Seattle Office Space News – May 2018

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of May 2018.

OFFICE DEVELOPMENTS

Urban Visions’ tower project at 801 Third, called “The Marion,” will build 36 stories rather than 29 and has added sun fins and folds to the architecture plan. The building will encompass the majority of the block from Third to Second Avenue between Marion and Columbia. The new design estimate has 820,000 square feet of office, with the bottom two floors reserved for an “open-market” type retail village experience.

Canadian development group Onni is planning a two- tower project in South Lake Union on the site of the old Seattle Times headquarters. Onni initially planned two residential towers, but decided to switch to office last year. The two buildings total over 1 million square feet, with 940,160 square feet of office and 54,000 square feet of retail. The project design has been green-lit and Onni is moving forward with a master-use permit application.

In May Amazon paused construction on Block 18, based on the “head tax” vote, and may also sublease the entirety of the new Rainier Square development. The online retail tycoon could be on the hook for around $20 million based on how the tax is levied and the estimated number of employees. There has been no confirmation of Amazon’s intent to sublease Rainier Tower, though it would be virtually impossible for another single tenant to fill the entire building. The tax compromise proved enough for Amazon to eventually resume construction on Block 18.

BUILDING SALES

The sale of Amazon-occupied Westlake 202 has broken price records with a sale price of $129.5 million, or $996 per square foot.  Investors have spent more than $3.2 billion on Amazon-occupied buildings in the last decade, and with over 40 buildings in Seattle leased to Amazon, there are plenty for investors to sink their teeth into. Record sales benefit local government due to tax – it is estimated that this transaction alone put $2.3 million in the state and city’s pockets.

The “Twin Toaster” buildings Metropolitan East and West are up for sale.  Seller CBRE bought the buildings in 2015, and paid 70% less than expected sale bid numbers. After Facebook moved out, CBRE renovated both buildings to attract new tenants and retain old ones. The plan worked, attracting major tenants like WeWork, Virginia Mason, Kaiser Permanente, and Jack Henry & Associates. A $461 million sale would be the highest sale in King County this year, if bids reach expected heights.

 

OFFICE LEASES

Co-working giant WeWork continues to absorb a space at a rapid rate in Seattle.  They currently have deals pending for 408,000 square feet in Seattle (5 new locations).   If WeWork does indeed sign and go through with all the speculated space, they will total nearly 1.43 million square feet in the Seattle area – that’s nearly the total square footage of Columbia Tower.  Interstingly, Amazon has subleased 3 floors from WeWork in 3 different locations and will likely continue to use WeWork as an option for short term flexibility.

Longtime tenant Regus is moving out of Two Union Square at 601 Union Street to make room for Apple. Resources say that Apple intends to occupy Floor 42, expanding beyond their current premises on Floor 44 and part of 45. Apple also has construction permits filed for floors 38 and 43. This would give Apple control over all or parts of five floors at Two Union. An increase in square footage is significant for Apple, because more space equals more people, meaning Apple will be ramping up recruitment to fill all those new seats.

The Mexican Consulate has officially confirmed its reported move to the Harvard Exit building in Capitol Hill. This new space will provide drastically improved conditions for both employees and visitors to the consulate, all at a more secure location. Conditions at their current location are cramped and tiny, but the Harvard Exit location will allow for space for meeting rooms and Mexican heritage community events. Thirty percent of the building is still up for lease, listed at $37.50 per square foot per year, plus $10 a foot for taxes, insurance and maintenance.

ECONOMY

The so-called “head tax” vote dominated headlines in May causing doubt, uncertainty and frustration within the business community. Early this month, Amazon suspended construction on their Block 18 project, pending the City’s vote, and are also considering subleasing the entirety of Rainier Square to another company (or companies).

On May 9, five council members planned to move forward with the tax, despite heavy criticism from businesses throughout the city, including Amazon.  The tax on 585 Seattle companies would bring in approximately $75 million a year for low-income housing and services for the homeless.

On May 11th, the Seattle City Council unanimously voted to enact the tax on businesses after Mayor Jenny Durkan brokered a reduced tax. The tax plan will collect $275 per full-time Seattle employee from companies with taxable gross income of over $20 million per year. The tax is expected to raise $237.1 million over five years to help alleviate homelessness and provide affordable housing. The tax will end on January 1, 2024.

The tax compromise proved enough to get Amazon to resume construction on its Block 18 project, though it remains uneasy about its future in Seattle, citing the city councils “hostile approach and rhetoric toward larger businesses.” The initial proposed tax of $500 per full –time employee per year was brought way down in compromise negotiations, though some proponents of the tax complain that even this initial amount wasn’t sufficient to adequately address the city’s homelessness problem.

While Amazon was clearly the largest target in this tax, plenty of other smaller businesses including startups are nervous about their future in Seattle. Seattle-based startup Outreach, a fast-growing local company, is starting to eye options in Bellevue instead of expanding further into Seattle as was planned. CEO Manny Medina expressed frustration and sadness over the sudden interruption in plans, and the likely potential that expansion will not include more jobs in Seattle, but outside of it instead.

Shortly after the vote, a campaign was organized to try and repeal the tax. Called the No Tax on Jobs referendum, the group plans on collecting 18,000 signatures by mid-June to get the referendum on the November 6 ballot in an effort to overturn the council vote. The campaign has set up a website and is collecting money.

Dozens of businesses including Amazon, Vulcan and Starbucks have pledged a total of $352,775 to the No Tax on Jobs campaign. The biggest pledge came from the Washington Food Industry Association, which contributed $30,000. A full list of the businesses can be found here.

Not everyone is taking the tax decision poorly – especially not nearby cities and counties. Pierce County mayors joined business leaders and unveiled a new $275 per new family-wage job incentive to directly compete with Seattle’s head tax. The Greater Phoenix Economic Council is also trying to capitalize on the Seattle tax, luring companies away from Seattle and towards more business-friendly locales. With the new head tax, Tacoma is poised to become a more attractive business location, especially with extended light-rail service to Seattle and Bellevue scheduled to start in 2024.

Speaking of Phoenix, Amazon has cut a team in Seattle that supports contractor delivery drivers and is moving the jobs to Phoenix. Amazon cites the desire to put the team in the same place as groups from other parts of the company that handle similar operations, and allow more space to spread out and group. While Amazon reports that the move is not related to the head tax vote, the timing is rather telling.

In the wake of all this at home, Amazon has finished visiting all 20 finalist cities for their HQ2 location. Perhaps more relevant than ever, Amazon seeks a city that will be amenable to business incentives. What will this mean for future jobs in Seattle? Everything is still up in the air, with Amazon remaining silent on any potential “favorites” for their new headquarters. To see the final list and make your own speculations, click here

Despite all the head-tax drama, it’s business-as-usual for the Seattle housing market. While the number of houses and condos new to the market soared (finally), prices continued to rise along with supply. While higher interest rates are expected to eventually lower price increases, the market has yet to reach that point. Home buyers are still staring down a gauntlet of sharply increasing housing prices across the Puget Sound region.

The historic population boom has much to do with these steep increases in prices. The problem? Too many new people and not enough housing. Over 114,000 people have come to Seattle since 2010, pushing the population to nearly 725,000 – an increase of 18.7%.

