Urban Land Institute

Emerging Trends in Real Estate 2008 Highlights: Seattle

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In 2008, Seattle ranked as the second-hottest commercial real market to watch, trailing only to New York City, but ahead of Washington D.C., Los Angeles and San Francisco. As a commercial real estate market, Seattle has been a rising star for the past five years, climbing back from a hole after the tech bust in the early 2000 to once again reach its late 1990's highs. It has now gained status as a preeminent U.S. global gateway city, among the nation's commercial and cultural wellsprings in a rapidly integrating world economy.

Seattle is a standout market for investors, receiving top or near top "buy" ratings for all property sectors: It ranks best in the country for buy ratings in industrial, multi-family, Office property, apartment residential (rental). It ranks second in buy ratings for hotels and retail properties, second only to San Francisco and New York, respectively.

Growth controls and geographic barriers have led to concentrated high-density, mixed-use development, which has drawn residents to new downtown neighborhoods, making Seattle a 24-hour city. However, terrible traffic congestion is strangling commuters. In part, this has helped to create a satellite office market in Bellevue. Expect to see further growth in other urban nodes.

Seattle has "top to bottom" strength because of its location on Asian shipping routes Puget Sound ports attract an abundant share of Pacific Rim import/exports, bolstering the solid warehouse market.

Like other global gateway cities, Seattle is a magnet for corporate headquarters, business elite and the best and the brightest workforce. With so many "corporate heavyweights" headquartered in or near Seattle, it has a highly diversified economy. With office vacancy rates below 10 percent, companies are seeking deals for big blocks of space. Rents are accelerating and prices have risen such that they are at or approaching replacement costs.

Seattle is the nation's best homebuilding market, and housing prices just continue to rise, making it an expensive city in which to live.

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Now in its 29th year, Emerging Trends is the oldest, most highly regarded annual industry outlook for the real estate and land use industry. The report reflects interviews with and surveys of more than 600 of the industry's leading real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants.