Seattle’s commercial real estate market is facing headwinds, but local industry leaders see reasons for optimism. At CoreNet Global Washington State Chapter’s event at Lewis’ office last Thursday, four panelists weighed in on the challenges and opportunities shaping today’s construction and real estate development landscape.
“We have a diversified economy, we have really well-capitalized growth companies that drive job creation,” said Andy Bench, president at Wright Runstad & Company. “We have a great research university and we’re world leaders in cancer care and energy research. There are a ton of things we have going for us as a market.”
While demand for office space remains tepid in Seattle, the picture is brighter in Bellevue. JLL executive vice president Cody Morrison calls the divergence “a tale of two cities.” Still, he said, there are “green shoots” on both sides of Lake Washington.
After years of steep escalations, costs aren’t increasing like they were. And beyond office space, Lewis vice president of operations Shannon Testa highlighted construction opportunities in education, data centers, renewable energy, and public projects including infrastructure work.
In the near term, one wildcard is the continued shift in workplace strategies, said MGAC director Jacqualynn Karsten. As companies reevaluate their office footprints, some are hesitant to make significant commitments, choosing instead to wait and see if return-to-office trends gain traction.
“One of our clients is waiting for the next large company that’s going to mandate five days per week in the office,” she said. “Besides Amazon, who’s going to drive it nationally? For the client to invest more here, it’s about getting more people back to the office.”
In the meantime, Shannon said that some Seattle landlords and developers are focused on repositioning older downtown buildings to meet evolving tenant expectations.
There are also signs of life in the multifamily sector, fueled in part by the region’s continued in-migration.
“There’s reason to believe there are going to be starts in that category,” Andy said.
While the panelists agreed that the commercial real estate boom of a decade ago isn’t likely to repeat anytime soon, they see the current slowdown as an opportunity.
“You can step back, pause, and focus on what you don’t usually have time for,” Shannon said. “It’s a good time to invest in your people, your organization, or to explore new innovations.”