Housing prices aren’t all that are soaring in Seattle. Construction costs have risen sharply in recent years, making Seattle the 7th most costly place to build in the world.

This “overheated” market has labeled Seattle as one of the two cities in the nation to have the highest construction cost increases in 2018. The other is, unsurprisingly, San Francisco. Rising construction costs, especially for apartment housing, may only exacerbate rent problems as increased costs are passed onto tenants.

OTHER NEWS

Avalara’s headquarters relocation is finally complete, and it only took 2,000 labor hours, 900 commercial crates, and 76 truckloads to do it! The move, which consolidated employees from two Seattle buildings and one Bainbridge Island location into Hawk Tower in SoDo, gives Avalara 114,000 square feet to spread out. It’s plenty of room for their 400 current employees, with space to grow to 700. Seattle-based moving company Hansen Bros. coordinated Avalara’s move, and their team moved over 6,200 items weighing around 383,900 pounds for Avalara. Avalara will likely be one of Seattle’s next publicly traded companies.

Advertisements
Posted in News | Leave a comment

Seattle Office Space News – April 2018

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of April 2018.

OFFICE DEVELOPMENTS

Skansa’s 2+U development has risen above ground level with the first of several columns that will support the new high-rise office development in downtown Seattle. The 85-foot tall “W” shape is made of large steel pipes, and will be joined by several more Y-shaped columns hoisting the skyscraper 24 feet above the planned urban village below. When finished in mid-2019, 2+U will have 665,000 square feet of office space spread over two connected towers. The ground floor will be home to retail, restaurants, and entertainment space.

Demand for space from Google and Tableau Software has created a tight office market in the Fremont submarket of Seattle.  Blue Rooster Development plans to help ease the crunch with a new waterfront office project. Due to break ground in May, the three-story building will have 40,000 square feet of office space with around 2,500 square feet of retail below. The building, called NorthShore, will have South Lake Union views and offer tenants 35 parking stalls, in addition to the quirky amenities of the Fremont neighborhood. It is on track to deliver June 2019.

BUILDING SALES

April was a slower month for building sales, with only one building reportedly changing hands. The 10,800 square foot commercial building at 1117 Pike Street sold to Majestic 1117 LLC for $2.9 million.  The seller was the Marleau family, which owned the property for over 40 years. The deal worked out to about $268 per square foot, and the building is 95% leased by a sole tenant.

OFFICE LEASES

Apple continues to expand in Downtown Seattle as it prepares to move into another floor at Two Union Square at 601 Union Street. They now have either full or partial control of five floors, bringing their square footage to over 70,000 square feet and giving them room for 350-475 people. This expansion allows Apple to continue to compete for tech talent in what has become a race to lock down the top people in the field.

Zillow leased two more floors at Russell Investments Center in April, subleasing the 7th and 8th floors from Nordstrom. With this addition, Zillow controls those two floors in addition to floors 29 through 42. 1,500 employees work out of Zillow’s 385,000 footprint in the Russell building at 1301 2nd Ave.

Lululemon has established a permanent foothold in Seattle after their full-floor lease at Second and Seneca at 1191 2nd Ave. The office currently has 50 people, which Lululemon hopes to double by the end of the year. The full floor space has room for up to 300 employees. The Vancouver B.C.-based Company hopes to amp up their technology department with all the tech talent in Seattle, led by Seattle resident and CTO Julie Averill, who was hired away from REI.

OAC, a 60-employee construction management company, has signed a long term lease at the Olympic Building. Located at 2200 First Avenue, the building is over 115 years old and is also home to Porch.com. The Urban Renaissance Group is the owner of the building and  SkB Architects designed OAC’s space with an open floor plan and space for training and events.

Seattle-based Lighter Capital is moving into 14,000 square feet in 1201 Third Avenue. The company aims to give banks a run for their money by providing an alternative to the traditional loan process. Now, startup founders don’t have to give up equity in their startup to receive a loan. Lighter Capital has 43 employees and plans to grow to 60 this year, with hopes of reaching 90 by next year.

New-York based real estate company Compass is expanding into Seattle in hopes of competing with other online real estate companies like Zillow and Redfin. The well-funded company is in the midst of a nationwide-expansion with 60 offices in 14 cities, with hopes to reach 50 new offices this year. Compass plans to open permanent offices in Seattle and Bellevue totaling 30,000 square feet, and is hiring for marketing, design and administrative staff.

ECONOMY

Seattle’s housing market has hit another record high, with the median home sale price now $819,500.  This marks the 18th month in a row that Seattle has claimed the title of the nation’s hottest housing market, and there are no signs of a slow-down.  The growth-rate of 12.7% (measured from last February to February 2018) has now surpassed last decade’s bubble economy. According to a report by the Seattle Times, if the recession had never happened and home prices had continued to rise at 2007’s pace, home prices would be cheaper than they are today.  This intense housing market has created a “pressure cooker” environment for potential buyers, with affordable homes snatched up almost as soon as they arrive on market, and luxury prices also rising sharply.

The lack of housing options and questions of affordability are routinely laid at the feet of tech companies like Amazon, who are accused of leaving behind many of Seattle’s middle and lower class residents in its race to the top. Seattle Tech 4 Housing, an organization founded by Zach Lubarsky, hopes to change the perception of the “callous” tech worker by hooking up techies with organizations that fight homelessness and housing shortage. Lubarsky is of the opinion that zoning is the key issue in housing shortage, claiming that increasing density will cause the market to balance out. However, plenty of detractors counter with the idea that building for density’s sake alone will simply cause more problems, replacing single family homes with apartments and duplexes that are far more expensive. The debate continues to rage.

Increasing apartment development in Seattle has created intense demand for apartment-related jobs such as maintenance, property management and leasing. According to the National Apartment Association, 41% of total real estate job postings in Seattle were related to the apartment industry. Seattle was ranked third among major US cities for apartment jobs, and this demand is causing a labor shortage. Paula Munger, director of industry research and analysis for NAA, expects salaries to rise in the short term. Training and apprenticeship programs are being developed to work through the labor shortage in the industry and head off any long term negative effects.

The Puget Sound’s largest commercial real estate deals of 2017 illustrate the utter dominance of Amazon in the region. Two of the largest leasing deals involved Amazon: Midtown21 and Tilt49. Amazon has also pre-leased the entirety of Rainier Square, which includes 738,902sf of office and will be complete in 2020. For more information on last year’s biggest deals, read on here:

Two Seattle area-based tech firms just went public to much fanfare and excitement. DocuSign and Smartsheet rang the opening bells in Nasdaq and the New York Stock Exchange on Friday April 27th. Both stocks opened above their pricing estimates, indicating a positive new era of publicly-traded Seattle tech companies.

ARENA

Excitement is high over what the new KeyArena renovation will bring. The NHL and the NBA are hopeful potentials, but one thing is for certain: there will be a lot more traffic. Environment Science Associates recently completed a database to help track potential visitors to the new arena in hopes of mitigating congestion. While 12.5% of fans would be travelling locally, most will be coming from the Eastside and cities to the north. Visitors from the south end and farther-afield locations like Kitsap County, Tacoma, and Vancouver BC. The planned northern extensions to the Light Rail could help a great deal in alleviating all this new potential traffic, but 63% of KeyArena patrons are predicted to travel in private vehicles. That’s still a lot of traffic.

