Boom time: Why Seattle is America's fastest growing city
Seattle's growing population, active property market and concentration of corporate headquarters are some of the factors that make it a dynamic city.
Seattle, the birthplace of Starbucks and grunge music, may see a lot of rainy days. But the outlook for its future as a global city is significantly brighter.
It was the fastest growing big city in the U.S. in 2017, when roughly 60 people moved into the area every day, many attracted by the prospect of its low unemployment rate, which stood at 4.7 percent as of January 2018, and the 31 Fortune 500 companies that call the Seattle metropolitan area home.
“Educated young people are actively choosing to live here,” says Joe Smurdon, Market Director for JLL’s Pacific Northwest market. “We have great jobs but also outlets for people to enjoy their personal time, from the amazing outdoors to great restaurants, music and several pro sports teams.”
U.S. News & World Report recently ranked Seattle sixth in the nation’s Best Places to Live. And although housing prices are rising, Seattle is still a discount compared to San Francisco and other higher-priced cities – and consequently, it is seeing an influx of residents who are looking for a more affordable place to live.
Its growing population, active property market and concentration of corporate headquarters are just some of the factors that make it a dynamic city in the shorter-term. According to JLL’s 2018 City Momentum Index, Seattle is among the top 30 cities in the world for short-term momentum.
Yet what puts the city in a unique position in America is how this combines with its “future-proofing” capacity, which will enable it to maintain its momentum over the longer-term and help it to compete on the world stage with other cities such Austin, San Diego and Berlin, which are known for their innovation capabilities.
The tech effect
Seattle’s thriving tech sector plays a huge role both now and in the future. “Significant demand from growing tech companies is continuing to boost economic momentum and real estate demand in Seattle,” says Jeremy Kelly, Director of Global Research at JLL.
“More than 60 percent of the office space currently being sought by tenants is required by technology companies, boding well for continued strong performance of the Seattle office sector. Tech tenants’ ongoing need for additional space has placed a premium on centrally-located, creative offices with high-end amenities and transit accessibility.”
Last year, Seattle experienced record low vacancies in its skyline buildings. “It’s a chain reaction,” says Smurdon. “A plentiful local talent pool is fueling growth of the tech sector and leading tech companies to scoop up office space.”
The tech sector’s ongoing appetite for more quality space is contributing to some of the highest rates of office rent growth globally, with an average asking rent of $38 per square foot at the end of the first quarter of 2018.
The numbers have not gone unnoticed among real estate investors. Seattle is now the 13th largest real estate investment destination in the world, attracting $28 billion between 2015 and 2017, which puts it ahead of Singapore, San Francisco and Sydney. And when it comes to Investment Intensity – that is real estate investment as a percentage of GDP — Seattle performs better than the U.S. heavyweights of New York and Los Angeles, according to JLL.
Foreign investors in U.S. real estate are increasingly looking to Seattle in the office and multifamily sectors. Between 2013 and 2016 alone, investment activity by foreign investors in the office sector grew nearly nine-fold compared to the prior cycle.
An eye on the future
A vibrant tech scene is not, however, the only ingredient for a successful future. Transparent governance, good infrastructure and a strong education sector are also key.
Seattle is focused on improving transportation patterns, with the city and county investing heavily in building infrastructure and different modes of mass transit that will support the needs of the region as it continues to grow.
Meanwhile, a rich higher-education system is producing a deep talent pool for the growing tech sector, with institutions like the University of Washington and Seattle University commanding international attention and creating a natural pipeline from college to career. This local talent doesn’t have far to look for future job opportunities; Seattle is forecast to have 740,000 job openings between 2016-2021 – and the majority of these will require post-secondary or college educations.
“We’re attracting innovators now,” says Smurdon. “And we’re proving capable of keeping them here for the long run with quality housing, improving infrastructure and a culture of innovation.”
With Seattle boasting all the indicators of a modern boomtown, the coming years will show if it can sustain its momentum to develop its place as one of America’s great cities on the world stage.