Much has been said and written about the growing cost of real estate in Seattle and the Eastside, but most of the commentary focuses on residents trying to afford a home in the area. Gentrification affects other industries in booming cities, though. Just look at Vancouver.
A Bloomberg story this week explains the travails facing the Port of Vancouver, the biggest and most diverse (in terms of shipments) port in Canada and a chief competitor of the ports of Seattle and Tacoma. As money pours into Vancouver’s housing market, downtown land surrounding the port is being turned into condos for the super-wealthy.
Ports require far more infrastructure than the shoreline structures. Once a container ship arrives, those goods have to be shuffled onto trucks and trains bound for locations throughout North America. And in Vancouver, condos are squeezing out room for warehouses that would facilitate these tasks.
In response, the port is expanding operations on an artificial island it built 22 miles south — a cumbersome spreading of operations. And if those initiatives fail, Vancouver could see its economy lose some of the diversity that made it one of the business powerhouses of the West Coast. The Bloomberg story cited a Monitor Deloitte report saying that, if Vancouver’s port is squeezed out by condos and apartments, “its economy could turn into a ‘lifestyle bubble’ for wealthy retirees and tourists.”
There are lessons to be gleaned here. Vancouver has functioned as a bellwether for the Pacific Northwest region as a whole, and what affects it usually trickles down to Seattle and Portland. The foreign dollars jacking up Vancouver’s real estate market are doing the same thing on the Eastside, where would-be Vancouver shoppers come for a bargain million-dollar home.
The implications are obviously greater for Seattle, the port of which is also feeling pressure from industrial gentrification, than for Eastside burgs largely built as bedroom communities. But there is a heavy manufacturing presence here, some of which — particularly in Renton — is close enough to water that developers could jump on it should companies decide to sell off land.
One thing’s for certain in all the aforementioned cities: Real estate development can attract money (Vancouver gets more tax revenue from residences than port activity) and wealthier residents, but doing so at the expense of another industry makes a city more vulnerable to economic downturns.
All Hail the Cloud
Hey, maybe Satya Nadella knows what he’s doing. Microsoft reported its fiscal-year-end financial results, and hoo boy, there’s some good news in there for Nadellites who are banking on the cloud.
The company’s commercial cloud division — which includes the Azure platform, Office 365, and the web version of Dynamics — now has a run rate above $12 billion. Office 365 in particular is killing it; sales were up 54 percent year-over-year. The productivity suite is also an important means by which Microsoft can differentiate its services from Amazon Web Services, its chief cloud-infrastructure competitor.
Microsoft for the year posted a 9 percent sales dip (thanks, Nokia). It was only the second decline in sales in the company’s history, but that matters little: Sales topped $85 billion, and what’s most important is that Microsoft finds a way to shift away from its flagging PC-dependent business. Nadella called for $20 billion in cloud sales by 2018. Microsoft appears well on its way to that target.
Elsewhere on the Web
The University of Washington pulled in $542.4 million in private funds this year. Thanks, Gates and Ballmer!
Redbox: The little streaming service that could.
Seattle’s startup scene is not as awesome as Silicon Valley’s. Are venture capitalists to blame?
Here’s how to handle budget cuts without inciting a mutiny.
Paccar fixed prices in Europe, and now it’s paying the price.
Finally, and unfortunately, downtown Bothell caught fire this morning.