Seattle is already locked in a massive downtown traffic congestion crisis, with new development shutting down lanes and even the locals finding daily traffic a struggle. Broadening the population potential to include the new NHL fanbase would put immense stress on the already over-taxed highway systems and downtown streets. New studies reveal that the City of Seattle has mismanaged traffic alleviations in the past, with minimal increases in bike usage despite tax revenue increase for the purpose. There is plenty of potential for Seattle to learn from all this new data on how to improve transport in the city, but there is also plenty of room to fail. Only time will tell.

WATERFRONT/TUNNELL/VIADUCT

The new Waterfront District promises to be beautiful once the Alaskan Way Viaduct is torn down. The City may form a $200 million dollar Local Improvement District (LID) to help contribute to the $1.3 billion cost of reforming the Waterfront. The City is expected to vote on the matter in mid May, and owners of properties along the waterfront can submit a protest to the LID if their property falls within its limits.

Properties that are within the LID will have to pay more due to perceived “special benefits” from the new Waterfront. Ivar’s 2,000 seat restaurant, for example, will pay 30% more than Safeco Field due to its waterfront locale. You can search for properties on the Waterfront LID Property Search Tool set up by Waterfront Seattle.org

OTHER NEWS

The 2018 Geekwire Awards are set for May 10, and it’s time to cast votes for the Geekiest office in Seattle! In the running are Qualtrics, Zipwhip and Avalara among many others. Visit the event site to learn more about each nominee, and to see pictures of their innovative office spaces.

Posted in News | Leave a comment

Seattle Office Space News – March 2018

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of March 2018.

OFFICE DEVELOPMENTS

Unico Properties has refined its plans for a second building at the site of the former PEMCO Headquarters in South Lake Union. The building, which will be called Yale and Harrison, is a companion building to another Unico development: Yale and Thomas. Yale and Harrison will have 200,000 square feet of office space over nine stories, and is being designed by Perkins + Will. No tenant for the building has been disclosed as of yet.

Trammel Crow is planning a high-rise office building on a parcel of land in Denny Triangle that is not yet under contract. 1916 Boren Avenue is the current home of the Dutch Shisler Center, a medical clinic and group home sober center founded by Dutch Shisler, an advocate for alcoholics and addicts. The owners, Safe Haven Associates, have announced that the parcel is indeed on the market. Trammel Crow is proposing a 115,000 square foot office tower with ground floor retail and underground parking on the site, should they acquire it.

Prologis’s new project, Georgetown Crossroads, is garnering quite a lot of attention from across North America. The project is the first multistory industrial building in the US, and is three stories with capabilities for manufacturing on all floors, many levels of parking, and an innovative top floor office space. It has 590,000 square feet, and construction started last spring.

OFFICE LEASES

Facebook has doubled in size in Seattle over the last two years, and has started to move into the second of four buildings it has leased in South Lake Union. The new building is 1101 Westlake Avenue North, across the street from Facebook’s offices at 1101 Dexter. The 150,000 square foot building has enough room for 900 more employees. Facebook has also leased the Arbor Blocks, two buildings currently under construction. This makes Facebook one of the largest occupants in SLU. Facebook reports that their Seattle headquarters is second in importance only to the Menlo Park, CA location.

Google has subleased more of Tableau’s extra space in Fremont, taking two floors at 837 N 34th Street. Today, Google employs 3,000 people in Fremont and the Eastside. Tableau, who leased a large amount of available space before its NorthEdge headquarters building was completed, has been subleasing its space since consolidating into the new building.

Madrona Venture Group has doubled its footprint with a 10-year lease of 20,000 square feet on the floor below their existing office at 999 3rd Ave downtown. Madrona plans to offer space similarly to co-working groups like WeWork and Galvanize. With room for its portfolio companies and startups in Madrona Venture Labs, in addition to other companies seeking co-working space, Madrona will charge for space and open up space for collaboration between its portfolio companies and others.

After a successful funding round, Vera Whole Health has moved into a larger office space. The new 14,500 square foot space is in their current building, the Decatur Building between Pike and Pine in 6th Avenue, but now enables them to hire more people and accommodate their expected growth. This new space can accompany up to 110 employees, and will serve as the company’s new headquarters.

ECONOMY

It may seem that construction in Seattle is still at an all-time high, but it has actually declined at the fastest rate in at least 12 years. There are currently 57 active projects underway in Seattle, down from 74 projects just six months ago. Still, development activity is higher than anything seen before 2015. Many development projects are still in the pipeline, waiting to begin. Rents are also dropping now for the first time in a decade, owing to the large amount of residential construction in the recent boom.

The Downtown Seattle Association reports that the downward trend in construction could be temporary, since project counts may simply be either starting or finishing, thereby taking them out of the count. Construction could rebound in 2019, though it still likely will not reach 2017 heights. Hotel and residential development continues to drive construction, with 5,723 residential units completed in the past year. Over 30,000 more are under construction or in development.

In other news of a potential slowdown, Chinese investment in the Seattle real estate market has declined 23% in 2017 from the year before, with acquisitions by Chinese investors falling to $78 million. This is an 81% decrease, a vastly smaller number than 2015, which saw Chinese investors bought $1.17 billion of Puget Sound development, warehouses and office buildings. China’s government has clamped down on overseas deals due to speculative investing concerns. The majority of recent sales have been domestic in nature, with plenty of other foregin interests competing with China, eager to snap up parts of this hot market.

On the flip side, the Seattle housing market is now so hot that some buyers are submitting offers with an open price line – the seller is told to simply fill in the amount. The surrounding area is just as intense. 14.4% fewer homes are for sale this year than last, which means that prices continue to rise due to high demand and low supply. All the surrounding counties also report price increases above 15%.

It is the 17th month in a row that Seattle has led the country in rising home prices, and there is no sign that the trend will slow or stop. The current median price of a home in Seattle is $777,000, and it’s even higher on the Eastside at $950,000. Population surges are creating intense competition for the limited housing supply. While more listings will emerge this spring, more potential buyers will follow, and demand will drive up prices even more. It remains a seller’s market in the area for the foreseeable future.

Amazon founder Jeff Bezos has topped Forbes’ annual list of billionaires in March, beating out Bill Gates with a net worth of $112 billion. Ten other Seattle-are billionaires also made the list, including other Microsoft co-founders and Seattle developer Martin Selig.

According to Indeed.com’s list of “Best Jobs in the US”, construction-related jobs are rising hand-in-hand with the tech boom. With all the demand for space, development in Seattle has caused the construction and project management sector to surge. The number one job on the list is Commercial Project Manager – just last year, it was number 19. Sixteen of the top 25 jobs were not even listed on 2017’s list. To see the full list, click here.

