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June 29, 2017

On the Block: Despite the turmoil, Seattle retail is doing fine

Seattle Daily Journal of Commerce

Brian Miller

It was a head scratcher for some people when Amazon announced its $13.7 billion purchase of troubled Whole Foods.

Yet the acquisition makes sense on some level, as analysts have observed, since it allows the Great Disruptor to continue experimenting with brick-and-mortar retail. Those baby steps began with its bookstore in University Village, and have continued with Amazon Go grocery stores - now in beta in South Lake Union and Ballard.

...Kidder Mathews basically agrees. Using a different regional yardstick for the first quarter, it puts the vacancy rate at 3.7 percent for King County. KM's trends and numbers generally align with M&M's more granular figures. And KM's Andy Robinson concurs that, "The retail market is strong in the core markets of Seattle and the Eastside. There is positive absorption, new construction and a strong investment climate for stabilized centers and single-tenant net-leased properties."

...KM's Susan Zimmerman says those spaces mostly are in mixed-use buildings with a residential component. The empty spaces are being marketed to commercial tenants who'll provide amenities for the renters upstairs. Zimmerman cites the "We really want a restaurant!" syndrome among developers. "They want it to be a lifestyle component." But there are only so many bars and restaurants to go around, and the food and beverage biz is notoriously fickle - and very labor-intensive in a town where labor supply is con

But here's a caveat from KM's Robinson: "Pressure continues to grow from e-commerce entities, and retailers who cannot differentiate themselves from this form of competition are under stress." Examples, please? "In 2017, we expect to see closures of Macy's, Sears and Kmart stores across the region."

Got a tip? Contact DJC real estate reporter Brian Miller at brian.miller@djc.com or call him at (206) 219-6517.

For the full story, go to Seattle Daily Journal of Commerce.

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