Seattle: "one of the best markets for younger adults"
In its latest outlook on real estate, the Urban Land Institute (ULI) pegged Seattle as the 7th best market in the U.S. for investment, development and homebuilding.
Compared to a year ago, the city's overall ranking dropped a notch, despite improvements in each category. One columnist suggested the shuffle reflects "stronger sentiment for some other tops cities and a warning about the competition." ULI named San Francisco as the top market to watch in all three categories.
Now in its 34th year, the Emerging Trends in Real Estate® report is undertaken jointly by ULI and PwC. Findings reflect the views of more than 900 individuals who were surveyed or interviewed.
The authors believe the real estate recovery will continue in 2013, with modest gains in leasing, rents and pricing expected to extend across U.S. markets.
In the opening chapter titled "Recovery anchored in uncertainty," the forecasters noted "real estate continues to meander along a slower-than-normal recovery track behind a recuperating U.S. economy, dogged by ongoing world economic distress."
On a brighter note, market recoveries are gathering some momentum across most of the country and in all property types. For the third consecutive year, surveys indicate that U.S. property sectors and markets "will register noticeably improved prospects compared with the previous year."
Seattle, which was listed among "cool places" with 24-hour characteristics for echo boomers and "veritable wealth-island magnets for investors" in last year's report, was singled out in the latest edition for its walkability and good quality of living. Its diversified new age corporate base, also drew favorable comments.
The city's position as the global center for the software industry draws both domestic and global investors, prompting one investor to suggest "Seattle belongs in the primary market category."
Survey results indicate investor sentiment is focused on job-producing industries and those markets that contain them, notably San Jose and Seattle.
The Trends report projects a 1.2 percent increase in Seattle's job growth next year, 50 basis points above its ten-year average. It also calls the Emerald City one of the best markets for young adults, noting the echo boomer population has expanded 20 percent over the past decade. That growth signals changing expectations for housing.
Researchers reported the large generation-Y demographic cohort orients away from the suburbs to more urban lifestyles, adding, "These young adults willingly rent shoebox-sized apartment units as long as neighborhoods have enticing amenities with access to mass transit." They also said more intergenerational sharing of housing occurs to pool resources among children (seeking employment), their parents (reduced wages and benefits), and grandparents (limited pensions and savings).
The Trends report's authors suggested home builders keep activity in check, but they anticipate rising confidence from stabilizing housing markets. "Any uptick in single-family construction by 2014 and 2015 should buoy the overall economy and help other property sectors," they remarked.
Upon reviewing the latest report, Seattle Times columnist Joe Talton highlighted findings about "the great reset in real estate." A big element of the reset involves the rising demand for infill in cities with strong economies.
The best city centers are benefiting from companies and people moving in from the suburbs, Talton wrote, adding, "Much of suburbia, heavily overbuilt during the bubble, continues to struggle," with Bellevue being a possible exception.
Investors may find Bellevue's proximity to vibrant Seattle inviting, even though its velocity of recovery lags downtown Seattle. Talton agrees the future looks promising for suburbs that can become denser and build serious transit hubs.
Despite promising findings, Talton said the good news requires some tempering. "We're not in for another 2000s boom, and that's a good thing considering how it turned around. The modest recovery is to be expected from the catastrophic downturn and its resulting financial collapse, oversupply and debt. "It will take years to fully undo the damage of the housing collapse," according to Talton.
Emerging Trends in Real Estate® is a highly regarded and widely read trends and forecast publication. It provides an outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the United States, Canada, and Latin America.
Participants who were surveyed or interviewed include investors, developers, property company representatives, lenders, brokers and consultants.