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

Daniel James Brown speaks in front of ULI Spring Conference attendees