Hoop Dreams: Impact of arena questioned

 
 

     When a basketball arena moves into the neighborhood, what happens?

     Chris Hansen’s proposed home for an NBA franchise (and maybe a hockey team, too) is still in the arguing phase, but already there is considerable speculation and concern about the impact of the arena’s construction, according to a recent research report issued by the real estate services firm Kidder Mathews.

     It’s not just the arena, for which Hansen has already spent nearly $54 million in assembling properties, the report notes. It’s also the push for more hotel rooms, more apartments, more nonindustrial uses in what is one of Seattle’s last large concentrations of manufacturing and warehouse operations.

     Those trends are meeting with resistance. The Port of Seattle and the longshore union are already on record opposing the arena’s siting just south of the Safeco Field parking garage. (Kidder Mathews says there’s a large market for leasing yard areas near the port.) Industrial firms in SoDo were unhappy with the encroachment of retailing, residential, entertainment and related activities well before the arena proposal surfaced. And as the Kidder Mathews report notes, the city has maximum size restrictions on nonindustrial uses in a designated area of SoDo (the arena itself is proposed for an area where such activity is allowed).

     What Kidder Mathews is predicting, and what the port and some industrial tenants of the area fear, is a tight local real estate market getting even tighter—and more expensive. Kidder Mathews says the 3.44 percent vacancy rate easily bests other markets in the Puget Sound region. By comparison, South King County, the state’s largest industrial market, had a 6.5 percent vacancy rate in the fourth quarter of 2012.

      The long-term impact, according to Kidder Mathews, will be “a loss of industrial supply.” That echoes an assertion made in a Seattle Planning Commission report last summer: “The proposed arena is likely to put further conversion pressure on nearby manufacturing and industrial business.”

Rental Market May Finally Be Cooling Down in Greater Seattle. Still Hot in Tacoma.

Rental Market May Finally Be Cooling Down in Greater Seattle. Still Hot in Tacoma.

With new units on the market and occupancy down, rents are growing more slowly.
 
 
Rent growth is accelerating in Tacoma while slowing in Seattle

In a sign of what could be the beginning of the end for the hot rental market, average rents are no longer growing at a torrid pace. While average monthly rents increased by 5.6 percent to $1,777 in the Seattle/Bellevue/Everett area in September from the year before, average rents actually declined slightly from the previous month.

“Seattle is still among the top-performing metros in the nation, but deliveries of new units accelerated in the third quarter and the pace is expected to quicken through the second quarter of 2017,” says Jay Denton, senior vice president of analytics for Axiometrics, a market research firm. Denton says the new supply is weakening the ability of landlords to boost rents as much as they have in the past. That's good news for tenants, but landlords may not be as excited.

By contrast, rents in Tacoma continue to soar. Check out the story we published on Tacoma's hot market earlier this year. The average rate of growth for rent in the Tacoma metropolitanTacoma increased for the 11th straight month in September, climbing to $1,266, up 9.6 percent from the year before and far outpacing Seattle. Occupancy is also higher in Tacoma — at 96.7 percent in September compared to 95.4 percent in the Seattle area. 

Rents in both Seattle and Tacoma increased faster than the nation, where they grew by just 2.6 percent to $1,290 in September from the year before.

 

Seattle-Bellevue-Everett                                     Sept 2016                  Aug 2016                  Sept 2015

Average Rent

$1,777

$1,799

$1,683

Annual Effective Rent Growth

5.6%

6.6%

8.0%

Occupancy

95.4%

95.5%

95.3%

Tacoma-Lakewood

Average Rent

$1,266

$1,256

$1,155

Annual Effective Rent Growth

9.6%

9.3%

8.5%

Occupancy

96.7%

96.4%

96.0%

National

Average Rent

$1,290

$1,293

$1,258

Annual Effective Rent Growth

2.6%

2.9%

5.2%

Occupancy

95.1%

95.2%

95.3%