Is Amazon good for Seattle? That was the question posed at KUOW’s hosting of “That’s Debatable.” Two opposing sides met to debate the question. Arguing “yes” were representatives of the Seattle Metropolitan Chamber of Commerce; arguing “no” were Cary Moon and Nikkita Oliver, both candidates during the 2017 Seattle mayoral election. Questions of gentrification, traffic, rising prices and the ethics of fulfillment centers cast shadows on the positives of economic growth, salary increase, and general prosperity.  As both side made their case, the original audience poll of “Good vs Bad” changed from 56/44 to 50/50. It is clear that feelings about Amazon in Seattle remain mixed and complicated.

Amazon has narrowed its search for HQ2 down to 20 finalist cities, including Dallas, Denver, and the Washington D.C. area. Denver may be one of the first cities to be visited by the Amazon executive committee, which was made up of 10 people from the economic development team. They visited Denver, toured the entire metro region, and met with educators and local CEOs to discuss diversity, inclusivity, and the workforce at large. Unsurprisingly, Amazon was tight-lipped about their thoughts on Denver but seemed to enjoy their stay. To learn more and see all of Amazon’s finalist cities, click here.

While the tech scene in Seattle is one of the best in the country for talent, start-ups have a surprisingly hard time developing here due to a dearth of venture capital. Bellevue-based BitTitan had to raise capital down in San Diego before they could grow their business, despite looking hard in their home area. The lack of capital creates challenges for entrepreneurs, who are forced to look outside Seattle for funding and spend time on the road. It discourages entrepreneurs from staying in Seattle and growing their business here, pushing them to other cities who have more investment capital.

ARENA

Chris Hansen is still buying property in SoDo – an interesting revelation, as the City has already approved a renovation on KeyArena spearheaded by the Oak View Group.  Still, a company led by Hansen paid $2.4 million for a small property just south of his desired sports and entertainment arena parcel. Hansen and his group, which includes Sonics legend Wally Walker, and Seahawks quarterback Russell Wilson, has been trying to bring the NBA back to Seattle (and resurrect the SuperSonics franchise). It is estimated that Hansen’s company, WSA Properties, has spent around $124.1 million on SoDo properties in pursuit of this goal.

TUNNEL/VIADUCT

The WSDOT plans to select one of four contractors to demolish the Alaskan Way Viaduct by June for a project that will cost between $80-$100 million. Kiewit Infrastructure West, Granine Construction, Faltiron West, and a joint venture of Myers & Sons Construction and Silverado Contractors are competing for the chance to earn the contract. The price is currently $20 million over previous estimates, owing to the “added scope” of replacing the Marion Street pedestrian bridge and more utility work. The project will likely start in fall and will also include decommissioning the Battery Street Tunnel and regrading Aurora Avenue N between Harrison Street and Denny Way. Whoever wins the contract, they will have to be finished within nine months or face the penalty of a fine.

The new Highway 99 tunnel could be open by as early as October. Crews are finishing up the final lights on the upper deck and painting the walls. Tests of emergency signals and ventilation have started, and once the state confirms the lanes and safety systems are properly done, it will take only three weeks to connect the tunnel portals to their entry and exit ramps. These three weeks will cause significant regional congestion, as the Alaskan Way Viaduct, the Battery Street Tunnel, and the Sodo lanes will all be closed.

The new Highway 99 tunnel is “one of the smartest tunnels ever built” according to experts. View how the tunnel plans to keep drivers safe in this video.

OTHER NEWS

Chris Hansen’s arena dreams may be all but dashed, but he still holds three key parcels in SoDo. What he plans on doing with them will depend largely on the authorities at the Port of Seattle. While plenty of people want to push the development boom further into SoDo with creative use neighborhoods, housing, retail, and innovative office space, plenty of others argue that gentrification of SoDo will harm maritime and industrial jobs that revolve around a natural port that cannot be moved.

The Industrial Lands Advisory Panel recommends that new homes be prohibited from being built in SoDo, citing numerous problems with the idea of housing such as interrupting the industrial nature of the the neighborhood, lack of schools and retail in the area, and noise and emissions from the various plants and manufacturing uses. They recommend that the area be kept largely for industry, with some allowance for retail and office development.

Take a look at Delta Dental’s new 61,000 square foot headquarters in 400 Fairview Avenue, a far cry from the company’s old “1980’s” cubicle and silo-filled  premises. Their new location takes a giant leap into the present with wide open spaces, plenty of light, and room to collaborate.

Avalara Hawk Tower also boasts plenty of new and unique features. Tour through Avalara’s top 4 floors of the tower, complete with Tiki-lounge common area, open plan layouts, and liberal use of the company’s signature orange hue.

Posted in News | Leave a comment

Seattle Office Space News – February 2018

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of February 2018.

OFFICE DEVELOPMENTS

South Lake Union is getting a new biotech building right in Amazon’s backyard. Called Dexter Yard, the project is located at 700 Dexter Avenue N. and will provide 15 stories (515,000 RSF) of lab and office space along with 25,000 square feet of ground level retail. BioMed Realty, who is developing the project, hopes that Dexter Yard will allow new biotech companies to gain a presence in South Lake Union, where only about 2% of all life sciences space is vacant. The project is set to open at the end of 2020, and will feature a large sports field on the property called The Pitch in addition to its office and wet lab building premises.

Also, this article affirms that Dexter Yard will proceed with construction, planning to begin breaking ground this fall despite not having any tenants lined up. This decision highlights the incredible demand for office/lab space in the area. For early renderings of BioMed’s Dexter Yard project, follow this link.

OFFICE LEASES

Co-working giant WeWork has leased a remarkable amount of space setting up locations all over Seattle, and is all set to expand further. In February it was announced that they have leased multi-floor chunks of space at 925 4th Avenue, 1411 4th Avenue, and 255 King Street in the Downtown area. They are also planning to lease a new office project in Ballard right on 15th and Market, and will be opening their new WeLive tower in Belltown in 2020.

Oracle continues expanding in Seattle with the recent announcement of their sublease of 160,000 square feet in Russell Investments Center, posting more than 600 open job positions listed in Seattle. Oracle announced in August that it plans to hire 5,000 employees across the US. Oracle seeks to compete with Amazon Web Services and Microsoft Azure with its cloud computing technology, making Seattle a growing center for cloud tech companies. Oracle subleased from Nordstrom and shares Russell Investments Center with Zillow, Indeed.com, and Russell Investments.

After a long search, the Mexican Consulate has finally found its new Seattle home in Capitol Hill. The historic building called Harvard Exit is an old movie theater with planned interior refurbishments. The Consulate employs 35 people who are currently working in cramped quarters in a two-story building on Third and Blanchard in Belltown. The new location would offer them a generous 17,000 square foot headquarters and would bring their business to Capitol Hill’s vibrant neighborhood. Neither the Consulate nor Eagle Rock (the owners of Harvard Exit) have given any particulars on the move.

ECONOMY

Business is booming in Downtown Seattle. Since 2010, taxable sales for bars, restaurants, and other retail have increased 50%, and the Downtown area has added 60,000 new jobs. More and more people are moving to Seattle – 22% more in the last 8 years, to be precise. Major public projects and planned or under way, and over 8,700 new housing units will be opened in the next two years. All this construction and development will only further augment the traffic congestion in the Downtown Core.

