Five takeaways from the 2018 Economic Forecast Conference.
Hundreds of local business leaders convened at the Westin Hotel in downtown Seattle on Mar. 8 for the 46th Annual Economic Forecast Conference hosted by the Economic Development Council of Seattle & King County.
Panel discussions explored topics such as business and technology innovations, urban development strategies, and workforce trends, while industry experts and analysts offered their thoughts on global, national, and local economic trends anticipated in 2018.
Still, much attention was paid to the Puget Sound region’s booming, yet double-edged, economy and housing market.
Here are five takeaways from this year’s conference:
Finding affordable housing in King County continues to mystify local residents and economists.
The median price for a single-family home is $950,000 on the Eastside, and $770,000 in Seattle, according to data released this month by Northwest Multiple Listing Service.
There’s no respite for renters, either. According to King County data, the average price to rent a studio apartment in King County rose from $792 in 2007 to $1,370 in 2017. If you are in the bottom-third and middle-third of income earners, you are spending 51 percent and 32 percent of your paycheck, respectively, on housing, according to Zillow Senior Economist Skylar Olsen.
It’s worse in New York and Los Angeles, Olsen added, where bottom-third income earners have been priced out.
“That’s something Seattle is particularly challenged with, not becoming a place like that, where it’s really out of reach for the lower third of incomes, and we’re moving that way,” Olsen said.
Olsen noted new housing construction isn’t keeping pace with the region’s demand, and homeowners are reluctant to sell their homes for fear of entering the home-buying market, where prospective buyers compete with many other offers.
The regional job growth driving the demand for housing isn’t expected to wane.
Data compiled by the Puget Sound Regional Council show the number of jobs in the central Puget Sound region grew from 1.4 million in 1990, to 1.9 million in 2008, to 2.1 million in 2017. The number is expected to reach 2.8 million by 2040.
For the past several years, the Puget Sound region has experienced the fastest growing home values and rental prices. “If it comforts you to be dethroned, we have been dethroned,” said Olsen, who noted that prices in San Jose, California, and Las Vegas, Nevada, are appreciating at faster paces than our region.
It’s cold comfort, for sure.
“In terms of when it’s going to stop, we still look super cheap to people outside, even though if you’ve been here for a while it doesn’t feel that way,” Olsen said.
Planes, Grains, and Computer Electronics
Chris Mefford, president and CEO of Community Attributes, a consulting firm that offers research and data analysis for businesses, noted the aerospace industry continues to dominate Washington state exports. It accounted for $42.3 billion of the $77 billion exported last year, followed by oil seeds ($5 billion), cereals ($4.2 billion), machinery parts ($2.8 billion), and electronics ($2.7 billion) rounding out the top five exports.
Who’s on the receiving end of all these aerospace exports? The top five countries (and one federation) include China ($10.4 billion), United Arab Emirates ($3.7 billion), Norway ($2.1 billion), Saudi Arabia ($1.8 billion) and Russia and Ireland ($1.8 billion each).
Moreover, 40 percent of all Washington jobs are tied to trade.
One statistic offered by Mefford and of interest — 45 percent of jobs in King County are provided by small businesses employing 100 people or fewer.
Xbox co-creator Ed Fries shared his insights on the impact gaming and interactive media companies such as Microsoft, Nintendo, Valve, Bungie Studios, Pokémon, and others have on the local economy.
“I love to talk about it because it’s such an amazing story, how big gaming is in this economy,” said Fries, who worked at Microsoft for nearly 20 years, retired in 2004, and is still active in the Eastside gaming industry. “It’s a huge business for our region.”
He pointed to a recent study compiled by OneRedmond and Washington Interactive Network that showed more than 400 local gaming and interactive media companies created over 23,000 jobs and generated over $28 billion in annual global revenue.
“Speaking as an old programmer, it’s a great environment to be indoors,” Fries quipped, referring to the Puget Sound region’s notoriously inclement weather. “It is a culture of makers, people who create things here, and I think we draw on that. But we also have a critical mass. If you are going to move your family here to work at a game company, the fact there are 10 more down the street is very comforting if it doesn’t work out.”
Betting on Bezos and Amazon HQ2
Three economists offered their thoughts on where Amazon would build its next corporate headquarters.
Last year, Amazon announced it planned to build a second North American headquarters, HQ2, and received more than 230 proposals from across the United States, Canada, and Mexico. The company has since narrowed its list of finalists, and plans to make a decision later this year.
“If you are putting money down, Atlanta is a good bet for HQ2,” said Zillow’s Olsen. Initially, she was bullish on Austin, Texas, because she said the city’s culture and reputation as a creative tech hub was in line with Amazon’s interests. But many housing economists point to Atlanta as having an edge because of its affordable housing market and an economic area that has room to grow. “A lot of what Seattle is struggling with now is growing pains,” Olsen said. “Atlanta would begin with less tension.”
Mefford of Community Attributes said his two top choices — Toronto and Denver — haven’t waivered because of these cities’ strong, tech-based talent pools.
Ehiwario Efeyini, a senior vice president and senior research analyst at Bank of America, pointed to New York City and Washington, D.C., the latter because of its connection to Amazon CEO Jeff Bezos (he owns a home there, as well as The Washington Post) and its proximity to lawmakers. “It might help with (any) regulatory threats coming the company’s way,” he said.
Snohomish County and the Port of Seattle were public sector recipients of Economic Development Champion Awards, while Microsoft earned the private sector award for its decision to move forward on a massive redevelopment of its headquarters in Redmond that, when completed, will cost more than $1 billion and include 18 new buildings offering space for an additional 8,000 employees.
“We have offices in 110 countries, but we only need one corporate headquarters,” said Michael Ford, GM for Microsoft’s global real estate and facilities, referring to Amazon HQ2 while accepting the award. “We’re proud to call the Puget Sound our home.”