Home Commercial Robust Puget Sound Job Growth Drives Real Estate to Boomtown Pace

Robust Puget Sound Job Growth Drives Real Estate to Boomtown Pace

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Ace Parking, Stockdale Capital Partners, Grosvenor Group, Seattle, Portland

By Neil Gonzales

It’s no secret that where there’s job growth there’s development, and Puget Sound has plenty of both.

“Clearly, job growth has been great,” said Bill Condon, Seattle-based executive vice president and managing director for commercial real estate services firm Colliers International. “It has had a huge impact on the commercial real estate market, which has been a positive thing for office, retail, industrial and multifamily.”

Over recent years, Puget Sound has enjoyed near-record employment gains, which have driven real estate to boomtown levels.

The region posted 236,400 new wage and salaried jobs in the past five years, according to a brief analysis of the latest state employment report by the Seattle-based Puget Sound Regional Council, which develops policies and coordinates decisions about growth and transportation planning in King, Pierce, Snohomish and Kitsap counties.

That job growth was the second highest in the last 25 years—surpassed only by the 279,000 gain from 1995 to 2000, the council pointed out.

The council also noted that a total of 62,000 new jobs were recorded from June 2014 through June 2015—the third largest year-to-year gain since 1990.

By comparison, the council said, the region grew by just 16,500 jobs during the entire decade from 2000 to 2010.

The state employment data does not include uniformed military jobs and sole proprietors. But the council tracks total employment in the region and estimated a gain of more than 295,000 jobs in the past five years.

The council is forecasting total jobs to exceed 2.2 million by next year and 2.9 million by 2040.

“Employment is up in every county,” council spokesman Rick Olson said. “There’s robust growth, and we’re on target related to long-term job numbers. We’re expected to keep growing.”

Job growth is occurring particularly in the aerospace and technology industries, Olson said.

He noted that aircraft manufacturer Boeing, which has long had a major employment presence in the region, is expected to employ 1,200 contractors at the peak of construction of its 777X wing-fabrication center in Everett. The project, costing more than $1 billion, is scheduled to be completed in May 2016 and expected to bring thousands more jobs to Puget Sound in the coming years.

Such activity in high-profile industries just trickles to retail and other sectors across the region, Olson said. “It tends to be felt throughout the job economy.”

While aerospace jobs are dispersed throughout the region, he said, tech employment has been growing mostly in King County—particularly Seattle and Redmond, where computer giant Microsoft is headquartered.

In Seattle, the South Lake Union neighborhood is becoming a tech hotbed with cloud-computing leader Salesforce.com, social-media firm Facebook and other innovative companies opening up offices there. South Lake Union has already been a longtime home to online retailer Amazon.com.

“Seattle is so active. That’s where the talent wants to be,” Condon said. “As a result, the office and multifamily markets are hot.”

But it’s not just the big-time companies that are hiring and growing, he said. “A lot of mid-size companies are expanding if you look at the tenant market.”

Given the market fundamentals, he added, “we’re well-positioned for the foreseeable future.”

However, with all the growth come transportation and housing affordability issues. Seattle is trying to address its mounting housing crunch with a plan to build at least 50,000 new homes, including 20,000 affordable units, over the next 10 years. Olson said other cities have similar ideas for their own housing concerns.

As for transportation needs, Olson said, the council has proposed a plan to build 100 new transit centers throughout Puget Sound over the next decade or so. The centers would serve regional bus and light-rail systems, and the council would encourage affordable-housing development around these hubs.

“We have a strong market now, but there’s concern about how to make sure the region stays an affordable place without the gnarly commute,” Olson said.