By Jack Stubbs
The residential development landscape in the CBD submarket is currently experiencing a period of robust activity—especially in relation to some of the surrounding submarkets.
“There’s very strong demand for housing throughout the city and that demand is being reflected in the downtown CBD area. Certainly more [residential] development is occurring downtown than in South Lake Union, for example,” Dennis Meier, strategic adviser at the Seattle Department of Planning and Development.
Although the submarket’s beneficial location is an attractive option for residential development, one challenge that developers have to consider when looking at the CBD is how tenants view the submarket initially, according to Greg Inglin, senior vice president in the office properties division at Colliers International in Seattle. “Perception-wise, there’s a little bit of a coolness factor that other areas have over the CBD, if you’re chasing a certain demographic. South Lake Union, Fremont and Denny Regrade are all cooler neighborhoods which have been proven to be popular with restaurants and nightlife.”
Although there is a perception factor about the CBD in relation to other submarkets, its proximity and accessibility cannot be understated, according to Dylan Simon, associate in the multi-family division at Colliers in Seattle. “There are two big [factors]. The first is the live-work-play phenomenon, and people wanting to be proximate to work and live in urban centers and take advantage of the restaurants and the nightlife. The other is that there are geographic constraints and people wanting to live in the urban core because they don’t want to commute,” Simon said.
While many of the more eye-catching developments under construction downtown are mixed-use office and retail, there are also several residential developments underway that are changing the fabric of the CBD submarket. Last fall, developer Equity Residential announced that they had begun construction of a 40-story, 398-unit luxury apartment tower at 204 Pine Street. The residential development, which will also include approximately 3,500 square feet of ground-floor retail space, will be completed sometime in 2017.
One of the more prominent residential redevelopments occurring downtown involves the proposed expansion of the existing Washington State Convention Center. Hunt Construction Group and Skanska USA are jointly leading the $1.4 billion expansion from the current center at 8th Avenue and Pike Street to between Pine and Howell streets and 9th and Boren avenues. The redevelopment—which will include an addition of 250,000 square feet of exhibition space and 120,000 square feet of meeting room space—will officially break ground early in 2017, with an expected completion date of 2020.
Bosa Development Corporation is currently developing two towers as part of their Insignia Towers project, a pair of 41-story skyscrapers at 2301 6th Avenue. When completed—the first tower will be finished by the middle of this year and the second tower by the end of 2016—the project will have 707 residential units and 1,000 parking spaces. The Insignia Towers project is one of many residential projects that will be benefited by its ideal and accessible site downtown, according to Rod Keefe, senior vice president at Kidder Matthews in Seattle. “Insignia’s location is a great part of town. It’s a great residential area with tremendous amenities, [and] you can walk around the neighborhood,” Keefe said.
Indeed, one of the main factors driving demand for residential and apartment developments downtown in the eyes of potential residents is the CBD submarket’s convenient and proximate location. “The apartment and condo demand is coming from the tech employees wanting to be close to their job and close to the nightlife so they don’t have to commute via car,” Keefe said.
While the location of the residential developments plays a big role in terms of attracting potential occupants, the various amenities that the developments provide also factor into the equation, according to Keefe. “[Many of] the new apartments are building bike lockers and showers to attract [tenants]. These are some of the key amenities that companies/employees are looking for in the tech world,” he added.
Demand for residential developments will continue to increase for the foreseeable future, according to Ashley Martin, market analyst at real estate agency CoStar Group. “There are several thousand apartment units already delivered in 2015, a couple more [thousand] are expected to deliver by the end of this year. Well into 2017 you’ll probably see the same amount of units deliver in terms of apartment inventory [in] downtown.” While demand for residential space downtown remains high, an increase in hotel developments—mixed-use projects like The Mark and Madison Center are two notable examples—is emerging downtown.
Yet residential development downtown continues to thrive and prosper, according to Martin of CoStar. “I think the demand for the CBD in particular is still going to hold strong, even over the next couple years.”