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Matthew Gardner's CRE Forecast

Matthew Gardner's  CRE Forecast
Signs of the apocalypse? Not in Seattle this year, Gardner Economics CEO Matthew Gardner told the crowd at our Second Annual State of the Market the other week. What Matthew does see:positive absorption in all asset classes, a Seattle market juiced by Amazon, and some spec on the way in Bellevue (maybe.)
Gardner Economics CEO Matthew Gardner at the Bisnow State of the Seattle Market event at the W Hotel.
Apartments, Absorption and Amazon. Looking out the window of his South Lake Union home, Matthew recently counted 30 cranes swinging around town. The economic and building thaw isn't just touching Seattle, either: "If Tacoma improves, you know we're in pretty good shape," Matthew says. Bazinga.
Seattle Deputy Mayor Darryl Smith at the GreenHouse Apartments in Columbia City.
Did we mention apartments? 8,000 new units next year, followed by another 12k in 2014, the most in Seattle history, bringing us to about 250k units in the tri-county area. (Above, Deputy Mayor Darryl Smith at last week's opening celebration of GreenHouse Apartments in Columbia City, the first market-rate multifamily project built there since Jimmy Hendrix was alive.) Even with the tough ride some had during the recession, Matthew doesn't believe we're going to become a city of perma-renters. With interest rates this low, it's cheaper to own after just three years. Should interest rates rise to previous norms, that number will become more like eight years.
Another view of South Lake Union.
Spec office development? Not just yet, says Matthew. "It will be a brave man who dips his foot into the water." Expect the Bellevue office market to dive into that particular pond before Seattle does. And yes, Matthew does think that Amazon makes the market look a tad better than it actually is (the same way that Seattle looks more handsome standing next to Tacoma). As for retail, Matthew points out that junior anchor space is getting rare. Why? "Blame the liquor stores!" (A slogan we haven't heard since 1919.)
Cairncross & Hempelmann's John Hempelmann at the Glendale Country Club in Bellevue.
The development panel at the State of the Market was moderated by Cairncross & Hempelmann's John Hempelmann, who kept the conversation moving and wasn't afraid to ask tough questions of our panelists: Ada Healey, A-P Hurd, Dave Sabey, Bob Wallace and Greg Johnson. Fun fact: His firm is representing new arena builder Chris Hansen. (We bet they shoot hoops together, too.)