Seattle’s Cranes: An Indicator of Future Growth

Posted on October 27, 2015 by Steve Laevastu

Do you know how many construction cranes are towering over Seattle building our future offices, condos, and retail centers? 20? 25? Believe it or not, according to the Rider Levett Bucknall Crane Index, which produces the North American RLB Crane Index, there are 42 cranes hard at work, altering Seattle’s skylines.

The Crane Index is published twice a year. It tracks the number of fixed cranes in major cities across North America and is an indicator of the construction workload in an area. Residential projects currently make up less than half of the craned projects in the Seattle area (Lake Washington to West Seattle and Northgate to Boeing Field). The index does not include Bellevue and Everett. According to the Puget Sound Business Journal, the Boeing 777X facility has 17 cranes on site alone.

It is no secret that this has been the busiest construction period that Downtown Seattle has seen in over a decade. While the RLB Crane Index indicated that the number of cranes decreased in Seattle since their last report at the beginning of the year (by nine), the number is expected to increase again according to the Puget Sound Business Journal. A number of projects have recently broken ground or are in the permitting phase.

What does this mean for the Seattle real estate market?

An increase in office space and retail space means more employees who will need housing.
An increase in residential units including apartments and condos will fulfill some of that need.
An increase in transportation facilities will help people move throughout the region faster, making housing in the outlying areas more attractive.
Some projects are for medical, hotels, and other infrastructure (such as the Elliott Bay Seawall) which will support Puget Sound residents.

I am excited for what Seattle’s economic future has in store! I predict demand will continue to be high in the coming years. What does this mean for you? Give me a call: (206) 226-5300 or send me an email: sold@windermere.com.

President Xi Jinping’s Visit to Seattle Could Prove Lucrative for the Puget Sound

Posted on September 28, 2015 by Steve Laevastu

The Chinese president, Xi Jinping, made an historic, first state visit to the United States this past week, visiting the Seattle area along the way.

The president’s agenda for the rest of his U.S. jaunt include a working dinner at the White House with President Obama, state dinner at the White House, and then proceed to New York where he will participate in meetings at the United Nations.

To have the highest-ranking state official from the world’s most populous nation with the second highest GDP in the world ($11.2 trillion per year according to CNN. The US is first with $18.1 trillion) choose to visit our area on his first state visit is huge!

Below are some of the highlights from his trip to the Puget Sound:

He visited Everett Boeing plant where he got a peek at a 787 jet that was under construction, contracted by Xiamen Air, China’s first privately owned airline. Xi indicated that China will continue to need aircraft produced by Boeing over the next 30 years – with a price tag of $950 billion (about 6,330 new planes). A $38 billion, 300 jet contract between the Chinese and the plane maker was announced.
He participated in a roundtable meeting organized by The Paulson Institute (hosted by former U.S. Treasury Secretary, Hank Paulson) and a Chinese trade organization, in which CEOs of some thirty U.S. and Chinese companies came together to discuss overcoming challenges with gaining greater access to each other’s markets. This open dialogue is critical for both countries to utilize each other’s resources and markets.
He visited Lincoln High School in Tacoma. This is actually not his first visit to Tacoma. Twenty two years ago, he worked on developing a sister city relationship with Tacoma and Fuzhou, China (where he was a leader).
He visited Microsoft in Redmond where he attended the U.S. China Internet Industry Forum which was hosted by Microsoft and the Internet Society of China. He met with tech executives Jeff Bezos of Amazon, Mark Zuckerberg of Facebook, executives from Alibaba (an Amazon-like company in China), representatives from Cisco, Apple, IBM, Intel, LinkedIn, and Airbnb as they toured the Microsoft campus and watched demonstrations of high-tech products. According to the Seattle Times, the attendees are “betting that their future relies on China.”

Between aerospace, technology, and potential trade growth for the new Northwest Seaport Alliance between the Ports of Tacoma and Seattle, the Northwest, and especially the Puget Sound area, is poised to take full advantage of the opportunities for an expanded economy in China. The president didn’t go to Los Angeles. He didn’t go to San Francisco. Economically, I am very excited about how this has the potential to strengthen Seattle’s economy even further.

