There was a lot of optimism in the room at last week’s 2016 State of Downtown Economic Report breakfast organized by the Downtown Seattle Association. The sell-out annual event drew leaders from all sectors of the economy and provided an overview of the city’s economic strength.
“2015 was a remarkable and record year in so many ways,” said Jon Scholes, president & CEO of Downtown Seattle Association, who delivered the association’s State of Downtown report. “We experienced record levels of residential development, the groundbreaking of what will be downtown’s largest hotel, the sale of the county’s property at 9th and Pine for the convention center addition, Expedia announced their move downtown, Nordstrom’s flagship remodel took shape, and the gum wall was clean for the first time in 20 years!”
“Together, we’ve created a place in high demand, going through rapid change”
The association tracks several areas of the city’s economic activity, but it pays special attention to what it calls the “live, work, shop & play” areas as the most important measures of downtown’s vibrancy. And in all these areas, Seattle has achieved, if not surpassed, previous highs.
Population growth in the downtown core continues to outpace the growth in the region and in the city proper, Scholes said. Since 2012, downtown’s population has grown by 12 percent with 67,000 Seattleites (one in ten) calling it their home.
Recognizing the trend of downtown living, the market has helped spur a development boom that has surpassed any other in history. There are more residential units under construction today than at the height of the development cycle in 2007, Scholes added.
On the commercial side there are currently 39 projects under construction totaling $3 billion in construction value. In all, active projects (those under construction, permitted and ready to begin, or those completed in the most recent calendar year) in 2015 represented $5 billion in construction. This is higher than any year since tracking began, though 2014 saw a similar level of investment among all active projects that year, according to the Downtown Seattle Association’s year end 2015 development guide.
And the economy of the city is booming. Nearly 30,000 jobs have been created in the downtown core since 2010, outpacing state and national figures, Scholes said.
Since 2010, net office occupancy increased by 9 million square feet, which is more than 50 percent of the new office space in the Puget Sound region. “Seattle has more office space under construction relative to our existing building stock than any other city in the country. 2.3 million square feet was delivered in 2015, including the first of Amazon’s towers between 6th and 7th Avenues,” said Scholes.
One beneficiary of this has been the retail sector, which has experienced a rapid rate of growth, as well. “Since 2010, retail sales have increased by 23 percent, beating all major cities in the region. More than 40 new retailers opened in downtown in the last year,” said Scholes. “In a single year, downtown generated more than $1.4 billion in state and local taxes. Nearly half of that directly to the city of Seattle.”
The economic impact of this has been felt across the board. Downtown Seattle is a regional hub for international trade and an undisputed economic center of the city and the region, said Mayor Ed Murray, who opened the event in his keynote address. And as the city evolves into an active 24-hour setting, it has to find a way to balance the positive aspects of growth with the challenges that such an evolution can bring.
“Seattle and downtown are in a pivotal moment in our history. We have incredible opportunities, incredible changes and incredible challenges,” said Murray. “And how we choose to respond over the next several years to those challenges and those opportunities will determine if Seattle and downtown is vibrant, if it’s livable, if it’s diverse, if it’s equitable, if it is safe and if it is a place of the future.”
With such rapid expansion, Seattle is starting to feel the stress of congestion, as well as dealing with issues of housing affordability and population displacement. These are not issues unique to Seattle and its downtown. The demographic shifts experienced in the Puget Sound region are endemic to other expanding urban centers, as well.
“The challenges we face today are largely driven by our successes,” said Scholes. He sees urban cores of cities only continue to grow in their importance, bringing issues of effective transportation and affordable living to the forefront of any urban experience. “Together, we’ve created a place in high demand, going through rapid change,” he said. And because of that the city of Seattle needs to craft a bold vision to address these issues that goes beyond the incremental improvements that have helped the city get by to date.
Before ending his speech, Mayor Murray called for the industry leadership to support expanding and passing a housing levy later this year. Recognizing that the city is at a crossroads, he called on the innovative spirit of the city that has for decades led the nation in technological advancement to also lead in other areas in order to get the next chapter of its evolution right.
Scholes concurred, calling on the city to develop a long-range vision for downtown’s transportation system and a plan to build 50,000 market rate and affordable units over the next decade. On the first, the association is already working with city officials to craft a strategy it can effectively put into place. On the second, market forces and the will of the people will have to align before any such vision can be set in motion.