Seattle is Nation's Second Best in Construction Jobs Added

 
 

The Associated General Contractors of America reported some good news for Seattle. But given the construction you see all around you, it might not be surprising news.

Here's the press release:

SEATTLE ADDED MORE NEW CONSTRUCTION JOBS BETWEEN OCTOBER 2011 AND OCTOBER 2012 THAN EVERY METRO AREA IN THE COUNTRY EXCEPT FOR HOUSTON
Seattle-Bellevue-Everett area hits four year construction employment high as employers add 6,500 new jobs, but threat of fiscal cliff’s spending cuts, tax hikes threatens local construction jobs, new report warns

The Seattle-Bellevue-Everett area added more construction jobs during the past year than all but one metro area as employment in the local industry hit a four-year high, according to an analysis released by the Associated General Contractors of America today. However, local construction jobs in the area are at risk if Congress and the president allow the “fiscal cliff” to occur, according to a new report the association also released today.

“It has been too long since we have had news like this to report here in Seattle,” said Butch Brooks, incoming president of the Associated General Contractors of Washington and owner of Brooks Construction Management. “Welcome as this news is, the looming threat of the fiscal cliff could cost this area thousands of construction jobs.”

Brooks said that the Seattle metro area added 6,500 construction jobs between October 2011 and October 2012, a 10 percent increase. He added that, out of the 337 metro areas the association tracks, only the Houston area added more construction jobs during the same time. There are 72,700 people working in construction in the Seattle metro area today, up from 66,200 a year ago. The association official added that local construction employment in the area is higher than at any point since the summer of 2009.

The recent increases in construction employment in Seattle represent a significant change from a years-long construction downturn that has eliminated nearly one-third of the construction jobs that existed in the area in 2007. Brooks noted that Seattle lost almost 30,000 construction jobs since October 2007. He added that 25 percent of the 211,300 construction jobs that existed through Washington in June 2007 have disappeared.

The local association official said that Seattle was not alone. Nationwide, 127 out of 337 metro areas added new construction jobs between October 2011 and October 2012, including Tacoma, Bellingham and the Kennewick-Pasco-Richland areas. But he cautioned that 156 metro areas lost construction jobs during the same time period while employment levels were stagnant in another 54 areas.

Brooks cautioned that the local increase in construction employment could be temporary if Congress and the administration were to allow the spending cuts and tax hikes that make up the fiscal cliff to occur. He noted that a new report released today by the Associated General Contractors of America details how the mandatory spending cuts included in the cliff cut over $6 billion worth of federal construction projects next year alone.

Many local contractors that work on military construction projects at nearby bases are particularly vulnerable, Brooks noted, given the $2 billion hit to Defense Department construction projects included in the sequestration. In addition, funding for local highway and transit projects is likely to be cut because the sequestration cuts nearly a half billion dollars out of the Federal Highway Trust Fund. And he warned that most economists predict the fiscal cliff would undermine broader economic growth. The tax increases from the cliff alone would increase unemployment and cause the economy to contract, according to the Congressional Budget Office.

“Allowing the fiscal cliff to occur will only make our nation’s fiscal problems worse,” Brooks noted. “Construction workers can ill afford the kind of recession that the fiscal cliff would cause.” View the new construction employment figures by state or by rank.

Seattle-Bellevue office space market remains red hot

Seattle-Bellevue office space market remains red hot

Despite 17-year high in new space coming on the market, more than half has already been leased.
 
 

You’d have to go all the way back to the heady days of the dot-com boom in 2000 to match the amount of new office space coming on to the Seattle-Bellevue market this year. 

It’s been 17 years since this much office space – 4.6 million square feet total –has been set to be delivered, according to a Q4 2016 report from the Chicago-based real estate services firm Jones Lang LaSalle. Just over half of that space, 51.2 percent, has been preleased.

Last year marked the fourth consecutive year that the Seattle-Bellevue office market was able to absorb more than 2 million square feet of additional space. Much of the current leasing activity comes from companies growing rather than relocating their offices, according to JLL research manager Alex Muir. That will soften the impact on vacancy rates. “You could see some second generation space struggle but the bulk of the major deals is expansion,” says Muir.

 Much of the demand for space is coming from tech companies, which accounted for roughly 60 percent of the leasing activity for 2016. The strong demand for office space, said Muir, “is coming from local companies growing and increasingly from Bay Area companies migrating to the region.”

The attraction: The Seattle area offers outsiders a robust cadre of tech workers and rents that are substantially cheaper than office rents in California. New office space in appealing downtown neighborhoods has proven itself a valuable recruiting tool for tech firms such as Amazon, Google and Facebook, which are going toe to toe for local tech workers. (Tech Firms Continue to Establish and Expand Engineering Centers.)

At the end of 2016, total office vacancies stood at 9.2 percent, with average asking rents up 2.7 percent year over year to $34.90 per square foot fully serviced. The downtown Seattle and Bellevue office markets are roughly midway through a peaking real estate market cycle, according to the JLL report.  JLJ senior vice president Daniel Seger describes the market as “still incredibly strong” and anticipates continued rent growth this year.

The continued demand for space is helping transform downtown Seattle and Bellevue. In Seattle, it’s helping revitalize the area around City Hall where two new office developments -- The Mark, a $400 million, 528,000–square-foot office project by Seattle’s Daniels Real Estate and Madison Centre, a $157 million mixed use project with 746,000 square feet of office space and 8,000 square feet of retail space by Bellevue’s Schnitzer West LLC -- will be completed this year.

Meanwhile, recent leasing activity has made Bellevue a more balanced market says JLL managing director Chris Hughes. “Moving forward Bellevue will be a little more broad a marketplace with a better balance of tenants than in the last cycle,” Hughes said. “That will be a benefit moving forward.”