Like many major cities, Seattle’s commercial real estate market has seen various ups and downs over the past several quarters. To gain more insight on the current state of the market, The Registry spoke with Steven Bourassa, professor and chair of the Runstad Department of Real Estate at the University of Washington. With many years of experience in the commercial real estate industry, Bourassa shared insight about the market and where it’s headed as well as future advice for those looking to get involved in real estate.
Q: Can you tell us more about your current role as well as your history/previous experience in real estate?
A: I have two main roles at the University of Washington. First, I am professor of real estate and chair of the Runstad Department of Real Estate in the College of Built Environments. Second, I am director of the Washington Center for Real Estate Research, which is based in the Runstad Department. As chair of the department, my job is essentially to lead the faculty and staff in delivering its educational programs, research and service. As director of WCRER, I’m responsible for securing grant funding and then delivering the reports supported by those grants.
I first became involved in real estate when working on my Ph.D. at the University of Pennsylvania. Although my degree was in city and regional planning, I worked closely with faculty from what was then called the Wharton Real Estate Center. My first leadership position in real estate was as head of the Department of Property at the University of Auckland, New Zealand, starting in the mid-1990s. Subsequently, I founded the real estate development program at the University of Louisville. I have also served as president and treasurer of the International Real Estate Society and I am currently treasurer of the American Real Estate and Urban Economics Association. I have published research in many real estate and related academic journals, mostly on aspects of housing markets, such as the measurement and predication of house prices and the causes of changes in house prices.
Q: As Chair of the Runstad Department of Real Estate, what long term goals would you say the department has over the next several years?
A: Over the past year, the Runstad Department devoted a significant amount of time and effort to developing a strategic plan to guide us over the next four to five years. The plan has five goals and each of those goals has multiple objectives. The goals involve: (1) ensuring that our academic programs are as good as they can be and attract top students from around the country and the world; (2) enhancing student experience outside the classroom; (3) expanding the department’s ability to engage in innovative research; (4) taking better advantage of community strengths in the local real estate industry and in the Seattle metropolitan area more generally; and (5) ensuring that the department is engaged in equitable and just practices across its range of activities.
Q: It appears as though you have worked in various locations across the country (and world). What can you tell us about the Runstad Department of Real Estate? In your opinion, what makes it unique, or how does it set itself apart from other programs?
One unique aspect of the Runstad Department of Real Estate is the breadth and depth of support it gets from the local real estate industry. This is one of the things that attracted me to my current position. The department would not exist and would not have developed into what it is now if it were not for Jon and Judy Runstad (Wright Runstad), the Jacobi family (Windermere) and many other supporters in the local real estate sector. The department has a very active Board of Advisors made up of top leaders in the industry. Among other things, the board sponsors the annual Runstad Leadership Dinner, which last year raised significant funds for undergraduate student scholarships. This year we hope to do the same for graduate student scholarships.
Q: In general, what can you tell us about the Seattle real estate market (or Washington more broadly)? How has it grown/changed over the years?
A: The growth of the technology industry is obviously the key underlying trend, having significant effects on many aspects of the Seattle real estate market. One effect has been to make the commercial real estate market quite dynamic and much more interesting as a subject of study. Another effect is that high incomes in the tech sector (second only to San Francisco) have caused home prices and housing costs more generally to be much higher than they otherwise would be.
Q: In your opinion, what challenges, if any, is the market facing?
A: Lack of affordable housing and a high level of office vacancy, particularly in the downtown, are the two key challenges. Both of these challenges are difficult ones without obvious solutions. High home prices make homeownership unaffordable to many lower- and middle-income families. Rents are also unaffordable for many lower-income households. Lack of affordable housing in turn contributes to Seattle’s substantial homeless population. The reduction in demand for office space that was greatly accelerated by the COVID pandemic is having a severe impact on Seattle’s downtown, adversely affecting demand for retail space and, more generally, the quality of life in the city’s center. Some office buildings may be configured in a way that would allow for conversion to residential use, if that were financially feasible, but additional solutions with broader impacts are needed.
Q: What direction do you see the market heading in? Are you optimistic about this direction? Why or why not?
A: In spite of the difficult challenges faced by the Seattle real estate market, it is difficult to be pessimistic. Seattle’s strong economic fundamentals and natural amenities are a winning combination that can and will withstand the current headwinds.
Q: Given your responses to the previous questions, what advice would you give to young professionals about the state of the market?
A: I would suggest to young professionals who are in real estate or interested in getting into real estate that the current slowdown in the market is an excellent time to build up their knowledge and skills and make themselves more adaptable, resilient and marketable. For some young professionals, it may be the ideal time to pursue a master’s degree so that they are well-prepared to be competitive when the cycle turns upwards. Our master’s degree in the Runstad Department can be completed in as little as one year. We also offer graduate certificate programs in real estate and housing studies.
Q: Is there anything else you would like to add that I have not already asked you about?
A: For students and young professionals evaluating alternative career choices related to business or the built environment, I would suggest that real estate is worth consideration. Real estate is a fascinating field of study in part because it is so diverse, with a variety of career options, including commercial and residential development, corporate real estate management, property investment and finance, brokerage, consulting and others It is also quite interdisciplinary, touching on a range of business disciplines (including finance, management, accounting and economics) as well as other built environment fields (such as architecture, landscape architecture, urban planning and design and construction). It provides an opportunity to have a lasting and significant impact on the quality of the built environment. All-in-all, real estate can offer a challenging, stimulating and rewarding career.