2007 State of Downtown

The Downtown Seattle Association (DSA) held its 2007 State of Downtown Economic Forum on Feb. 9th providing an overview of current and future downtown livability issues, planning and development. The forum focused on four areas of commerce – the commercial market, residential market, transportation and tourism and was highlighted by featured speakers, Chris Ludeman, CEO of CB Richard Ellis, and Kate Joncas, President of the DSA. An enlightened discussion followed with panelists representing biotechnology, tourism, commercial and residential sectors.

This article focuses only on the residential sector.

Downtown Residential Facts

• 13% of all Seattle housing units are located in downtown for 54,766 residents
• Since 1990, resident population increased 61%; rest of Seattle grew 11.2%.
• 12.5% of all subsidized housing units are in downtown for 4,637 people
• 16% of downtown units are owner occupied, 84% are rentals
• Average household income is $51,471
• 39% of residents over 25 hold a bachelors degree
• 41% of residents are 35 or younger; average age is 44 years
• 2,718 children live in downtown

Currently, over 32 condominium projects have been proposed providing 9,000+ new housing units to the downtown area in the next few years. Though, Matthew Gardner, a real estate analyst & economist, expects that only 60% of the proposed projects will be built, a lower estimate than he provided at the Downtown Realtor Symposium this past June.

When asked if there will be an over supply of high-end condos, Gardner didn’t believe so stating that developers have been more cautious compared to other markets and that downtown will likely actualize approximately 5,400 units over the next 4 years. He did mention, however, that the realization of smaller units with higher prices may keep suburbanites away. I’m not an economist, but intuitively, it does seem a reach to believe the buyer pool is large enough to support 1000’s of condos where 1-bedrooms start at $500,000 and 2-bedrooms start at $800,000.

Gardner was also asked about the state of affordable housing in the downtown core; he said he didn’t have an answer. Seattle’s downtown is small and confined by topography resulting in linear high-rise architecture that make affordable housing prohibitive. He did state that failing to meet affordable housing needs will keep Seattle from being a world-class city.

To help meet the need for affordable housing, the city enacted legislation that charged a fee to allow for taller, denser buildings. The fee is expected to generate $92 million dollars for new affordable housing and $12 million for downtown child care. For example, buyers in the exclusive 1521 project pay an additional 5% over the purchase price.

The need for affordable housing is great and developers should take heed. One only need look at the Moda Condominium as an example. Moda’s sub-$500,000 units sold out in 3 days while upscale projects just blocks away have been languishing on the market for months.

Downtown Quick Facts

• 201 coffee shops
• 45% of Puget Sound office market is located in downtown
• 49.3% of all Seattle jobs are located downtown
• $761 million in development projects completed in 2006
• $2.3 billion in development projects are under construction
• 42 acres of parks and open space
• 20th largest port in the world
• 9.1 million tourists visited in 2006
• Largest convention was the NW Flower and Garden show with 60,000 attendees
• 1,600 hotel rooms are under construction
• $300 million allocated for transportation spending for transit repair and improvements
• Light rail and street car operational by end of 2007
• 6,152 bags of garbage collected
• 7,865 graffiti tags removed

Update:
Related Article: Seattle Times – The year of the condo with map

I found the article a little too rosy; the author interviewed condo marketing firm’s principals. On speculative buying, Dean Jones of Realogics was quoted:

Jones estimates that speculators accounted for 30 percent or more of all new condo purchases in Miami and Las Vegas, compared with “no more than 15 percent” in Seattle. Now, developers require buyers to disclose if they intend to live in their new condos in an effort to limit speculators, Jones said.

Fifteen percent is quite high, but may still be a conservative figure. On-site sales people want to get the units sold…its my experience they’re a bit flexible on the occupancy issue so I tend to think speculative buying is higher than the experts may be reporting.

Related posts:

5th and Marion – Downtown Condo Update on Downtown Area Apartments Downtown Market Update Downtown Seattle Condos for Sale

Tags: Downtown Seattle, Seattle Condo Market