Boston vs. Seattle: Who Would Win the CRE Bowl?

by | 29 January 2015

The Seattle area and the Boston area are in the national spotlight this week due to an annual sporting competition. Maybe you’ve heard of it. In the United States, the Super Bowl is more popular than the Olympic Games and the World Cup combined. All eyes are set on this year’s matchup between the New England Patriots and the Seattle Seahawks in Glendale, Ariz.

The advent of Super Bowl XLIX naturally provokes comparisons between the home cities of the opposing teams. If Boston and Seattle were to face off in the context of commercial real estate — a CRE Bowl, if you will — who would win?

When we compare basic stats, Boston seems to have an edge on Seattle:

Boston metro area Seattle metro area Source
Population 4.7 million 3.6 million US Census Bureau
Cost of Living Index 144 138 AreaVibes.com
Median Household Income $72,907 $67,479 US Census Bureau
Gross Domestic Product $370 billion $285 billion US Bureau of Economic Growth

But these statistics don’t tell the whole story.

For one thing, Boston is by far the older city, having been settled in 1630. Seattle’s birth year is 1851. That’s a two-century head start on population and industry. Last year, Seattle was ranked as the fastest-growing major city in the United States. In 2013, the City of Seattle proper (as opposed to the metro area) actually overtook the City of Boston as the 21st largest city in the nation.

With these facts in hand, let’s look at the contenders in the context of commercial real estate.

Multifamily
Real estate investors are in the midst of a love affair with the USA’s multifamily market. Shifting demographics and desires have propelled multifamily construction to a 27-year high, and cranes are popping up in major metropolitan areas all over the nation. In fact, counting cranes is exactly how one prominent property consultant keeps track of construction activity around the United States.

Multifamily construction accounts for the majority of cranes erected, and Boston and Seattle are both hot spots. But according to the Rider Levett Bucknall Crane Index, Boston’s multifamily construction is tapering off, and Seattle’s is ramping up. Advantage: Seattle.

Office

Obviously one of the biggest indicators of a successful office market is job growth. By this metric, Seattle has an advantage over Boston. In 2014, Seattle topped Boston on lists of best cities by job growth again and again and again. Looking at data straight from the U.S. Bureau of Labor Statistics, we can see that Seattle added 60,500 new jobs in 2014 to Boston’s 53,400.  This might explain why, in Q4 2014, the Seattle metro area had only 10.21 percent office vacancy. In comparison, the Boston area had a 15 percent office vacancy rate. Office space in Seattle is in higher demand. Seattle’s offense is looking pretty good.

Industrial
As the U.S. economy continues its recovery, the industrial market has generally followed suit. And despite a West Coast port slowdown caused by labor issues, the Seattle metro area had below-average industrial vacancy rates, according to a report from late 2014. Unfortunately, Boston has not fared as well. The same report cites the city on Massachusetts Bay as a “laggard.” Sorry, Boston … Seattle wins this round.

Retail
Solid growth in employment and consumer spending have resulted in a generally positive retail market in the U.S. And growth has been led by robust demand for prime space in top markets such as Boston and Seattle. According to a recent report by CoStar, Seattle’s retail vacancy rate stands at 4.9 percent, which continues an overall decrease for the past year. As for Boston, its retail vacancy rate is 3.9 percent, also reflecting an overall decrease for the year. Looks like this round goes to Boston.

And so …

It happens that Seattle and Boston are among the USA’s hottest commercial real estate markets. They are two of what are commonly known among CRE professionals as the “Sexy Six.” So really, they are both CRE champs already.

But it seems clear that if the CRE Bowl were a contest to be played out — and not the big business it really is — Seattle would win.

Disagree with my assessment? I’m not a commercial real estate research expert, so I’m open to reviews from the booth. Let me hear your opinions on the CRE Bowl in the comments.

Tony White has spent decades exploring discourse within online communities, and he writes about social media and digital innovations in real estate. Send him tips or questions at Tony.White@Colliers.com or via Twitter