Kimco Realty Market Profile: Seattle

Posted by: Scott Onufrey Scott Onufrey
on August 14, 2013
NATIONAL ANCHORS: Safeway is one the anchors at Marketplace at Factoria, in addition to Walmart, Target, Nordstrom Rack, and several other national and regional retailers

NATIONAL ANCHORS: Safeway is one of the anchors at Marketplace at Factoria, in addition to Walmart, Target, Nordstrom Rack, and several other retailers

Economic recovery has moved forward in a range of areas across the U.S. But one MSA that has continued to cement its foothold faster than others is Seattle-Tacoma-Bellevue. Several indicators are showing that economic recovery is here to stay in the Seattle market, making it a strong investment target for Kimco, and the subject of our latest Market Profile post.

Kimco now owns 10 centers in the area. Most recently, we acquired our partner’s share of The Marketplace at Factoria in May. The almost 510,000-square-foot center is approximately 95.5 percent occupied and anchored by several large national and regional retailers, including Walmart, Target, Nordstrom Rack, T.J.Maxx, Petco, DSW Shoe Warehouse, Old Navy, Rite Aid, and Safeway. The average household income is $131,000 within three miles of the center, according to SitesUSA, almost two-and-a-half times the national average of $53,132.

Kimco is strengthening its presence in Seattle for many reasons. Here are some of the most important ones that demonstrate why we — as well as the REIT sector, institutional investors, and retailers — are focusing on the market.

Strong employment trends

Employment in Seattle has outpaced the national average every month since March 2012. Seattle’s joblessness hit a major milestone in May with the unemployment rate falling to 4.7 percent — the lowest since August 2008 when it was also 4.7 percent. Unemployment remained low in June, ahead of the national average of 7.6 percent, according to the BLS.

Seattle is also leading other MSAs in terms of employment. Of the 23 metropolitan divisions that had year-over-year jobless rate decreases in June, Seattle had the largest decline, dropping 2.3 percentage points.

Job creation

All told, jobs are expected to grow 3.3 percent this year, according to Marcus & Millichap’s Q2 2013 Market Report for the Seattle metro. This would top last year’s expansion of 2.5 percent.

Helping fuel the job market are Seattle’s aerospace and technology industries, which are some of the largest employers for the area. Although Boeing dominates the Seattle aerospace market, several other global companies — including Crane Aerospace and Electronics, Honeywell Aerospace, and Aerojet — have strong positions in the metro, too.

At a Glance

Population: 3,548,880
Median Household Income: $72,763
Households: 1,379,307
Median Home Value: $347,922


Population: 314,893,068
Median Household Income: $53,132
Households: 119,804,218
Median Home Value: $179,711


Source: Data obtained through SitesUSA

Seattle’s tech scene has grown considerably since Microsoft and Amazon were founded in the area. These businesses continue to be major employers in the Seattle market. But companies such as GoDaddy, Google, Facebook, Zynga,, Hulu, and Twitter have also entered the Seattle area to tap its reservoir of tech talent.

Housing market surge

Another positive development in Seattle has been its hot housing market. Seattle is one of the top 10 markets nationwide for apartment and condo construction, according to the Marcus & Millichap report. The report found that over 10,700 units are under construction, 7,000 of which are due for completion this year.

Home prices are also on the rise. The median sale price for homes area-wide in June was $279,950, which is 9.8 percent higher than a year ago, according to the Northwest Multiple Listing Service (MLS). In the city of Seattle, median home prices came in at $458,000 in June, up 19.7 percent from June 2011, according to the Northwest MLS.

Home buyers are helping support the market’s population of 3.5 million people, making Seattle-Tacoma-Bellevue the 15th largest MSA in the country. SitesUSA projects the market’s population to grow by 1.4 percent by 2017, ahead of the projected national growth rate of 0.9 percent.

Retailer growth

Seattle’s residential boom is driving national retailers to expand their presence in the area. Target opened in downtown Seattle last July, Walmart opened new stores in Tacoma and Marysville this summer, and Zara plans to enter Seattle in early 2014.

Small retailers are also entering the market. One of the most recent and exciting newcomers is San Francisco-based messenger bag provider Timbuk2, which opened in downtown Seattle in May.

Rent and vacancy improvement

The strengthening economy will continue to drive tenant demand. This will help grow rents, which increased slightly in Q2, according to CoStar’s Seattle/Puget Sound Retail Market Report for Mid-Year 2013. Rents within the shopping center sector outpaced retail overall, ending the second quarter at $17.66. This is up from $17.60 in the first quarter, also according to the CoStar report.

Good news can be seen in Seattle’s vacancy rate, too, which has stayed down over the past four quarters. Retail vacancy was 5.8 percent in Q3 2012, 5.5 percent in Q4 2012, and held steady at 5.3 percent in the first and second quarters of 2013.

Investor interest

Seattle’s economic growth has increasingly attracted investors to the area. Institutional buyers (REITs, investment managers, sovereign wealth funds, etc.) have significantly increased their investment in the market over the past three years. They injected $60.3 million in 2010, $215.4 million in 2011, and $665.4 million in 2012, according to Real Capital Analytics. Continuing the trend, institutional investors have injected $300.8 million in capital into the Seattle market so far this year. That comprises 67 percent of the capital flowing into the area.

When considering REITs alone, it’s clear they are showing greater confidence in Seattle. They’ve increased their investment in the area from $35.1 million in 2010, to $96.6 million in 2011, to $138.3 million in 2012. They are responsible for 25 percent of the capital flowing into the area this year so far, at $111.1 million.

QUICK SERVE: We've added several fast casual restaurants to Marketplace at Factoria, including Panda Express and Panera Bread, to tap the strong daytime customer crowd

QUICK SERVE: We’ve added several fast casual restaurants to Marketplace at Factoria, including Panda Express and Panera Bread, to tap the strong daytime customer crowd

Kimco’s plans

We’re planning to continue contributing to these numbers and building our Seattle portfolio of high-quality shopping centers. I mentioned one of these centers earlier, The Marketplace at Factoria, located in Bellevue.

Back in 2005, Kimco decided to redevelop and re-tenant the shopping center to capitalize on its advantageous location, produce higher rents, and better serve the community. We split a vacant anchor space into two stores and signed new leases with DSW and T.J.Maxx, and also filled another anchor space with a new Walmart.

As the shopping center is located near multiple office parks and a high school, we added more quick-serve restaurants to attract customers. In the coming months, we are considering additional redevelopment plans for the center and might add a food court and kiosks to diversify the tenant base.

Our other centers in the Seattle area include:

The Seattle-Tacoma-Bellevue market is showing solid signs of recovery, outpacing the country across many crucial metrics. We believe Seattle has the strength and momentum that will continue to spur shopping center demand, and generate a consistent and growing cash flow for our shareholders well into the future.


There are no comments yet.

leave a COMMENT