Today’s average tech worker in the Emerald City is paid $132,000 per year, not including bonuses and other perks. Seattle’s lower cost of living relative to base salary has made it one of the top destinations for relocation amongst tech workers, especially those eager to leave the Silicon Valley (and its insane cost of living) behind.

Office rents in Seattle are rising 2.5 times faster than the national average. Seattle is no longer the “budget option” it once was for startups and established tech companies alike. Seattle is now one of the most expensive places to rent office space, surpassing Chicago and Los Angeles in the last three years. The vacancy rate in Seattle is 5.7%, and Central Seattle has the lowest vacancy rate out of the 10 biggest office markets in the country. Despite (seemingly) endless new construction, rent increases continue to crunch new tenants looking for space.

Winter is traditionally a slower time in the housing market, but Seattle started off 2018 by breaking its own price record. Single-family home prices across King County rose nearly 20% in January compared with January 2017. The increases hit all parts of King County, with prices rising anywhere from 28% to 11% depending on the location. Seattle’s median home price is now $757,000, which is the highest price ever – even higher than last summer.

According to the Northwest Multiple Listing Service (NWMLS), there are only 3,915 houses and condos for sale in King County, which is less than one month’s supply. In a balanced market, the supply would be closer to 4-6 months. While experts forsee a moderate increase in listings and project slower price increases due to rising interest rates, the Seattle area market remains outrageously hot. And King County is not the only county affected: median prices in Snohomish County went up nearly 10%, with Pierce County jumping almost 16%. Kitsap saw a more moderate 3.5% increase in home prices.

Even cities well outside the Seattle area have seen soaring price increases. Washington now has 5 of the 9 hottest housing markets in the US. The median home price on the Eastside is a staggering $938,000, which puts even Seattle’s $757,000 to shame. Even the much “cheaper” areas of Bremerton-Silverdale, Kennewick, Olympia and Spokane have seen home prices rise between 8.2% and 10.5%. However, don’t worry just yet about getting priced out of those markets. Despite increases, the median home price in Bellingham is just $378,000, and $202,000 in Yakima.

There may be a severe housing shortage in Seattle, but construction costs are still rising. Most of the building projects underway are non-residential, and this considerable increase in building is driving up costs. Construction employment flat-lined in 2017, however, which offers a hint of a slowdown regarding rising construction pricing.  Still, the Mortenson Construction Cost Index recommends that owners plan for construction costs to increase by 3.5% to 4% in 2018.

Long-term mortgage rates continue to increase, now making it even more expensive to borrow and purchase a home. The average rate on a 30-year fixed-rate mortgage is 4.43%, and 3.9% on 15-year fixed rates. These increases discourage potential home buyers in addition to encouraging sellers to hold on to their homes. The pace of Americans buying homes fell 4.7% in January, due to increasing home prices, rising mortgage rates, and a severe shortage of housing.

In another twist and potential indicator of a slowdown in Seattle, Amazon has confirmed that about 500 people will be losing their jobs in the Seattle area, though many of those employees will be offered jobs in other departments. These layoffs are due to Amazon’s rapid growth in the last few years, which caused redundancy and budget problems in some departments. Amazon still has over 4,000 job openings in Seattle, but any cutbacks at all are a rarity. Amazon has said that they plan to hire aggressively in some areas while cutting back others, and will likely focus the majority of their new hiring efforts on HQ2 when they finally settle on a second home.

ARENA

David Bonderman and Jerry Bruckheimer, the would-be owners of Seattle’s new NHL team, indicated in February that the NHL would give them favorable expansion rules to build a team here. They have also indicated that they would be willing to become owners of an NBA team, should that become a possibility. The ball has certainly gotten rolling with the new Key Arena renovation going full-steam ahead. Fans are already clamoring to put down deposits on NHL season tickets!

OTHER NEWS

Is WeWork taking over the world? Well, if the founders had their way, they would. WeWork founder, Adam Neumann, envisions a world where people are brought together within the work environment. Revolutionary concepts like open plans with social areas encourage people to congregate. Sharing a drink together at work is considered a virtuous pastime, as opposed to a taboo, and plenty of WeWork offices have well stocked bars and sponsored happy hours. And work is just the beginning. With concepts like WeLive cropping up in Seattle and elsewhere, Neumann intends to completely reframe the way humans live and work. They are even getting into the early education business. The brainchild of Neumann’s wife, Rebekah, WeGrow will offer early education to children age 3 and up, with emphasis on socializing and entrepreneurship. It may seem wild, but Neumann insists that in order to change the world, you have to be a little wild.

Amazon’s list of HQ2 finalists is getting shorter, and rumors are flying about five locations in particular: Austin, Maryland, Northern Virginia, Boston, and Los Angeles. From Super Bowl ad hints to code names like “Project Golden,” the suspicions abound. However, despite rampant guessing, Amazon has yet to give any concrete evidence about where their new headquarters will be. Read up on these rumors and form your own opinion here.

Posted in News | Leave a comment

Seattle Office Space News – January 2018

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of January 2018.

OFFICE DEVELOPMENTS

There was a good amount of coverage regarding Seattle office developments in the first month of 2018.  PCC Community Markets will be the anchor tenant for Regency Developers’ new project, Ballard Blocks II. The new space is scheduled to open in spring 2019. Ballard Blocks II will be approximately 115,000 square feet and, when combined with Ballard Blocks I, the total square footage will be 265,000.  This will be PCC’s first Ballard location.

The University of Washington has officially opened its new Nanoengineering and Sciences Building. The 78,000 square foot building was designed by ZGF Architects and is part of a larger, 168,000 square foot complex at the center of campus. The building is five stories tall, and includes space for classrooms, learning centers, and 4 floors of lab space. It was designed to reduce the environmental impact of laboratory work, with a rooftop rain garden and phase changing gel in the walls, which responds to outside temperature and regulates heat and cooling within the building.

1818 Fairview Avenue East has been in development for 10 years, and is – at last – under construction. Alexandria Real Estate purchased the project from Washington Holdings when it was called “the Atrium.” Now, after laying dormant and changing hands, the lab/office hybrid project is at last getting off the ground. The project will total 205,000 square feet and have a four-story atrium lobby. None of it has been preleased yet, but Alexandria is in discussions with potential tenants.

Kevin Conroy, owner of the Blue Rooster building in Fremont, is planning a second development with partner Jim Neuburger. The Fremont NorthShore Building located at 1326 Northlake Way, will be about 30,000 square feet and have three stories, ending in a rooftop deck. Bicycle storage, parking and a 2,440 square foot restaurant on-site will round out this new addition to Fremont’s growing office neighborhood. Conroy hopes to have a permit by March, and complete construction within 12 months.

Alexandria Real Estate Equities Inc. has submitted drawings of their new development at 1150 Eastlake Avenue E, which include plans to open a portion of the building with glass and feature a two-story visible “urban forest.”  The building will face the freeway, and this is part of why the architects at Gensler will be designing the transparent walls. The goal is for this urban forest to be visible from the freeway and give the building a unique, tangible presence.

