A City Starts to Percolate

Commercial real estate conditions have improved steadily in the Puget Sound region, fueled primarily by new hiring and a lack of new development. During 2010, area employers expanded payrolls by 15,900 workers, following the loss of 125,000 jobs in the preceding two years. The rate of employment growth is forecast to accelerate to 2.2% (or by 36,000 positions) this year as local business conditions strengthen. Translating this into the commercial real estate sector, demand for apartments is expected to increase by year’s end, pushing vacancies down and subduing, but certainly not eliminating, distress in that sector. Retail has benefited from a lack of new construction, which has resulted in greater leasing and a decline in concessions. Seattle’s industrial sector is also expected to make strides, driven largely by an increase in trade activity. While the office market is gaining momentum, especially in the class A segment, the sector faces some uphill battles due to still-weak fundamentals.

Distress in Multifamily