The Seattle-Tacoma area now ranks 5th overall in CrowdStreet’s national list of top commercial real estate markets in which to invest. It has jumped from 14th on the commercial real estate investment platform’s list in 2021.
The markets ahead of Seattle-Tacoma were Austin, Texas, followed by Raleigh-Durham, North Carolina; Nashville, Tennessee; and Orlando, Florida. All very fast growing markets.
In the Puget Sound region, multifamily continues to be a “superstar,” with a ranking of fourth overall, Ian Formigle, chief investment officer for CrowdStreet, told Business Journal.
Though King County’s population decreased by 20,000 in 2021, homes prices and rents continued to increase.
“The Seattle-Tacoma MSA (metropolitan statistical area) is about two years behind in housing production,” he said. “There is strong job growth coupled with a housing shortage and rising home prices forcing people to rent, so multifamily rent rates are back to pre-pandemic levels and rising, making the Seattle-Tacoma MSA a great area for investors to consider multifamily investments.”
The report also ranks the Puget Sound area as the third-best place to invest in industrial real estate, behind Los Angeles and Orange County.
“Seattle has had a 9% year-over-year increase in port volumes,” Formigle said. “This increase has fueled industrial demand and led to a 4% vacancy rate in its industrial market. Adding more fuel to Seattle’s already blistering industrial market, where a $367 per square foot average sales price for industrial properties makes the MSA the nation’s most expensive, is the fact that a substantial number of industrial leases are expiring this year and were inked before the massive surge in e-commerce instigated by the pandemic. Prices to lease these industrial properties are up an average of 25% over the rates of the five-year contracts that are expiring.”
Industrial rents in coastal markets, such as a the Puget Sound, are expected to rise 40% over the next two years, according to the report.
The Puget Sound area also grabbed the report’s third-ranked spot on the best places to invest in retail.
“While the pandemic decimated retail in many MSAs, Seattle’s robust employment growth, high-income levels (the second-highest in salary level and third-highest in growth when compared to other major U.S. tech markets) and anticipated population growth of almost 50,000 residents this year, point to a healthy increase in retail deal volume in the MSA for 2022,” Formigle said.
In the report, Seattle-Tacoma did not rank among top markets for office, life sciences or hospitality real estate.