Battle of the Economists [March 2018 Breakfast Recap]

April breakfast panel A “battle royale” was held at the NAIOP Breakfast Meeting on March 21, also known as a lively and illuminating discussion with two premier economists from our area.

President Tony Toppenberg began the meeting by showing even more features from the NAIOP WA app. It really does have some great features including the presenters’ slides for each breakfast meeting, downloadable for one month after each event. New members were introduced and we heard the sad news that Sharlyn Turner of Peterson and Sullivan passed away.

Tony also talked about the Spring Property Tour which will be held at the Fred Hutch campus on May 2. He also thanked our sponsors: Gateway Construction, Ryan Companies, CenterPoint Properties, JLL, McKinstry, Southport, Graphite Design Group and Stimson Bay. We thank them for their continued support!

Dylan Simon, Exec. VP at Colliers moderated (refereed?) this battle. Our two economists were:

  • Skylar Olsen – Senior Economist at Zillow
  • Matthew Gardner – Chief Economist at Windemere

Skylar began by stating that the long expansionary period has driven unemployment rates below pre-recession levels. This is mainly in King County because as Matthew pointed out, the rest of the state is not doing as well.

Matthew gave us a synopsis of the last 20 years highlighting the low points of the Dot-com bust and the Great Recession. Recovery has occurred and in King County we are essentially at full employment; Matthew forecasts that 40,000 to 50,000 new jobs will be created in King County for the next few years.

Skylar looked at job growth by sector. Going lowest rate to highest rate it looks like this:

  • Manufacturing
  • Healthcare (steady growth)
  • Leisure and Hospitality (strong growth)
  • Tech

One interesting fact is the job multiplier rates of particular companies in our region:

  • Boeing: 2.8 jobs for every new hire
  • Microsoft: 2.9 jobs for every new hire
  • Amazon: 4 jobs for every new hire

We are indeed fortunate!

We then moved onto a discussion about income. Our panelists said that the average tech sector salaries looked like this:

  • Bay Area: $142,000 per year
  • Seattle: $132,000 per year

However, when the numbers are adjusted for cost of living, Seattle really looks like $182,000 compared to the Bay Area—a strong reason why 150,000 people have moved from the Bay Area to Seattle.

We were told about income’s effect on housing. In San Francisco, 6% of the median income earners could afford the median housing cost. In Seattle, it is 46%—another reason house values are on a continuous upward trajectory here.

We finally had some disagreement! In regards to HQ2 for Amazon, Matthew opined that Boston and DC were in the front position. Skylar said that it is Atlanta. We will see! Regardless, as Amazon occupies the buildings currently under construction, their employment base in Seattle will rise by 50%.

Both Skylar and Matthew agreed that affordability is a concern. The bottom 33% of earners can’t afford housing in King County; top earners have no problem, but middle earners are feeling the pressure. However, Snohomish and Pierce Counties still look affordable for the majority of homebuyers. Of course, this exacerbates the issue of infrastructure in our area. There really is no free lunch!

Much has been made of housing inventory; both speakers agreed that it is difficult in our area.

So, what about the future? Employment looks good, income growth looks good, but affordability is an increasing problem. Matthew pointed out that in LA and San Francisco, he forecast a drop in home pricing or at the very least a rapid contraction in the rise of pricing. Cautionary notes for sure!

Skylar and Matthew were entertaining, insightful, and we thank them very much for a great presentation!

Be sure to check out the slides from the morning’s presentation by going to the NAIOP WA State app. Look for the paperclip icon (materials) for the 2017 March Breakfast.

If you have not yet downloaded the app, you can search for NAIOP Washington State in the Google or Apple app stores or click here. Your login is your email address and password, which is set to your last name unless you have changed it. To update your password, click here to request a password reset link or contact [email protected].


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

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