Seattle’s Construction is Still on Boom
Even after several years of Seattle’s construction boom, the situation is not likely to subside anytime soon. As per a twice-yearly report released Tuesday by the Downtown Seattle Association, there are 66 major projects underway now in the central part of the city, from South Lake Union to Sodo, up from 65 six months prior.
Construction has reached its zenith with 74 projects a year and a half ago, and has had some ebbs and flows over the years, but the general trend throughout the decade has been more and more and more building. For example, Amazon’s entire campus in Seattle has about 44 buildings.
The group also counted 32 new projects ready to get started soon, and another 129 in the pipeline for future years, figures that haven’t changed much.
The only thing which has the potential to be a deterrent is the shortage of developable sites left — parking lots and low-slung buildings are disappearing, and two-thirds of developable land in the city is reserved only for single-family houses.
The construction boom is significant because most of the new projects are apartments, and the bevy of new housing opening up in the city in recent years has resulted in a slowing rental market — but developers seem undeterred.
With the new buildings now in lease-up, about 1 in 10 apartments in the city are sitting empty, while Seattle rents over the past year have grown at about the same rate as inflation. Particularly, new buildings have been facing issues to fill up. And in Seattle, it has become a common practice to offer a month or two in free rent to lure in tenants for a lease in new apartments.
The extra supply has been tremendous. Around one-half of all apartments in central Seattle were built this decade, according to the Downtown Seattle Association.
However, more than two-thirds of the buildings under construction right now are residential, and a huge majority of those are apartments.
The highest downturn had a record 5,700 new housing units open in 2017, and while that dipped to 3,800 last year, current projects under construction should yield 3,500 units this year and 5,600 in 2020. Beyond these numbers, another 23,000 units are in the pipeline.
As per the report, Seattle has built as much housing in the central part of the city as San Francisco has built citywide.
There has been a shift in preference by the developers. Developers are getting back into the condo market for the first time since before the housing crash a decade ago, switching some project plans from for-rent apartments to for-sale condos. The central part of the city has now 1,000 condo units getting built now, with 2,300 in the pipeline.
However, office construction has not been very spectacular this year. As per the report, just a half million square feet opened, essentially equivalent to one skyscraper and one-fifth the amount that opened in each of the previous few years. But that may be just another factor of timing for the many buildings underway; a record 4.5 million square feet of office is set to open in 2019, led by Amazon’s growing campus and new expansions for Facebook and Google.
Another new Trend has also been set in Seattle. 2,100 new hotel rooms opened last year, more than in the rest of the decade combined. This has been largely due to the opening of the new 1,260-room Hyatt Regency Seattle in the Denny Triangle, as the most prominent hotel in the Pacific Northwest. Some more hotels are also under construction and soon to be opened.
The biggest project in the pipeline is the first phase of the new Expedia campus, valued at $600 million, according to permit costs (which typically understate the full, actual cost of a project). Then comes the $570 million Rainier Square office and housing development. Other significant projects include the $390 million 2+U office project and the $350 million Colman Dock upgrades.
It should be noted here that South Lake Union has been the epicenter for newer constructions. And Lower Queen Anne and First Hill now have just as many projects — all three neighborhoods have 10 underway now. The Denny Triangle and Capitol Hill have seven and six new projects underway respectively.