Seattle’s position has slipped in a key national ranking of real estate prospects looking ahead to 2023, reflecting the economic uncertainty looming over all types of development.
The “Emerging Trends” rankings are produced each year by the nonprofit Urban Land Institute and PwC, an advisory and tax-services firm, based on a survey of more than 1,400 investors, developers, lenders and other real estate insiders across the country.
Seattle’s rankings have been a roller coaster in recent years, scoring the No. 1 spot for “overall real estate prospects” in the report looking ahead to 2018, then dropping to No. 16, climbing back to No. 10 and then tumbling to No. 34 after the pandemic hit in 2020. Last year, the city returned to higher rankings at No. 9.
In the latest report, looking to next year, Seattle dropped out of the Top 10 and ranked 17th.
Top-ranked cities were mostly in the South, with Nashville, Tennessee; Dallas/Fort Worth; and Atlanta comprising the top three. San Antonio, Houston, Miami and Orlando, Florida, also surged past Seattle this year.
Other Washington markets dropped a bit in the rankings: Tacoma from No. 60 to 62 and Spokane/Coeur d’Alene, Idaho, from No. 73 to 78.
The developers and investors surveyed considered a number of market factors, from single-family home prices to the office market, demand for industrial space and more.
Across the country, fewer commercial real estate deals are taking place, and profit margins are narrowing. Single-family home sales and construction are slowing. Rents, which have shot up over the last year, are beginning to level off. Demand for office space is confused, with fewer employees physically in the office but some companies holding on to that space as they wait and see, a dynamic that can’t last forever, the report notes.
Commercial real estate investment surged last year, but those surveyed expect less lending and investing next year.
The report calls Seattle an “establishment” market that, along with others like Los Angeles, Chicago and San Jose, California, continues “to attract a disproportionate share of investment dollars.”
But ratings for those markets are “volatile” because of “the changing fortunes of the tech sector,” the report said.
Tech companies have slowed their hiring in recent months, with Amazon partially freezing corporate hiring. Microsoft reduced hiring earlier this year and announced it would lay off about 1,000 employees last week.
