Seattle’s Commercial Market Is Supersonic
The National Association for REALTORS® has released its top 10 commercial real estate markets for 2021, and the Seattle-Tacoma-Bellevue area is a proud addition to this list. To no surprise, this metro area has witnessed substantial growth within its economy over the last decade due to an increase in both its population and the number of jobs available. Seattle’s metro area offers a wide variety of benefits for retail, industrial, and office sectors while consistently attracting new residents every year. Let’s break down the national outlook for CRE this year before exploring just what makes Seattle such a catch for commercial real estate opportunities.
2021’s Commercial Real Estate Outlook
As retail, hotels, and office space prices declined 5–10% over the last year, industrial sectors, data centers, life-science spaces, and rentals all have increased in value. Demand has transitioned to these areas as remote work, travel, and tourism have all influenced the current commercial real estate market.
According to the National Association of REALTORS®, properties or portfolios of at least $2.5 million fell 28% year-over-year in the first quarter of 2021, with declines across all property types except for hotels. Across the country, commercial real estate is slow to make a comeback, as reopening unfolds carefully market to market. That said, Seattleites shouldn’t worry about the state of their top-performing CRE scene.
"The top commercial real estate markets that are expected to outperform the rest of the nation are generally affordable and able to draw new residents with a greater flexibility to work from home," said NAR's Chief Economist Lawrence Yun. And, between its affordability and wealth of employment options, the Seattle-Tacoma-Bellevue metro area certainly fits that bill.
Why Is Seattle’s Metro Area So Attractive for CRE?
Seattle’s population has been growing, topping the list of major cities for population growth in 2020. Despite being one of the first cities seriously impacted by COVID-19, Seattle’s metro area has made a remarkable rebound. One of the emerging trends behind Seattle’s comeback is the desire to migrate to a destination that supports people’s lifestyles, culture, and offers ample employment opportunities.
New jobs abound in the Emerald City, which is a big factor in Seattle’s population growth over the years. Seattle has flown past Los Angeles, Denver, and Austin in tech job rankings, growing 16% in Q1 of 2021 and peaking at 1,562 available jobs. Beyond the tech industry, over 19,000 jobs were added to Seattle’s labor market in March of 2021.
Additionally, Seattle recently took Manhattan’s spot as the top commercial real estate hotspot for foreign investment, according to a study by Real Capital Analytics (RCA). This marks the first time since 2009 that Manhattan hasn’t ranked at the top for foreign investment. Foreign investment in Seattle hit $2.5 billion after Manhattan’s plummeted by nearly 80% in the past year.
Beyond the employment options and foreign investments, Seattle’s economy is very attractive in general. With an unemployment rate that is approximately 25% lower than the national unemployment rate (just under 5% in Seattle vs. 6% nationally) and an expected 44% increase in job growth moving forward, the city’s future is looking bright. Though 2020 left many across the country feeling hopeless and scared, there’s plenty to celebrate in Seattle this year. Our commercial real estate market is full of promise, and our post-pandemic recovery points to a bright future.
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