BUILDING SALES

The 112,686 square foot Joseph Vance Building at 1402 3rd Avenue sold for $43.3 million in January 2018. The price per square foot equates to roughly $326/sf.  An entity of New York based Brickman purchased the building from RSGF Vance Building LLC, who previously purchased the building in 2006 for just over $23 million. The sale also included the Sterling Building, which occupies the same property and includes 20,000 square feet. The Joseph Vance Building was recently renovated in 2007 by ZGF Architects and achieved a LEED certification. Building tenants included the Sightline Institute and the American Jewish Committee among others.

OFFICE LEASES

Despite Amazon’s HQ2 search, the tech giant is still rapidly expanding in Seattle. Amazon has recently leased two more mid-sized office buildings in South Lake Union: the 162,000 square foot Ninth and Thomas building and the 186,000 square foot former PEMCO headquarters building on Eastlake Avenue. The PEMCO building is small, but incredibly visible as it sits right along I-5 next to the REI building. Amazon will move into both buildings in June of this year. Amazon now occupies over 8 million square feet in Seattle, and has plans to reach over 12 million square feet soon.

Co-working giant WeWork continues to rapidly expand, planning to double its Seattle footprint in 2018. WeWork opened its fifth location in the Seattle area this month, with plans to open three more locations this year. In addition, WeWork’s presence will further increase after it completes its 36-story WeWork/WeLive tower in Belltown and takes two floors at the new 15th & Market building opening in Ballard next year.

Police body camera developer Axon is growing in Seattle, with plans to hire an additional 50 people this year to add to its current headcount of 150. Axon recently leased another floor in the Metropolitan Park West building to supplement its current office and bring their square footage up to 32,000. They now have room for up to 210 employees, which will cover their current hiring plans for this year. Axon reports that as of Q3 2017, 38 of the nation’s 68 largest city law enforcement agencies have bought their body cameras or use its other services.

Accenture and Avanade, a subsidiary of Accenture, will be moving from their current Denny Triangle location to a new headquarters space in the Second and Seneca building. The companies have leased the first three floors of the building, giving them a total of 61,000 square feet and a new hub of regional and international operations. The move is scheduled for this fall and will affect around 2,100 employees. The new space, which is being designed by Gensler architects, will be “a forward-thinking, human-focused space that really does lean on technology” according to Gil Wooton, Accenture Managing Director.

ECONOMY

Amazon published its list of HQ2 finalists in January 2018, narrowing the choice down to 20 cities across North America. Several other Puget Sound cities applied to Amazon, but none made the cut. It appears that Amazon is truly interested in moving out of the region and exploring new territory.

Amazon and the City of Seattle are set to meet and discuss their relationship in early February. While plenty on the council are eager to keep the tech giant here and happy, GeekWire recommends avoiding financial breaks to companies like Amazon and Microsoft, and instead integrate their capabilities into the City’s inner workings. Suggestions include blending Amazon Alexa into law enforcement as a voice assistant to cut down on notation time during crimes/emergencies in progress, spearheading the integration of augmented reality, and upgrading/implementing 311 and next-gen 911 capabilities.

It’s been 15 months, and Seattle remains at the top of the housing markets in the country. According to the latest report, Seattle home prices rose in November 12.7% over the same period a year ago, more than double the national average of 6.2%. The average cost of a home in Seattle is now $718,700 according to Zillow. Zillow also reports that prices rose 16.2% over the last year, though they expect that rate to slow to 5.7% over this next year.

The recent drop in housing price growth rate could be largely caused by the new federal tax code revisions recently signed into law. Windermere Real Estate Chief Economist Matthew Gardner expects that Puget Sound sale prices will rise by 7.6% this year, and King County rates will rise by 8.5%. Under the new tax law, mortgage interest rate deductions will be capped at $750,000, down from $1 million. While this is largely viewed as a tax on wealthy households, some of this effect will be felt in Seattle, though major targets of this law will be in the high cost markets of California, Hawaii and New York.

Seattle traffic was bad, is still bad, and is about to get worse. The Emerald City has reached what experts call the “period of maximum constraint” in terms of the number of people attempting to navigate the Seattle city center. From now through 2021, the already-crowded city center is going to get even tighter, with a number of projects designed to increase accessibility reducing it instead – at least until those projects are complete. Dozens of cranes dot the city skyline and over 110 buildings are proposed in the near future, which will result in lane closures and sidewalk detours. A full write-up of all these projects, their effects, and timelines can be found here.

Month-over-month apartment rental rates have shown a decrease in Seattle, though experts are torn on whether this decrease is relevant in the long term. Rents have declined in Seattle 1.4% in the past month, though are still up 3% year over year. Dylan Simon, a broker at Colliers, says that rents are always lower in the winter months along with higher concessions. Still, even allowing for the normal seasonal slowdown, rent growth is still significantly slower than it has been in previous years: 3% in 2017 as opposed to 4.9% and 5.8% in 2015 and 2016 respectively. It is likely that the decrease is due to Seattle’s increase in multi-family housing options and the seasonal decline.

Despite the signs of a booming economy here in Seattle, the metro area has dropped out of the Mulken Institute’s Top 10 Cities ranked by economic growth. However, the entire region, which includes Bellevue and Everett, still ranks 17th in the nation. Recent aerospace layoffs at Boeing and Rockwell Collins are reducing economic diversity. However, the Puget Sound’s thriving tech sector, most notably its cloud computing industry (Amazon and Microsoft) is bringing high paying jobs to the area and creating a highly educated labor pool to fill demand. However, increasing housing costs as well as business costs have caused some companies to move outside of large city centers like Seattle, San Francisco and San Jose.

Seattle ranked second among the nation’s 20 largest metros in small-business job growth in a report by Paychex/HIS Markt Small Business Employment Watch. The state of Washington also ranked second in small business job growth, behind Tennessee.

It’s no surprise that Seattle is getting denser, but that density applies to more than just new office towers. Residential construction has largely followed office construction this year, with the majority of new homes and apartments being built in urban centers and urban villages. The goal is to reduce the need for residents to drive to work, instead living within walking, biking or bus distance to their place of employ. Developers have been closely watching Amazon’s leasing and purchasing patterns, erecting housing near these new employment centers in South Lake Union, the Denny Triangle, and First Hill.

With all this new development, it may come as a surprise that our crane count has actually dropped by more than a fifth, coming down to 45 from 58 six months ago. The all-time high was 62 cranes in the last half of 2016. However, Seattle still tops the nation in cranes, though Toronto beats out even Seattle with a staggering 88 cranes.

ARENA

The ink is dry on Oak View Group’s deal with the city for the renovation of KeyArena, but apparently the idea of a SoDo arena isn’t dead yet. Mayor Jenny Durkan gave hope to SoDo arena fans, saying that the idea of two arenas isn’t completely out of the picture. Chris Hansen still needs the city to vacate the street where he wants to build the area, and with new people on the City Council, the vote could go either way.

An attorney for Oak View Group has registered 13 different internet domain names for potential Seattle NHL teams. Some of the suggested names included the Seattle Sockeyes, Seattle Krakens, Seattle Totems, and Seattle Seals.

TUNNEL/VIADUCT

The Highway 99 tunnel could be ready to open this fall, according to the latest schedule. The builders are forecasting October 25th to finish construction. However, the state needs an additional three to five weeks to connect ramps at the Sodo and South Lake Union entrances. This new projected opening date is sooner than the previous January 2019 estimates, though it’s still three years behind the original goal of late 2015.