Amazon Set to Lease More Office Space in Downtown Seattle

Posted on March 26, 2015 by Steve Laevastu

According to the Seattle Times, Amazon has leased a full city block in South Lake Union which was originally occupied by Troy Block. This is a two building development with 817,000 total square footage leased. The first of these two buildings will be open in 2016 and the other in 2017. The total square footage occupied by Amazon could accommodate 50,000 employees which would make Amazon the largest employer in Seattle.

While there are some concerns about Amazon occupying 25% of Seattle’s available inventory of premium office space, I would like to focus on what this could mean for our local real estate market.

As you probably are aware, we have a shortage of available homes in our Seattle real estate market. There is a shortage of condos, residences, and rentals causing rental rates to increase excessively. There are some apartment buildings in the area that are renting apartments in excess of $4,000 per month for a two bedroom apartment just over 1,000 square feet. The City of Seattle and King County have turned density and growth into hot, highly debatable, topics. Unless we allow for areas of higher density, house prices are going to continue to rise, causing would-be workers to be priced out of the urban core due to high rents or housing prices.

The second hot topic is transportation. Sound Transit and Light Rail are going to be a part of our long-term solution for dealing with the increase in traffic that more jobs in the Downtown core creates. Although I mentioned Amazon earlier, Facebook is also expanding Downtown according to Geekwire, along with Zillow, Twitter, Tableau, and Google which means more employees at these companies as well.

What do homeowners and would-be homeowners need to know? If you are renting, please talk to a real estate agent about what the next five years could look like for you in terms of rent versus your purchasing a home or a condo. There may be loan programs available that will allow you to purchase property with a lower down payment than you expected.

I will be keeping an eye on what Seattle and King County are doing to handle the density problem which could affect homeowners in our area. In other cities where additional dwellings are allowed on a city lot, the value of those lots have gone up significantly. I will be sure to keep you in the loop if something like that comes to the Seattle real estate market! In the meantime, please contact me with any questions you have about our local housing market: (206) 226-5300 or email sold@windermere.com.

Seattle’s Tech Employers May Be Contributing to Home Buying Frenzy

Posted on April 30, 2014 by Steve Laevastu

I am sure by now you are aware of the home buying frenzy that is happening in Seattle right now. Your neighbor may have sold their home with 10 or more multiple offers with the final sales price 15% above what was asked for it. Buyers who need or want to buy have to be prepared to be very competitive with their offers if they want the house.

But why? What is leading this home buying frenzy?

Real estate is a supply and demand-driven market. When there is an abundance of supply (such as at the low point of the recession) with low demand, prices have to come down to the point where people will buy those homes. However, the market that we are seeing right now is driven by very high demand and historically low supply – both of these factors are hard at work.

In the two graphs below, I show inventory of residential homes (in gold) and the number of homes under contract, known as pendings (in black) for each March going back 10 years with the line being the median number of homes available. You can see that our supply is well below even what it was at the height of the last fast market in 2004-2006:

seattle-inventory-vs-contract-2004-2014

The current demand can be contributed to many factors, one being the increase in population in the Seattle area. Technology companies such as Amazon have gone on a big hiring spree in the last few years, encouraging workers to move here. Many of these employees are young and prefer to live in hip downtown areas (such as South Lake Union, Capitol Hill, Queen Anne, Beacon Hill, etc). In fact, The CoStar Group which provides commercial real estate information indicated in a special report, “Amazon Remaking Seattle in Its Own Image”, between 2000-2012 Seattle’s downtown population increased by more than 26% as compared to Seattle as a whole (17%) with the 25-44 age group dominating that growth.

Because there is a shortage of rental spaces in the urban centers, the price for rentals has increased, leaving many looking at buying their own home as a solution. Since a percentage of these renters are becoming property purchasers, this has been one of the recent drivers of demand.

According to the Seattle PI, Amazon has amassed 3.4 million square feet of office space and employs 18,000 workers locally. The CoStar Group indicates that in the next few years, Amazon may hire 22,000 additional workers and hold 8 million square feet of office space.

Amazon is certainly not the only big employer in the area and not the only tech company in town. However, as long as there continues to be growth in these industries in the Seattle area, there will be a demand for housing that needs to be met.