Home Commercial Seattle is in “Beast Mode”: Downtown Seattle Association Issues 2020 Economic Report

Seattle is in “Beast Mode”: Downtown Seattle Association Issues 2020 Economic Report

Seattle, Downtown Seattle Association, King County, Amazon, Boeing
Image Courtesy of DSA

By Meghan Hall

For much of the Puget Sound’s history, jobs and the region’s economic engine were located in the suburbs, outside of downtown Seattle, where firms like Amazon and Boeing were established and grew. However, over the course of the last 10 to 20 years, downtown Seattle has come into its own, with record job and economic growth that has placed the Puget Sound on the map. For Jon Scholes, president and CEO of the Downtown Seattle Association (DSA), downtown Seattle is in “Beast Mode,” an unprecedented and somewhat surprising period of expansion that the DSA expects will continue long into 2020 and beyond.

“There has been no doubt that Seattle has been one of the few areas in the country since the Great Recession to experience an incredible amount of prosperity and growth largely driven by tech,” explained Scholes. “And that has been catalytic to other investments in residential development, retail, entertainment and the arts. But it really starts with the jobs being really concentrated at a higher level in the downtown.”

According to the DSA’s annual State of Downtown Economic Report, Seattle’s downtown has added 112,000 new jobs, and employment increased by 52 percent. Although downtown represents less than six percent of Seattle’s land mass, downtown’s 12 neighborhoods now account for nearly half of all economic activity in the City, including half of the jobs, a third of brick-and-mortar retail sales half of leisure spending and half of taxes paid by businesses in the city. Historically, Scholes added, job growth had been located in the suburbs, and only in the past market cycle did downtown become a big draw for growing companies.

“In the previous decade, most of the jobs in King County were created in the suburbs, and Seattle was largely flat,” said Scholes.

Thanks to incredible job growth, the office, residential, retail and entertainment sectors all continue to post strong growth, and the combination of all four is pivotal to a healthy market.

“Our report is organized into four categories: live, work, shop and play,” said Scholes. “We think that mix of residential, jobs, healthy retail and arts and entertainment, those ingredients are really important to a healthy and vibrant downtown. We have really benefited from being able to fire on all four cylinders.”

During the first half of 2019, Seattle had more newly-occupied office space than any other city in the nation except for Phoenix. Newly-occupied office space during that time period reached just under 2.09 million square feet, and downtown’s occupied office space has grown by 34 percent, to about 17.7 million square feet since 2010. In that same time period, the occupancy rate has jumped from 86 percent to 95 percent. During the first half of 2019, Seattle also had more than 7.8 million square feet of office space under construction, only second do Washington D.C., which had 9.2 million square feet in the pipeline, and Manhattan, which had nearly 16.9 million square feet under construction.

And, noted Scholes, with so many jobs coming to downtown, residential, retail and entertainment have all followed suit. More than 40 percent of existing downtown apartments have been built since 2010, and, thanks to fast-growing supply, rents between 2018 and 2019 decreased in Seattle by three percent. 3,263 residential units were completed in 2019, and 9,948 units are scheduled for delivery in the next two years. In addition, nearly 24,000 units are in the development pipeline.

“The desire…[of those] employees to live in a more urban way, and really wanting to live urban, be urban, that has driven residential investment in the downtown core,” said Scholes. “Their preferences are really evolving to be much more urban-focused than in previous decades.”

Retail has also benefited; in 2019, CoStar called Seattle one of the healthiest retail markets in the country, and retail sales at downtown stores have increased by 56 percent since 2010. Retail vacancy also remains low, at or around four percent over the past decade. At the end of 2019, retail vacancy downtown was at less than two percent. Currently, downtown has 10.2 million square feet of retail space, with 513,000 square feet under construction.

Downtown is also home to one-third of the city’s cultural spaces: 72 percent of Seattle’s performing arts seats, 55 percent of visual arts organizations, 36 percent of art galleries and 24 percent of music-related cultural spaces are located downtown. These attractions have contributed to millions of tourists each year. DSA reports that Pike Place attracts 15 million visitors every year, while there are four million visitors to museums and performance venues, respectively and three million sporting events attendees. 

And, as a major tourist hub, the hotel industry has also continued to thrive. Downtown Seattle is home to 72 percent of hotel rooms in the City and accounts for 84 percent of hotel revenue. Even though there was a staggering 15 percent increase in the number of available hotel rooms in 2018, Seattle hotel occupancy remained one of the highest in the nation during the summer of 2019 at 90 percent. Hotel rates averaged at $257 per night and downtown Seattle hotels sold 4.2 million nights in 2019, an eleven percent increase year-over-year.

The goal for Seattle, moving forward, noted Scholes, is to figure out how to grow not only sustainably, but in a way that continues to create an open, welcoming region to those who seek opportunity here. Much of this year’s State of Downtown Address revolved around learning from other regions, such as the San Francisco Bay Area, and planning well ahead. 

While housing affordability, homelessness and crime can be tough for an urbanizing city to tackle, some solutions can arise from proper zoning and careful planning, for example, building upon transit hubs and looking for processes that encourage the construction of affordable and equitable housing and community spaces.

“How do we become a city that is both prosperous and inclusive? I think that’s our charge…and our opportunity to learn from places like San Francisco and to use some of their challenges and frankly, some of their failings, to move with a greater sense of urgency to deal with the real challenges in Seattle,” said Scholes. “…How do we maintain those conditions so we don’t become a gated utopia?”