News
THIS MORNING'S STATE OF THE MARKET
November 8, 2011
| Hello, Seattle! Allow us to introduce ourselves. We're the largestcommercial real estate publication in the US, publishing local People Magazine-like issues in each of 17 cities. Today marks our first in Seattle. We try to keep them lively, photo-heavy, personality oriented, highly informative, and mercifully short. If you have story suggestions, contact Sibley@Bisnow.com, or to check on advertising or event sponsorship, contact Graham@Bisnow.com. Thank you for your hospitality! |
| We were thrilled to see so many of you join us for our Bisnow State of the Market event bright and early this morning at the Renaissance downtown. Half a dozen stars told us which way is up. |
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| Here are 375 of you being riveted by our panelists getting real on a number of topics—from the unique neighborhood structure of the market and need to feed the creative class, to what that means for Amazon?s changing space needs. |
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| Corporate tech tenants used to want suburban campus space, but neighborhoods that are well-served by transit, strong amenities, andsense of place are the places people want to be, says Touchstone Corp VP A-P Hurd. Southlake Union, with Amazon as the poster child, is an example of changing corporate tastes. Now, the online retailer is compromising—on floor plate sizes, parking, how much open space—and still making the move. There's ?an emerging sense from many companies that good ideas that drive the future of companies come from being in a melting pot of other ideas.? |
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| Dave Sabey, president of Sabey Corp and Sabey Construction, adds that Amazon is becoming the e-general store to the world and will just continue to grow and impact the Seattle market. Dave just purchased the 30-story former Verizon building next to City Hall in downtown Manhattan, paying $125/SF with plans to spend another $1,000/SF to redevelop it as data center space. It's unique for the price because it already has 30 MW of power, which would cost up to$1.5B to get in Lower Manhattan today. Notable Dave quotes: ?I fish in Alaska because that's where the fish are,? and housing is ?economic cocaine.? (None of our panelists have ever inhaled.) |
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| So what about new construction? Holland Partner Group CEO and chairman Clyde Holland says that to make new development work when you normalize land and construction costs in downtown Seattle,rents would need to increase by 35%. Construction prices are down 25% from peak, meaning ?you're going to have some significant increases and that ability to pay is really going to bite into the take-home pay of folks,? he says. Holland has three projects under construction—two in Southlake Union and one on Capitol Hill. What the people want: local authentic businesses. ?This is about us and our town and not what other people are imposing on us.? |
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| Skanska EVP of development Lisa Picard is a contrarian: the marketain't broken; it's fixed. It's fixed because now quality matters, she says. People care about making the right decisions; the CEO of a company doesn't want to look foolish in terms of making a bad investment in real estate, so the product has to match theconsumer?s needs, says Lisa. There's a lot of existing productthat's not feeding the needs of those companies that are growing, which are right-brain companies not following logic. Skanska is 100% internally financed; she says she is able to enjoy her job more and focus on building projects. What you should know: She's a big techie(early adopter) and looks for social patterns that apply to developing and buying properties. |
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| Marcus & Millichap Pacific Northwest VP Justin White oversees M&M?s Seattle, Sacramento, and Reno offices, which work mainly with entrepreneurs (the $1M to $20M investment property owner), he says. As a newcomer who's still flying in from LA Sunday evening and back home on Friday, Justin observes some happy facts about this market: it has a highly educated, high-income population with adiversity of jobs in a supply constrained market. His recommendation: buy now and hold for 7 to 10 years. The outlook: no matter how much is developed in units and square footage, it won't meet future demand. He says he's already seeing some amazing rent growth in Capitol Hill and other parts of the city. |
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| The conversation was kept lively by sponsor Ahlers & Cressman partner Scott Sleight. Scott?s practice focuses on construction andreal estate issues. When disputes arise, Scott assists owners and contractors with prosecution and defense of claims. |
