Don’t Call It a Comeback

In 2017, Seattle was declared one of the only cities to vault from secondary to gateway market status.¹

At the time, Seattle was bustling with unprecedented growth. There was no shortage of capital flowing into the local market, and companies were taking advantage of our highly educated workforce, hiring at a feverish pace.

As head of the local market, I admit that all this made my job seem easy. With commercial space being quickly absorbed and developers building at a rapid rate to accommodate the growth, it was an ideal environment for my team to transact business for our clients.

In fact, institutional investors crowned our region a Tier 1 investment market.

Since hitting that peak, Seattle’s reputation has taken a hit.

What was behind the decline? Public safety concerns, no doubt. But more broadly, local government was at odds with the business community.

Case in point: In 2018, the City Council unanimously passed the so-called “head” tax, a per-employee levy on large employers designed to help finance solutions for the growing homelessness crisis. After significant opposition from both businesses and labor unions, the tax was quickly repealed and later reintroduced in a less-aggressive form.

But the damage had been done.

Amazon had begun scaling back its real estate plans in downtown Seattle and focusing on expansion in Bellevue, on the east side of Lake Washington. At the same time, multiple local political candidates who supported more rational, business-friendly positions were defeated at the polls.

Not long after, the pandemic landed on our shores, with the first U.S. cases of COVID-19 recorded 12 miles north of Seattle in January 2020.

Later that summer, Seattle again made headlines, as a flashpoint of the civil unrest unfolding across the country.

These challenges were exacerbated by the tech-heavy workforce’s embrace of work-from-home policies. In fact, since 2019, Seattle has led the nation in remote work, with roughly 31% of employees opting out of the downtown commute, according to the U.S. Census Bureau.

Ultimately, retailers were driven out of downtown by a lack of foot traffic fueled by issues including public safety, homelessness and open-air drug use, along with high work-from-home rates.

All this served only to further diminish Seattle’s vibrancy.

While companies in Seattle have recently begun enforcing stricter return-to-office mandates, implementation comes with separate challenges. Lack of mass transit options and continued safety concerns are two of the most prominent, which are leading more people to commute by car. Last year, we saw a 9% increase in traffic congestion in the area.

These factors have led many organizations to consider Bellevue for their office needs—attracted by its business-friendly policies and safer environment.

Leasing trends for both sides of the lake, however, remain relatively the same—driven by a surge in tenant demand for space as return-to-office policies are imposed. This surge is being led by professional services, gaming and AI technology companies, which have ignited a flight-to-quality trend, benefiting owners willing to invest in building upgrades.

At the same time, Seattle is well on its way back to becoming a true 24-hour city.

Following the expansion of its facilities downtown, Seattle has emerged as a major convention destination, and our local sports teams have helped reenergize the city.

This also contributed to Seattle’s selection as one of the host cities for the World Cup in 2026—an event that is prompting road and transit upgrades to accommodate an estimated 750,000 visitors who will fuel an expected $900 million in economic activity for Seattle next year.

Additionally, construction along Seattle’s historic waterfront will reconnect it to the downtown core, creating a more pedestrian-friendly experience—something that car-centric Bellevue has struggled to replicate. This 15-year project is on schedule to complete this year.

Seattle’s resurgent vibrancy, particularly when it comes to entertainment, walkability and culture, is hard to beat.

The Downtown Seattle Association’s 2023 report card noted that the number of residents has increased by 19%, and total jobs is roughly on par with 2019 numbers. And Amazon’s five-day return-to-office mandate is already having an impact on foot traffic downtown.

With the increase in pedestrian activity, retail is on the upswing, and we are starting to see owners convert office buildings to residential, with a new local government offering needed incentives.

Notably, high-net-worth investors are in a prime position—with no debt requirements and longer investment horizons—and are upgrading tired or geographically challenged office assets and can offer reduced rates to prospective tenants.

Additionally, Mayor Bruce Harrell’s Downtown Activation Plan is having positive impacts—including a 27% reduction in violent crime in the Pike/Pine area. And the completion of light rail between the Eastside (Bellevue) and Seattle will do more to connect Seattleites.

This interconnectivity will be key to transcend recovery and build a unified region connected in both purpose and ease of use.

Although the ghosts of the pandemic still linger, Seattle is poised for a renaissance.

The city’s resilience and capacity for renewal are becoming increasingly apparent as business activity, urban livability and community engagement revive.

With increased focus on public safety, infrastructure improvements and the reimagining of downtown spaces, Seattle is addressing legacy challenges while laying the groundwork to reclaim its status as a gateway market, ushering in a new era of growth and opportunity for businesses and residents alike.

Acknowledging the cyclical nature of commercial real estate and Seattle's long-term growth potential, it’s time for investors to reconsider the opportunities emerging in Seattle as it exits the downturn.