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.

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