OTHER NEWS

Here is a 4-minute time lapse video of the last three years in Seattle, showing the massive increase in development that us locals have been witnessing. The compressed time period makes Seattle’s boom look almost comically sudden, but it truly hits home on how much the city has grown, especially areas like Denny Triangle and South Lake Union. The images were taken from a panoramic camera installed on the top of the Space Needle. Full video here.

Posted in News | Leave a comment

Seattle Office Space News – December 2017

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of December 2017.

OFFICE DEVELOPMENTS

Wright Runstad broke ground on the massive Rainier Square development at 4th & Union in downtown Seattle in December 2017.  Rhine Demolition is using four excavators to tear out the old retail below the pedestal of Rainier Tower. The shops will be replaced by the 58 story building that will have 722,000 square feet of office space leased by Amazon on the lower floors, and 200 luxury apartments on floors 41-58. While the current retail space at 1301 5th Avenue is gone, the first two levels of the new Rainier Square tower will have 79,000 square feet of retail, amenity and fitness center space including an organic food market. Wright Runstad expects the tower to be finished in the summer of 2020.

BUILDING SALES

8th + Olive sold for $185.9 million in December, passing from 720 Olive Way Venture LLC (an entity of Talon Private Capitol) to PPF OFF 720 Olive Way LLC (associated with Morgan Stanley). The building, located at 720 Olive Way in Downtown Seattle, just underwent a $12 million renovation in 2015 after Talon acquired the property in 2014.  Talon purchased the 20-story building for $101 million in 2014 when it was four-fifths occupied with CHP of Washington who was set to move. After a massive renovation complete with all new elevators and a beautiful lobby, the building is now fully leased to online legal services company Avvo, along with Airbnb and Coupang, a Korean online retailer.

Off Center LLC has sold the Shilshole West office building in Ballard for $7.1 million, after paying $6.2 million for the property in 2014.The buyer was Shilshole West LLC, associated with a private investor in Kirkland. The six-story building is just under 40,000 square feet and was built in 1997, and is reportedly fully leased.

OFFICE LEASES

Internet retailer Coupang, the “Amazon of Korea,” leased 47,000 square feet at 8th + Olive in December. The company leased three floors with space for up to 350 employees. Coupang already employs over 100 people here in Seattle, and is looking to hire more. The company was founded in 2010 and has raised more than $1.4 billion.

Also, Cascadian Therapeutics has subleased a large portion of space from CTI BioPharma Corp at 3101 Western Avenue. The 52-month lease starts January 1, 2018 and gives Cascadian 44,000 square feet on two floors of the Belltown building.

ECONOMY

With Amazon pursuing it’s “HQ2”, there has been much hand-wringing and worrying about the potential economic effects of Amazon turning its gaze elsewhere. But, two top experts dampened the fires of panic by weighing in on some of the potential upsides of an Amazon power vacuum. Heather Redman, Co-founder of Flying Fish Partners and chair of the Seattle Metropolitan Chamber of Commerce insists that diversity of business is helpful. By seeing that Seattle is “open for business,” new tech firms could fill any gaps created by Amazon’s potentially decreased presence. Matthew Gardner, chief economist at Windermere Real Estate, agrees. He states that without Amazon immediately grabbing every new square foot of office construction, a desirable slowdown in rent increases could occur. And with less of a footprint, housing demand may slacken a little as well – something he would “not be unhappy about…whatsoever.”

Despite these calming opinions, the Seattle City Council has reached out to Amazon in December seeking to “hit the refresh button” on its relationship with the tech giant. Amazon responded, seeking to schedule a round table discussion in January. The issues of “mixed messages” sent to Amazon about the community of Seattle – and how welcome Amazon is in the city – will likely be addressed.

In another interesting indicator, Amazon ended the year with 3,500 job openings posted in Seattle, and that has some people worried. While the number sounds astronomical, it is down more than half from June 2017, where 9,000 jobs were listed for Seattle HQ alone. Amazon’s current listings are the lowest since 2014, petering out after a massive hiring binge that has lasted several years. While it may seem that Amazon’s appetite for employees is endless, it isn’t. With their new HQ2 search in the works, Amazon will likely seek to hire and fill needs in their chosen second home. Also, the internal news of hiring freezes/postponements, reorganizations to reduce redundancy, and cuts in travel fees speak to the need for Amazon to come to terms with how all their new hires will fit into the company. Whether these are simply normal fluctuations or the beginnings of a new trend for the company remains to be seen.

Despite the wintry weather and holiday season, home sales didn’t slow down in Seattle in December, which is sending housing prices through the roof. Sales of single-family homes went up 3.3%, and in King County, the median home price jumped 15.6% to $575,000 (including condos). Still, winter is the best time to buy, with less competition and sellers motivated to close out the year with a sale. The tax bill moving through Congress could also be a factor in the increase of home sales during the holiday season. Some real estate professionals have expressed concern that the tax bill would reduce or eliminate home owning incentives, which in turn could decrease the desire to own vs rent.

The single-family housing market may be hot, but the condo market is even hotter. Seattle faces a severe condo shortage compared to other large metropolitan areas, and this decrease is shooting the average condo price through the roof. In Seattle, the median condo price is now $453,000. Only 350 condos are available for sale throughout the entirety of King County, and it doesn’t seem likely to change any time soon. In Seattle, 94% of the housing units coming down the pipeline are apartments for rent.

Seattle’s endless climb in housing costs has landed it in the top five most expensive cities for renters. The median rent reached $1,448 in 2016, and all trends point towards further increases. Across Lake Washington in Bellevue, the median rent is a staggering $1,846 per month. And for the first time ever, Tacoma has hit the “$1000 Club,” with the median rent now $1,045.

With rental rates reaching all-time highs, the issue of rent control – long banned in Washington State since 1981 – is starting to become a viable possibility. State Representative Nicole Matri, D-Seattle, plans to introduce a bill in the upcoming session to repeal this ban on rent control. This bill will be the first attempt to overrule the ban since 1999. Despite most bills of the sort being deemed as doomed on arrival in Olympia, the housing crisis is worsening not just in Seattle, but across the state.  For the first time in years, Democrats will control the Legislature during the 60 day session starting in January. Some see it as an opportunity to push for rent control, while others warn that it will do more harm than good in the long run.

Finally, President Trump’s desire to curb immigration stems from a desire to help the America people and boost the economy. But KoKo Huang, an attorney at Jackson Lewis P.C. in Seattle, argues that it could actually weaken our region. It is no secret that Seattle has become a top destination for tech talent and startup growth, and plenty of those founders and entrepreneurs have been immigrants. In the Seattle area alone, immigrant residents total around 614,000 and paid $6.5 billion in taxes in 2014. Some of the most iconic startup companies in Seattle have been founded by immigrant entrepreneurs, such as Stripe, eBay and SpaceX. Under Trump’s immigration changes, Huang argues that immigrant entrepreneurs will leave or avoid Seattle, hurting our overall economic growth and significantly reducing our workforce.

