercer Mega Block development plan was approved by city council this month to build an 800,000 square foot life sciences campus. Alexandria has become one of the most active developers in South Lake Union. Along with the life science campus, Alexandria will fund affordable housing units, a community center, and transportation improvements. Joe Marcus, Alexandria Real Estate’s founder stated, “We envision our Mercer Mega Block development as a mission-critical campus that can drive cross-pollination of life science and technology.”
Apple stated Seattle would become a key engineering hub earlier this summer. So far Apple has committed to taking all 630,000 square feet of office space at 333 Dexter in South Lake Union and a building permit application listed tenant improvements for Apple for another 17,000 square foot expansion in Two Union Square located at 601 Union Street. Apple currently has enough space in Seattle for more than 4,200 employees.
Microsoft, the second largest officer occupier in the region behind Amazon with more than 13 million square feet, is renovating a full floor in the Capitol Hill WeWork located at 1525 11th Ave. Microsoft has leased 8,200 square feet. The entire building contains over 73,000 square feet of office space and 13,000 square feet of retail space. The cost of the renovation project starts at $3 million with MKThink listed as the architect and HST Construction listed as the contractor.
The Seattle Quilt Building at 316 1st Ave S in Pioneer Square was purchased in September by local investor associated with Keeler Investments Group of Mercer Island located for over $13.5 million. The seven-story, approximately 35,163 square foot building includes offices, apartments, retail and parking worth between $347 and $385 per square foot.
The Medical Dental Building located at 509 Olive Way sold to MDB Landmark LLC associated with Menashe Commercial Properties of Portland for over $112.8 million or $380 per square foot. The 18-story building has approximately 297,200 square feet, 100 parking stalls, ground floor retail and is home to several small medical offices.
The Seattle housing market may not be the hottest in the nation, but the market is still strong and difficult for first-time buyers. The median home price of a single-family home in Seattle is $760,000 and King County median home price is $670,000. The Snohomish County market is beginning to slow, but the Pierce County market remains strong with prices up by 6.25% over last year. Typically more homes will be in the market in the next several months, but prices may still be too high for first-time home buyers. To view how Seattle home prices are balancing between growth and decline click here.
Seattle continues to add jobs as several companies expand their Seattle teams. However, according to a study by New York-based research company Kisi, Seattle ranks among the worst work-life balance cities in the nation. The study considered factors such as most hours worked, percentage of workers with 48-hour-plus work weeks and longest one-way commute times in which Seattle ranked high in all of these categories. Conversely, we ranked first in least stressed.
In Seattle proper, Amazon has surpassed 50,000 employees with a total of 53,500 employees in the region which gives it the title biggest Big Tech employer in the region. Microsoft is second with 51,854 employees. Amazon has more than 650,000 workers worldwide and continues to hire. In the Seattle region alone it is estimated that Amazon contributed $111.2 billion to Seattle’s GDP between 2010 and 2018. Therefore, it is no surprise that the median home price in Seattle remains strong and commute times have increased.
The number of condos and apartments planned for delivery in Seattle are fewer than the previous year because developers do not expect job growth to continue at the current rates. The slowdown can be measured by the decrease in cranes and rising rents. In the last two years roughly 10,000 new multifamily units opened and despite the slowdown the market still remains strong. According to RealPage, “across the U.S. multifamily projects breaking ground has dropped by 5% year-over year” so it seems the market is slowing in general.
A $52 million dollar deal to buy 10 new streetcars was cancelled by the Seattle Department of Transportation in September . SDOT cancelled the deal because it would cost more to stay in the 2017 deal than start on a new contract, which they plan to. The First Avenue project is still in the pipeline and is expected to open in 2026. The estimated cost of the project is around $208 million.
The Washington State Department of Transportation reported that the viaduct demolition was completed this month and there only remains cleanup and a small demolition project north of Pike Place Market. Kiewit Infrastructure West is the prime contractor and Ferma worked on the demolition. To view what the waterfront looks like click here.
According to a WalletHub study, Seattle ranked No.1 as having the best public transportation in the nation. Commute time can be reduced through the use of public transit and ridership is growing in Seattle unlike many other cities. The study compared 100 cities and used 17 metrics. To view the top 20 cities click here.
In September we learned that Seattle Mayor Jenny Durkan found $31 million to fund “Vision Zero” which focuses on transit safety projects and improvements. The budget came from the sale of city-owned properties and one-time increase for the city’s purchase of transit services. The mayor has a total of $725.9 million to advance transportation and transit priorities. To read the projects funded from the sale of properties click here.
The former KeyArena in Queen Anne is being renovated and is on schedule. Once the temporary roof is in place, crews will lower the bowl 15 feet further. Oak View Group owns the facility and is funding the $930 million project and has yet to sell the naming rights. The owner’s representative Ken Johnsen stated, “We are not renovating the building—we are building a whole new arena.” The new arena will almost double in size and be around 750,000 square feet. The goal of the project is to be done by summer of 2021 just in time for hockey season. The NHL team that will call the arena home has still not decided on a name.
This month was a rocky one for coworking operator WeWork. Their valuation of $47 billion was reduced to only $15 billion in September. Adam Neumann stepped down from his CEO role and we learned that WeWork will not hold an initial public offering in 2019. We Work occupies over 1.5 million square feet in the Seattle region.