Q2 2012 Seattle, Washington Commercial Real Estate Economy

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Q2 2012 Seattle, Washington Commercial Real Estate Economy

About two-thirds of the jobs lost to the economic downturn in the local Metropolitan Statistical Area (MSA) have been recovered. Seattle, accordingly, is enjoying robust recovery trends featuring expansion across an array of major industry sectors. According to data provided by the U.S. Bureau of Labor Statistics (BLS), total non-farm employment in the Seattle area Metropolitan Division as of July was up 43,900 jobs (3.1%) from 12 months prior and was up fully 5.0% (69,300 jobs) since July 2010. (The Metropolitan Division excludes the Tacoma area, covered by Reis in a separate Reis Observer.) Increases such as these would qualify as strong growth at any time, never mind at a time in which the nation is struggling with an uncertain and reluctant economic recovery.

Although the local economy prides itself on its recent diversification, manufacturing, an effect of The Boeing Company, continues to play a central role in dictating local trends. Thus Boeing’s recent expanding business activities have had a marked positive effect on both the manufacturing sector and the regional economy as a whole, as aircraft production orders, including many from overseas, continue to mount. Indeed, the firm has predicted 34,000 new airplane sales over the next 20 years valued at $4.5 trillion “driven by strong growth in China, India, and other emerging markets,” the Seattle Times reported in July. According to BLS data, employment in local manufacturing as of July was up fully 13,400 jobs (8.4%) year-over-year and was up 21,400 jobs (14.1%) over two years. The latter job numbers represent 31.0% of all non-farm jobs gained net over the latest 24-month span.

In a separate domain, expansion by e-commerce and other high-tech firms such as Amazon.com, eBay, Google, and others also contributes to local economic expansion—and to the tightening of the local office market. Employment in the related Professional and Business Services sector as of July was up 2,500 jobs (2.4%) over 12 months, according to the BLS. And increases in trade post recession through Seattle’s ports, despite a reported recent temporary slowdown, are a significant element as well. Indeed, a return to expansion is anticipated for the period ahead for container traffic. As reported by the Puget Sound Business Journal in May, ships belonging to Asian shipping giant MOL are now passing through the Port of Seattle “for the first time since 2008,” an effect of a new route started by New World Alliance. According to BLS data, employment in the Trade, Transportation and Utilities sector as of July was up 8,700 jobs (3.4%) over 12 months.

With recent reporting citing the beginnings of a recovery for the national housing market, Seattle, with its relatively strong economy, is somewhere ahead of the curve. According to the Northwest Multiple Listing Service as reported by the Journal in September, the $378,000 August median price for a single-family home in King County was up 8.0% year-over-year. Sales of homes and condos combined were up 21.0%, while inventory of homes on the market shrunk by 40.0% (condos account for one-fifth of inventory). Similarly favorable trends are indicated for Snohomish County. Rising values, meanwhile, could increase the for-sale inventory as owners relieved from negative equity may feel at greater liberty to sell their homes, Zillow’s chief economist informed the Journal in August.