Exploring Sea-Tac: Puget Sound Region Provides Bay Area Parallels
May 24, 2017
Booming technology companies are thriving in a diverse and beautiful urban metro area while the region struggles with skyrocketing housing prices and lagging transit infrastructure. Sound familiar? Welcome to Seattle, the northwest corollary to Silicon Valley, and the living laboratory for the Urban Land Institute's spring conference.
While the Bay Area has been subsumed by its own growth, and related challenges and opportunities, Seattle has been experiencing its own renaissance. Here are a few facts for reference:
- Regional population of 3.73 million people; 27 percent are millennials
- Median wage has increased by 12 percent
- No state income tax
- There are 20,000 open tech jobs
- Home to the top two wealthiest people in the world
- Currently has 62 cranes – the most in the world
Seattle skyline as seen from the Space Needle
Balancing all of this growth and prosperity is the sobering fact that Seattle has received 45 inches of rain since October 2016! As one conference attendee joked, “Living in Seattle is like being married to a supermodel who’s always sick.”
Seattle office brokers highlighted tenant migration comparisons between Seattle and Silicon Valley that are fairly similar – 26.9 million square feet inhabited by Microsoft and Amazon vs. the 22.2 million square feet inhabited by Google and Apple. Less comparable are things like asking rents ($38 vs. $74 per square foot/per year), median home prices ($604K vs. $1.2M), and median tech salary ($108K vs. $118K).
Meanwhile, suburbs like Tacoma are seizing the opportunity to up their innovation game. With a population of 200,000, Tacoma is almost the same size as Fremont and is the same distance to Seattle as Fremont is to San Francisco. Tacoma also has a rail connection to Seattle and the storyline of a blue collar town that is transitioning to an advanced industry economy.
Tacoma has several unique assets including a satellite campus for the University of Washington, a collection of destination museums focused on cars, art glass, and history, and a breathtaking waterfront anchored by the 750-acre Defiance Park. It’s also home to the third largest port on the West Coast.
Downtown Tacoma with Union Station on the right and University of Washington on the left
But perhaps there is no better place than Seattle to explore the impact of e-commerce on our local business environments. At least 45 percent of all U.S. households are Amazon Prime members, and industry experts say that percentage may be closer to 50 percent.
CB Richard Ellis has an e-commerce division that follows the trend closely. The impact for industrial real estate is tremendous considering industrial demand is highly connected to GDP growth. For every package that arrives on your doorstep, there are twenty “touches”. For traditional retailers, there are five. The annual growth rate for e-commerce is predicted to be 15 percent and for every $1 billion in sales, 1.25 million square feet of distribution space is needed (2-3x of what is required for traditional retail). As more and more traditional retailers become “omnichannel” in nature, companies are trying to figure out the right mix between cost and service in meeting customer expectations.
Amazon's new downtown Seattle campus features "Spheres"- a lush greenhouse for employees scheduled to open early next year
The highlight of the ULI Seattle experience was hearing from Daniel James Brown, author of “The Boys in the Boat”. In describing the “hard-earned humility” of the crew that overcame many odds to reach the 1936 Summer Olympics, he provided a powerful reminder that greatness is possible when we bring our talents together and work in harmony to achieve common goals.
Daniel James Brown speaks in front of ULI Spring Conference attendees
Welcome to our blog – Takes from Silicon Valley East! Our view is slightly different here on the east side of the bay – from the Mission Peak backdrop to the advanced manufacturing companies that dot our boulevards. As we become more urban and strive to interpret the business issues affecting our innovation economy, we want to share with you our observations, insights, photos, arguments, agreements, inspirations and CEO interviews – and here on our blog is exactly where we plan to do this.
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