By Naib Mian
Seattle’s historic Pioneer Square neighborhood is experiencing a revival with new developments and the influx of young companies.
“Pioneer Square is undergoing a bit of a renaissance. There’s great access to public transportation and amenities are moving there,” said Alex Vouvalides, CIO of Hudson Pacific Properties, a Los Angeles-based West Coast REIT that broke into the Seattle market in 2013. These changes along with economic drivers like low unemployment and a lot of intellectual capital, Vouvalides said, are bringing an influx of people to Seattle.
“Seattle’s a hot market. There are a lot of start ups as well as San Francisco companies trying to expand,” said Alex Muir, a senior research analyst at JLL. “Tech has spread throughout the market, and Pioneer Square is capturing that. It has good retail and amenities, good transit, and good quality of product—the 19th century brick and beam buildings—tech likes that,” he said.
As one of the most affordable areas in the city with rents averaging under $30 per square foot, vacancies, now at 7 percent, are down 360 basis points year over year.
One of the main forces of change has been the announced move of forest product manufacturer, Weyerhaeuser, which signed a lease agreement last year to fill 200 Occidental Avenue. Moving to a location that will span over 200,000 square foot new development, which is still under construction by developer Urban Visions, in October 2016, Weyerhaeuser will bring 900 new employees to Pioneer Square.
“Moving our headquarters to Seattle will give us access to a larger talent pool to meet future recruiting needs, not just in this region, but from across the country,” said Doyle R. Simons, Weyerhaeuser president and CEO, in a prepared statement.
The building’s designers hope the new construction, with Occidental Park on one façade and surrounded by three historic buildings, will connect its indoor and outdoor spaces and revitalize the surrounding area. “By activating the park, it’ll change the dynamic tremendously,” said Mithun partner Bill LaPatra, who is heading the 200 Occidental design team.
However, new development is limited in Pioneer Square given its historical nature. All construction must go through an entitlements process with the Pioneer Square Preservation Board, which has maintained the traditional look of the neighborhood. LaPatra described Weyerhaeuser’s new building as “respectful of the past without being a mimicry of the historic detail.”
Another ongoing project, the Alaskan Way Viaduct Replacement Program, offers potential for Pioneer Square rejuvenation. While the end date is not confirmed, it will move State Route 99 underground through a two-mile tunnel, opening up the waterfront area. “This will be a huge selling point for the area,” said Muir.
Hudson Pacific’s Vouvalides is also looking forward to the completion of the project as the bulk of their 700,000 square feet of property in Pioneer Square lies along the viaduct, including a 165,000-square-foot new project at 450 Alaskan Way, which is set to receive entitlements by the end of the year.
As these projects bring new life to the neighborhood, Pioneer Square is seeing positive trends in all sectors of commercial real estate. While mostly office and retail, new jobs and projects are resulting in more residential projects as well.
“Its an active place, and we’re seeing more people living and using amenities there as we see more housing,” Vouvalides said.
The question of cost, however, is always present. With new developments, redevelopments and an influx of younger professionals, Pioneer Square’s rents are rising slowly, but have room to grow. “There’s an ability for rental rate increases, and in the near term we feel really good about where rents could go.” Vouvalides said.
This kind of gentrification, however, often poses complexities to the neighborhood. “The social dynamic is a complicated one,” said LaPatra, who compared the Weyerhaeuser project to Twitter’s effect on San Francisco’s Tenderloin. “While it will pose some complexities for social services, I imagine Pioneer Square will rise in stature.”