ARENA

Seattle’s KeyArena, former home to the Seattle Supersonics, is officially getting a facelift. Early in December, the Seattle City Council approved a plan to let Oak View Group spend $600 million to renovate the aging event venue. The development will nearly double the size of KeyArena to 680,000 square feet and will create capacity to seat 17,000 for hockey games, 18,350 for basketball games and as many as 19,100 for concerts. Oak View group has been focused on acquiring an NHL franchise and turning KeyArena into a world class NHL and concert facility in the hopes of eventually also attracting an NBA team back to Seattle.

Tim Leiwicke, head of Oak View Group, addressed various topics revolving around the KeyArena renovation at the GeekWire Sports Tech Summit this past summer. Some of his plans include streamlining transportation around the new arena, engaging with companies like Activision Blizzard, and improving spectator security through the use of technology like facial recognition and drones.

Oak View Group will fund the entire project, and their 39 year lease comes with two 8 year renewal options, totaling 55 years. The agreement between Oak View Group and the city includes many benefits to the city, from relocations of Seattle Center tenants (and their reintegration post-construction) to a $20 million Community Fund, with $10 million dedicated to YouthCare.

Finally, it seems like the agreement between Oak View Group and the city of Seattle couldn’t come at a better time, because National Hokey League Commissioner Gary Bettman has reported that the NHL Board of Governors is willing to accept and consider an expansion team application from Seattle. The application fee is $650 million, but Oak View Group is already planning to conduct a season ticket drive and collect deposits to show Seattle’s eagerness to have the NHL return to the Emerald City. There is already rampant speculation over the potential new team’s name, and NHL fans through the Puget Sound are excited about this new prospect.

Posted in News | Leave a comment

Seattle Office Space News – November 2017

 

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of November 2017.

OFFICE DEVELOPMENTS

November brought news of Amazon’s newest high-rise, 2205 Seventh Avenue, which is being designed with an “urban treehouse” theme. The site, Block 18, is being designed by Graphite Design Group and will have 388,000 square feet of office space and 8,800 square feet of retail. The top floor deck will be available to all tenants, and the building will also have collaborative gathering areas called “birds’ nests.” More pictures can be found here.

Also, Life sciences developer BioMed Realty showed off their new plans for 700 Dexter, a new life science campus in South Lake Union. The 500,000 square feet of office space is being designed by SkB Architects, and will be split between two 14-story buildings, each one connected by a double-decker sky bridge.

BUILDING SALES

There were no reports of office building sales in Seattle in the month of November 2017.

OFFICE LEASES

Uber may reign supreme in Seattle, but the competition is starting to heat up. Lyft signed a lease for 19,616 square feet at the 83 King building, adding to the 19,000 square feet they already occupy in the National Building. The ride-hailing company is currently hiring for a variety of positons in Seattle, and now has the room to add 200 more non-driver employees to its current 110. Lyft’s sales are growing faster than Uber’s, but despite this headway Uber still leads the market.

Spaces, a subdivision of the co-working company Regus, opened their first Seattle office with 60,000 square feet at 450 Alaskan Way in Seattle’s Pioneer Square submarket. The ever-growing number of co-working companies flocking to Seattle has experts predicting the total co-working square footage to double to over 1.3 million square feet in the near future.

Meanwhile, Nordstrom continues to offer more and more space up for sublease. The retailer has recently put 177,000 more square feet on the market at Russell Investments Center, which is located about five blocks from the Nordstrom flagship store. Nordstrom now has over 300,000 square feet available for sublease at Russell, some of which has already been subleased by Oracle and Indeed. Nordstrom insists that the release of space has nothing to do with financial troubles, and instead stems from a desire for consolidation of personnel. Regardless, Nordstrom is giving up more than a fifth of their downtown Seattle office space.

ECONOMY

People often talk about how Amazon’s growth has affected rents in Seattle, but a new report from Zillow has officially quantified the tech giant’s impact. Seattle rents have increased by an average of $0.11 per square foot per year since 2011. And about $0.07 of that increase is due to what Zillow calls the “South Lake Union jobs boom.” New jobs means more people, and more people drives up demand – and rent. Zillow discovered a relationship between the number of SLU employees in a neighborhood, and larger rent increases.

In a new quarterly report from HSH.com, the study found that the average prospective buyer needs an $11,000 pay raise just to afford a typical mortgage. Households need an income of $93,400 per year to afford monthly house payments in the Seattle metro area, up from $82,000 only a year ago. Down payments are also increasing, putting pressure on some to buy now before costs get too high, or simply pricing people out of the market entirely.

Downtown Seattle’s skyline may be looking increasingly crowded these days, but developers continue to erect apartment towers despite the squeeze. Skanska recently paid $21.6 million for a property in Belltown, which will eventually become a 346-unit apartment tower. Multi-family housing keeps popping up, but the demand is still outpacing supply. Seattle continues to add jobs, and the record appetite for office space in the city sends a clear message: people working in Seattle need to live somewhere. Skanska’s Executive Vice President, Murphy McCullough, says that even though it’s hard to believe, the market still isn’t building enough apartment buildings.

Many of Amazon’s office leases are coming to a close in 2019, but John Schoettler, vice president of global real estate, insists that many will be renewed. Amazon’s future space needs are up in the air, but for the foreseeable future, Amazon will be a major leasing tenant in Seattle and also Bellevue.

All these rapid changes in the market have resulted in some mental turmoil in the Seattle area. A recent poll regarding the direction of Seattle’s growth reflects a mixed opinion – pessimistic in some regards, optimistic in others. 70% of people believe that the region’s growth benefits only a few, but 69% also believe that the Puget Sound region is moving in a positive direction. Just over half of those asked think that the region is becoming “world class,” but only 38% believe that their quality of life has gotten better.

ARENA

The Seattle City Council is just about ready to approve Oak View Group’s bid to renovate KeyArena. The vote will be on December 4th, right after a memorandum of understanding (MOU) with Chris Hansen expires. If the vote passes, the City will sign a 3-year MOU with Oak View Group. The project’s overseer, Lance Lopes, revealed some details of the timeline and goals of the arena renovation, including budget, parking concerns, and whether or not the NBA will decide to move back to Seattle.

TUNNEL/VIADUCT

The new Highway 99 tunnel is over a year away from completion, but the lower deck is now being built out. 1,152 concrete panels will form the lower deck, a different construction than the tunnel walls and upper deck, which were cast in place.

A Geekwire article has taken an even deeper look into the future home of Highway 99, riding through the tunnel before its completion. For more pictures and a narrative exploration, read on here.

OTHER NEWS

Our shifting work landscape continues to move away from the linear efficiency-focused model of past decades, and towards a creative, flexible model that encourages expression, fluidity and innovation. The office environment can be set up in a way that fosters creativity and empowers employees, 87% of which seek creative, forward-facing companies (according to a 2016 Gallup poll).

Wood-products company Weyerhaeuser has won NAIOP’s “Office Interior of the Year” award for its innovative, re-purposed headquarters in Pioneer Square. Images of Weyerhaeuser’s space and the other finalists can be found here.

Finally, Launch Pads takes a look inside Hulu’s dynamic tech space at Fourth & Pike, which runs 24-hours per day to monitor Hulu’s growing host of apps. A closer look at Hulu’s office can be found here.

Posted in News | Leave a comment