Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
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M A R K E T H I G H L I G H T: S E AT T L E www.REBusinessOnline.com Western Real Estate Business • November 2015 • 17 Developers are doing everything they can to make their projects attrac- tive to corporations and their brokers as competition in Seattle continues to increase for high-growth tech tenants. And they're doing it with good rea- son: Seattle was recently ranked the No. 1 city in the country for technol- ogy jobs. Seattle's tech industry has grown by 12 percent over the past two years, according to Forbes, outpacing Silicon Valley, Boston and other tech markets. Experts point to a diverse local economy — Microsoft, Amazon and Boeing — and more-afordable housing that, together, enabled Seattle to fare better than other technology hubs. With tech business booming, Seat- tle's real estate market is simply try- ing to keep up. Projects are starting every week, it seems, by developers looking to capture the unprecedented supply of tech businesses. Some are trying to attract anchor tenants with equity, naming rights or aggressive TI allowances. No matter the approach, smart owners realize their buildings must be created in a way that enables tenants to gain a competitive advan- tage in attracting top industry talent. Surveys show culture is by far the biggest draw when it comes to recruit- ing and retaining tech workers. How a company's owners and employees think, feel and act by far outweighs compensation for today's savvy tech worker. The buildings they occupy are also critical in determining how that corporate culture is able to live, breathe and improve over time. In fact, owners trying to attract high- profle tenants should reserve some 12 percent of their portfolio space to cul- ture-boosting amenities, according to a recent Colliers International report. Owners are increasingly working with their architects to create ameni- ties-rich corporate campuses — urban and suburban — dedicated to facili- tating authentic and dynamic work- place cultures for tenants. This means locating projects in neighborhoods that foster active, balanced lifestyles — something Gen-Xers vigorously embrace — with a range of goods and services on or near campuses. The developers at Southport Water- front Campus in Renton, where three, nine-story, Class A tech-ofce build- ings are being created, apply a "live, work, play and stay" sensibility to its campus. They're incorporating fex- ible workspace, apartments, on-site retail, a hotel and recreational assets to encourage teamwork and collabo- ration. Southport also includes out- door conference rooms with views of Lake Washington and direct access to a 57-acre waterfront park with trails and open space that promote innova- tion and discovery. The project is also walking distance to numerous shops and restaurants. Another example of intentional amenity build-outs is Bellefeld Ofce Park in Bellevue. The owners are em- bracing the project's unique location next to a wetland with a dedicated trail system and signage that educates tenants on the variety of fora and fau- na in the area. Not surprisingly, connectivity is important to today's top tech ten- ants. After all, it's central to their cul- ture. Employees want 100 GB data speeds and next-generation network infrastructure to accommodate burst speeds and heavy data transfer. Ten- ants want to stay connected – whether in conference or experiencing nature just outside the front doors of their of- fce. Developers in the Seattle area will continue to push the envelope when creating spaces that engender a high level of collaboration and, more broadly, meet their tech tenants' unique cultural requirements. SEATTLE TECH BOOM CREATES NEXT-GENERATION, CULTURE-FOCUSED CAMPUSES Kip Spencer Director of Leasing and Marketing, SECO Development AMAZON.COM DRIVES GROWTH IN SEATTLE The Seattle market is experienc- ing record growth. Ironically, tech companies like online retailers Am- azon.com and Zulily have spurred some of the major job growth in the area. They have added nearly 80,000 jobs, which in turn is driving some of the mixed-use ofce and multifamily development, which then afects the retail market. Amazon occupies nearly 20 percent of the Downtown Seattle ofce mar- ket, which has spurred a workforce explosion of ofce and multifamily spaces. The retail occupying the ground foors in buildings throughout the neighborhood is beneftting from this growth, attracting restaurants and other tenants that vie to capitalize on the well-paid and tech-savvy workers. Notable leases this year include grocer Haggen, which took 47,736 square feet, though the company's future remains unknown; Amazon nabbing 38,384 square feet in north Seattle; and Whole foods absorbing 37,595 square feet at a grocery center in Tacoma's University Place. Trader Joe's is also ru- mored to be opening in Bothell, a northern suburb, while there are whispers Bellevue Square is courting Whole Foods, Uniqlo and Zara. Bellevue, home of Microsoft, Expedia and other major tech companies, boasts more than 50,000 millionaires. This has prompted local developer Kemper Freeman to expand the Downtown Bellevue collection, adding to its inventory of more than 250 distinctive shops, 23 restaurants, a premier cinema, 1,000 luxury hotel rooms and more than 10,000 parking stalls. The Bellevue Square and Lincoln Square centers boast a 25 million annual cus- tomer trafc count. The region's premier mall still cites sales numbers well above $1,200 per square foot. Mixed-use developers are extremely active in the area due to the major job growth and infux of Millennial urban apartment dwellers. Seattle is a boon to foodie and independent local restaurateurs, such as James Beard award winners Ethan Stowell, local magnate Tom Douglas, and recent newcomers Matt Dillon and Renee Erickson of the world-famous Walrus and Carpenter. Rental rates are near to the top fve in the country, with New York, San Francisco, Boston and Washington, D.C., flling the top slots. While Down- town Seattle rates hover in the high $70s per square foot for high-street re- tail, nearby rates in restaurant-heavy Capitol Hill are in the $55 per square foot range. Deals are also getting done in Amazon's backyard of South Lake Union, which comes in at the $45 per square foot to $65 per square foot range for new construction. The area is adding nearly 80,000 jobs and thousands of apartments. This is not your grandpa's urban city! "Ama-zombies" can be seen walking the streets, laptop in hand, glued to their mobile devices with a leashed dog in tow. The future is bright for Seattle's retail, though this economic boom comes with real job growth, not a false sub-prime lending catastrophe. Damian Sevilla Senior Associate, Colliers International