A Tale of Two Cities [September '16 Breakfast Recap]

Data met Dickens in our September Breakfast, “A Tale of Two Cities,” dealing with how the haves and have-nots are faring in a changing commercial real estate market.

Teutsch Partners, Holberg Company, Schwabe, Williamson & Wyatt, and GeoEngineers sponsored the meeting and we appreciate their continued support.

John Teutsch began the meeting and as our September Breakfast is also our annual Business Meeting, John conducted a ratification of the new Officers for 2017 and the new Board. We also heard about the Community Enhancement Project that occurs on Sept. 24 at New Start High School and the 2016 Night of the Stars finalists, and met new members.

Jennifer Tamparo from First American Title introduced our guest speakers, Mark Fleming, Chief Economist with First American, and Linda J. Isaacson, Sr. VP at First American.

Mark began with an in-depth discussion of what is driving commercial real estate investment and demand. Some of the factors are:

  • A higher priority of capital in the traditional land/labor/capital business model
  • Stagnant household income
  • The middle class being squeezed between high earners and low earners
  • Rental housing creation being the growth leader for the residential sector
  • Millennials waiting longer for marriage and children

Mark then spoke of how Seattle is doing in this environment. He indicated that our GDP is double the national average. Unemployment is at the national average. Education level attained and income is also above the national average.

Linda then drilled deeper into the have and have-not cities with a specific bent towards how investors are deploying their dollars. Key factors are technological, innovation and education. As mentioned previously, Seattle is one of the “haves” in these factors. Linda noted that investments are down nationally although international investment is up with Canada and Asia leading the way.

California and New York lead in domestic investment in Seattle and is mainly focused on multi-family and office. Seattle outpaces the national average for international investment and the primary countries are:

  • Germany (may be an anomaly as this represents the SAFECO Plaza Building purchase by GLL)
  • Canada
  • South Korea (they are the main investors in the SAFECO Plaza Building purchase)
  • Singapore
  • Hong Kong
  • China
  • United Kingdom (stay tuned as Brexit unfolds)
  • Japan
  • Taiwan

A challenge for Seattle is filling available STEM (Science, Technology, Engineering, and Mathematics) jobs. This challenge should continue Seattle’s recent trend of population growth.

Linda spoke about how walkability is becoming a more visible metric in cities and commercial properties, and concluded with the forecast that the Seattle market will continue to grow through at least 2019.

Links to resources from this meeting: 

This article was written by NAIOP Washington State and Programs Committee member Edward Scherer, Account Executive, Avidex Industries, LLC.

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