Thousands of leaders in real estate converged on Seattle earlier this month for the annual Urban Land Institute (ULI) spring meeting. Clouds parted in the notoriously drizzly Pacific Northwest town to show off its finest hour as a city engaged in building one of the most “user-friendly” cities in the United States.
As the largest urban area in the Pacific Northwest and a tech cousin to San Francisco, this 700,000-person city — with a regional population of approximately 3.8 million people — enjoys tremendous growth in the technology sector, with companies like Amazon consuming massive amounts of real estate. To counter the growing pains of San Francisco, Seattle is trying to develop its urban core to take advantage of the city infrastructure and to diversify its community. Here are four key takeaways from the conversation about these issues at ULI, and a few provocations for the future.
1) Neighborhood as Catalyst
With a strong interest in the South Lake Union neighborhood, many events and tours at the ULI event showed the tremendous impact of revitalizing this once parking-lot-filled area of Seattle into a vibrant mixed-use neighborhood. Home to a variety of organizations, South Lake Union integrates working, living and playing in a medium-density format. The area is rich with architectural character — blending the past and present with the energy of youth and optimism fueled by the millennial ethos. While not perfect, South Lake Union presents a great case study on how public and private partnerships can come together to spur development — from parks and retail, to corporate headquarters and new forms of transportation.
2) A Strong, but Uncertain, Economy
Another topic of interest was defining where we are in the economic cycle. Entering the seventh year of sustained growth after the “great recession,” there are varied opinions on the topic. Terms like “extra innings” and “double-header” were used as a familiar analogy to describe the sentiment. Are we close to a walk-off home run with two outs and a 3-2 count? Or are we in the 3rd inning of the evening game of the double-header?
One statement made by Tom Hennessy from Equity International caught my attention and I think is a more accurate assessment. Tom described the current situation as “land priced to perfection.” Unpacking his statement, Tom says the costs to continue this cycle of economic vitality are at a premium with zero margin for error. This will likely tighten the market significantly. However, the United States is and should continue to be a safe haven for international capital, which is beginning to flow into cities where vacancy rates are declining.
3) The Trump Effect
What conversation doesn’t include some discussion about politics? The market enthusiasm for bank deregulation, corporate tax cuts and support for small and medium business has everyone optimistic. However, many also expressed concern about the lack of traction and inability to move policy forward in Washington. This gridlock will likely not bode well for the markets, which could overshadow aforementioned positivity.
4) A Time for Tech
Seattle, with its tremendous development boom and 60+ construction cranes, had many people asking, “How much gas is still in the tank?” On one hand, it seems all economies are cyclical, even Seattle’s. But on the other hand, the growth of the tech industry seems to create anomalies that aren’t just based on traditional metrics. During the ULI meeting, Amazon’s vice president of global real estate, John Schoettler, announced that the company will hire 100,000 employees over the next 18 months. While that number represents employees around the world, it still equates to over 5,000 people per month — the size of a small Eastern Washington town. These figures underscore the dramatic shift that is happening in this “second machine age” fueled by extraordinary advances in computing technology. Developers and cities would be wise to continue to invest in this industry for years to come.
Regardless of these trends and what else is to come, it’s safe to say that we are just at the tip of the iceberg of the unimaginable changes that will take place in society. Over the next 10 years, disruptions such as driverless cars, more mobile ways of living and working, artificial intelligence and extraordinary breakthroughs in bio-science will transform cities and human life in profound ways. My friends and colleagues at ULI are perfectly positioned to lead and drive this discussion. Economy, ROI and politics aside — the future is bright and will be looking for innovation at all levels. It’s going to be quite a journey, so buckle up and enjoy the ride!
Image courtesy of Kevin Scott/NBBJ.Follow nbbX