When we think of “gateway” markets for commercial real estate, New York City, San Francisco, and other major metro areas usually come to mind.
But there are other locales that have blossomed since the market has made a comeback. We’ve covered the success of the Denver commercial real estate market, but another area with similar significant growth is the Pacific Northwest, specifically its two largest cities, Seattle and Portland, OR. After all, these areas house the headquarters of Microsoft, Costco, Starbucks, Nike, Amazon, and other major corporations.
Seattle’s commercial real estate construction activity is soaring right now. Around and within its downtown area, there are reportedly 65 buildings underway, which represents a 10-year high in development. Offices and hotels represent the largest projects coming out of the ground right now, the largest being the $400-million Mark office building and hotel, which will be a 660-foot skyscraper in the city’s downtown. There is a total of 5.7 million square feet of offices under development right now, just over one third of it for Amazon.
Additionally, housing is booming in Seattle’s urban core. There are reportedly nearly 8,700 new housing units on tap around the downtown area under construction between this year and 2017.
Apparently, an increase in employment opportunities and tourism, as well as pent-up demand for new spaces, is driving this burst of output.
Meanwhile, Portland is no slouch in its own right, making some market experts in the area wonder how much longer, at least in multifamily, the success can continue. Local brokerage firm Barry & Associates says that, Portland commercial real estate in the third quarter on the multifamily level is very strong. The number, and value, of transactions is increasing. Additionally, the vacancy rate is a miniscule 3.5 percent, which plenty of landlords in other cities would envy.
On the office end, things are strong as well. Brokerage firm Norris & Stevens says that Portland office rents increased 3.5 percent during the first quarter. Vacancy rates are down as well, at 7.6 percent, an improvement from the 7.8 percent during the prior quarter.
There might not be much cache to the Pacific Northwest compared to other regions, but this will undoubtedly serve as a stable commercial real estate market as long as the economy holds up, and GRS Group is more than qualified to handle due diligence issues that commercial real estate investors might have in the region.