Market Trends From Around the Sound: Q3-2018
I am pleased to present a look at housing market trends for the third quarter of 2018, from the shores of Bainbridge Island’s waterfront homes and in-city living opportunities to the Eastside’s most distinguished residences.
Inventory continues to remain at the center of real estate conversations in Seattle, as the frenetic market of recent years has given way to a more balanced one that reflects typical seasonal trends. In Q3-2018 we saw 2.1 months of inventory, up nearly 75% compared to last quarter (at 1.2 months) and a staggering 156.4% on a yearly basis.
Record-breaking home price growth for single-family homes on the Eastside moderated from Q3-2017 to Q3-2018 with a 7.11% gain, a stark difference from last year’s report, which showed a 14.80% increase in median home prices from Q3-2016 to Q3-2017.
While Seattle and the Eastside saw slight decreases in the average median sales price from the second to third quarter of 2018, home prices on Bainbridge Island increased on a quarter-by-quarter basis, from $865,000 in Q2 to $912,000 in Q3, representing a 5.4 percent increase (larger than the 2.3% year-over-year gain). This may be due to a shortage of supply, as Bainbridge Island averaged just 2 months, which was down from the previous quarter and marks the lowest of surveyed areas, though this figure held steady from the third quarter of 2017, which also averaged 2 months.
As was the case in Seattle’s single-family market, the number of homes available for sale is dominating real estate discussions, as the condominium market in Seattle saw 2.7 months of inventory in the third quarter of 2018, the highest number reported since the third quarter of 2012, when we nearly reached a balanced market at 2.9 months. Since that time, inventory has continued to dip, maintaining numbers well below 1 month in every quarter since the start of 2015.
As of September 2018, Realogics Sotheby’s International Realty (RSIR) held over $1Billion in new construction projects with over $2Billion in local sales volume for the trailing 12 months aggregated by brand in the NWMLS. RSIR also consistently ranks among the Puget Sound Business Journal's list of top ten residential real estate firms, taking the seventh position on the annual list this year. Ranked by 2017 residential home sales data in the Puget Sound region, RSIR reported $1.52 billion in sales volume with an average sales price of $894,229.
In other related news….
Seattle and the Eastside are both benefiting from an influx of technologically-driven growth, both from Amazon and other companies including Facebook, Apple, Google and more.
"Seattle’s relative affordability, high quality lifestyle, lack of a state income tax and investment in transportation infrastructure will give the Seattle metro area a strong competitive advantage over other West Coast tech centers.” - Dean Jones, President & CEO Realogics Sotheby’s International Realty.
Seattle Tech Update
Amazon now owns twice as much office space as it did in 2016 and will reportedly occupy 15 million square feet of office space throughout downtown Seattle with current commitments.
Apple is expanding within Two Union Square with more than 70,000 sq. ft. to office 500 employees (rumors persist that it is making offers on larger office space).
Google continues to expand in South Lake Union (with five buildings either under construction or in planning), comprising nearly 1 million sq. ft. of office space with occupancy expected by early 2019 – the downtown Seattle campus could employ more than 4,500 people.
Facebook has opened a new campus at 1101 Westlake in addition to other leaseholds in South Lake Union with current capacity for 3,000 employees. The social media giant recently applied for permits for Oculus expansion of more than 60,000 sq. ft. of office space in the Home Plate Center near Safeco Field in SODO. It’s presumed the company leased all 124,000 sq. ft. of the available space, but is merely building out the first half at this time with future plans to grow into the remaining space.
F5 Networks has leased 516,000 sq. ft. in a new office tower (now called F5 Tower) with an estimated 1,500 employees and room to expand. Excess office space is temporarily being sublet and attracting other employers.
Expedia plans to relocate its Bellevue headquarters to Interbay (Seattle waterfront) in 2019 in what may eventually comprise of 1.9 million sq. ft. of office space for approximately 8,000 employees (recent indications suggest the company will moderate its growth in measured phases). Many Bellevue-based employees will either relocate to Seattle or face an arduous commute.
WeWork Northwest continues to expand in the Seattle region and is eyeing a total of 2 million sq. ft. of office space in the greater Seattle area with new commitments in the World Trade Center North building and a 36-story tower being developed in Belltown (this tenant is critical for future growth in tech as many startups are incubating in co-working environments).
Eastside Tech Update
Amazon occupies one office tower in Bellevue with 2,000 employees and plans for another with the potential of adding another 2,500 employees by 2020 - that's about 10-percent of the regional headcount.
Vulcan Real Estate is planning 3 million sq. ft. of office space - likely to target additional expansion of Amazon and other tech users. This developer is very close to the tech growth, and their commitment to Bellevue is a strong signal of additional tech expansion in the region.
Tableau Software has preleased 180,000 sq. ft. of Kirkland Urban for occupancy in 2019.
Facebook will reportedly develop 650,000 sq. ft. of office space in Redmond and along Willows Road for their Facebook Reality Labs/Oculus campus, according to public records.
Microsoft is doubling down on its own campus rebirth with a multi-billion-dollar expansion that could office upwards of 8,000 employees. The direct connection to LINK light rail means Microsoft employees could choose to live in downtown Seattle or downtown Bellevue and enjoy reasonable commutes to Redmond.
SRM is planning a 136,000 sq. ft. building adjacent to Google's Kirkland campus, likely for Google’s continued expansion.
Rumors persist about expansion of Alibaba and other international tech companies seeking growth in the region (including potential leases at Southport on the Renton waterfront).
While not tech-oriented, Costco Wholesale recently announced plans to expand it’s Issaquah headquarters by 1.2 million sq. ft. with room for 4,000 employees. Again, eventual LINK light rail service to Issaquah affords employees the option of living in an urban market and commute by train to work.
Commercial developers are clearly optimistic. Nearly 2 million sq. ft. of speculative office space is currently under construction in downtown Seattle with occupancy by 2020. That space will eventually attract additional companies and an estimated 13,000 new jobs will be created in the relative near term.