News
All-Stars Reveal Seattle's Big Drivers
November 1, 2012
| We gathered five local all-star developers at the W Hotel Tuesday for Bisnow's second annual Seattle State of the Market event. The consensus: It may be autumn outside, but it's springtime for Seattle development. |
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| Credit where credit's due: Vulcan VP Ada Healey reminded the audience that though Amazon and South Lake Union have become the focal point of development in Seattle, you can't overlook the impact of Boeing and Microsoft. (That's our motto: A Fortune 500 company a day keeps the creditors away.) Can Vulcan keep it going in the SLU? "I've got another five million square feet, so I'd say yes," a grinning Ada said. She also addressed the $1.16B question: why Vulcan chose to sell the Amazon campus when it could have held it? "It was a risk-diversification strategy," Ada said, noting that the company was mindful of tax rate changes at the beginning of the year. "We thought we would take some chips off the table." |
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| Vulcan isn't the only one selling big things: Wright Runstad & Co listed 1201 Third Ave, a.k.a. The Tower Formerly Known as WaMu, in September. (When asked why, CEO Greg Johnson looked at Ada and said: "Ditto.") The good news for developers is that the snowballing Seattle market is causing more equity sources to look seriously at the city, Greg adds. His two-pronged focus: transit and views. (Lucky for him, Wright Runstad's two big projects, Husky Stadium and the Spring District in the Bel-Red corridor, are well positioned for both.) |
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| Just back from NAIOP's national conference, Touchstone VP A-P Hurd reported that at the very least, "No one is pulling their hair out like they were 18 months ago." The future according to A-P: Job creation, that ever-important economic driver, may not come just from the Amazons of the world, but also smaller to mid-size companies. While recognizing that real estate is cyclical, A-P finds herself "super bullish" on the region over the long term. One reason why: The diversity of minds Seattle is attracting is breeding innovation. "People don't innovate because they hang out with people who think exactly like them," A-P says. "People innovate because they had a brain collision with someone who thinks totally differently than they do." |
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| If there's one thing everyone agreed on, it's that the process of getting entitlements can, well, suck, said Wallace Properties CEO Bob Wallace. (That's with the possible exception of Tacoma and Des Moines, two cities that have practically placed personal ads for long-term relationships in trade journals.) However, he noted that the process in both Seattle and Bellevue has improved significantly over the last 20-25 years. He attributes that to higher-quality city councils (including Bob's son and Wallace president Kevin, a city councilman in Bellevue) and staff and "a less hostile electorate who have come to believe that density reflects good stewardship of a scarce resource—land.? |
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| Data king Dave Sabey said Sabey Corp has $50M it would like to put into projects but agrees with Bob that getting entitlements is "kind of an art." ("I have never experienced anything like that," Greg chimed in, deadpan.) Ada notes that you can't be entitled about entitlements; you have to pick your battles— or at least spread them out over a period of time. "We made a purposeful decision not to seek all our entitlements at once," she said. "If we'd done that, we'd still be arguing with the city." |
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| How to bolster innovation, according to Dave? Give Microsoft the H-1B visas it wants to bring skilled workers from overseas to Seattle. "Otherwise," he warns, "it's going to create a huge opportunity for Vancouver," where Dave bets Microsoft's next facility will be located if it can't bring workers to Redmond. Dave also gave us an update on Sabey's NYC data center—80% complete in Phase 1—which rode through superstorm Sandy just fine. Are there implications for Seattle? "I wonder how many of us are really as prepared as we think we should be," he said. |
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| We'd be deeply remiss not to mention Gardner Economics's Matthew Gardner, whose rock star 10-minute report kicked off the festivities. Matthew's succinct summation of where we are and where we're going was one of the best presentations we've ever seen at a CRE event, and we'll have a more complete report with all the deets on Tuesday. Matthew also tells us more than 50 people have already emailed him requesting copies of his excellent Powerpoint presentation (m.gardner@gardnereconomics.com, FYI.) We only wish there was a hard copy available; we'd ask him to sign it for us. |
