STATE OF DOWNTOWN

TABLE OF CONTENTS
Economic Competitiveness
Transportation & Access
Urban Experience
WELCOME MESSAGES / 03STATE OF DOWNTOWN 2021 ECONOMIC REPORT
Jon Scholes
President & CEO Downtown Seattle Association
Just a year ago, downtown Seattle was firing on all cylinders. We ended the prior decade with record growth, outperforming almost every major city in the country on development, job and population growth.
Since the onset of the pandemic, we’ve seen dozens of downtown businesses permanently close, and our arts, entertainment, tourism and hospitality sectors devastated. Indeed, downtowns across the world and the country have a unique and daunting set of challenges as we emerge from this historic event.
The recovery of our downtown is critical to the economic future of our entire city; to our robust tax base and quality of life; to our ability to invest in infrastructure; and to provide opportunity for the next generation.
The good news is that we are building back from a very strong base. We have some of the most innovative private sector leaders in the world, one of the largest downtown residential populations in the country, and we’re making generational investments in our city. We’ve seen hard times before. Each time downtown Seattle has faced challenges — whether it be the Great Fire of 1889, the 1950s-’60s flight to the suburbs, or the collapse of the retail core in the early 1990s — we emerged stronger.
A MESSAGE FROM OUR PRESIDENT & CEO
That Seattle spirit is already at work. Many restaurants, retailers and nonprofits have creatively shifted their business models during the past year. In the first week of 2021, there were roughly a dozen announcements of new business openings downtown and approximately 90 new business announcements in 2020.
As we recover, we’re committed to embracing a new vision for the center of our city, where everyone feels that they belong and everyone has an opportunity to participate and share in the prosperity. The downtowns that rebuild in this way will be more dynamic, desirable and resilient.
Whether you’re a longtime DSA member, potential investor or exploring the benefits of DSA membership, we invite you to join us as we reshape and reengerize this downtown into an even better version of the one we knew in March 2020.
WELCOME MESSAGES / 04STATE OF DOWNTOWN 2021 ECONOMIC REPORT
The year 2020 was a brutal one of unprecedented and historic challenges for our city: a global pandemic, a civil rights reckoning, a climate crisis and an economic crisis that has had a devastating impact on our workers and our local businesses, especially downtown.
With the lowest cases and hospitalizations of every major American city, Seattle showed it could lead the way during the pandemic with our collective actions. We began adapting early to respond to the COVID-19 pandemic, establishing a first-in-the-nation small business support program to provide grants to hundreds of struggling businesses, free citywide testing, and assistance to our residents for rent, meals and child care.
The challenges ahead are some of the greatest in our city’s history, but 2021 also offers hope with a vaccine. Getting millions of our workers and residents vaccinated will be key to reopening and economic recovery, and Seattle will lead the nation with efforts on equitably distributing vaccines.
As we reopen the city, revitalizing and supporting downtown businesses, nonprofits, workers and residents will be key to our long-term economic recovery. I am proud to support the efforts of the Downtown Seattle Association as they work to support their members, ratepayers and stakeholders through the immense challenges brought on by COVID-19. I love this city, and I am confident that we will come back more just and equitable.
Stay healthy,
LETTER FROM THE MAYOR
DOWNTOWN SEATTLE 2020 REPORT CARD / 05STATE OF DOWNTOWN 2021 ECONOMIC REPORT
Report Card
2010 2012 2014 2016 2018 2020 0%
20%
40%
60%
LIVE Total Number of Jobs 37% increase since 2010 / 2020 estimate: 300,375
2010 2012 2014 2016 2018 2020 0%
20%
40%
60%
WORK
0%
-25%
-50%
50%
25%
Brick-and-Mortar Retail Jobs 31% decrease since 2010 / 2020 estimate: 6,069
SHOP Dining, Hotel, Recreation, Arts and Entertainment Jobs 44% decrease since 2010 / 2020 estimate: 15,282
2010 2012 2014 2016 2018 2020
0%
-25%
-50%
50%
25%
PLAY
DOWNTOWN SEATTLE 2020
Sources: data on this page were derived from multiple sources, including CoStar, Esri, Puget Sound Regional Council, Opportunity Insights and the Washington State Employment Security Department. Note that while most
jobs data are for March, we used 2Q estimates for 2020 to better capture the impacts of COVID-19. Population data are for July of each year and 2020 population was adjusted downward based on occupancy data from CoStar.
STATE OF DOWNTOWN 2021 ECONOMIC REPORT NEIGHBORHOOD MAP / 06STATE OF DOWNTOWN 2021 ECONOMIC REPORT
UPTOWN
Downtown Is a Family of Neighborhoods
Downtown Seattle is a collection of 12 neighborhoods that account for approximately half of all the economic activity in Seattle. Downtown is home to some of the densest neighborhoods in the Pacific Northwest. In fact, more than one in 10 Seattleites calls downtown home. During the COVID-induced downturn, these areas of residential density have been crucial to the survival of the street- level businesses that make downtown a vibrant urban center.
lanepowell.com | 800.426.5801
From the vibrancy of Pike Place Market to the blue waters of Elliott Bay, there are so many things to love about downtown Seattle— including its resilience.
In the face of the pandemic’s harsh impact, DSA continues to strive to ensure the health of the city’s urban center, and the quality of life within it. The future of downtown remains bright, and we can’t wait to be reunited with it once again.
ADVERTISEMENT / 07STATE OF DOWNTOWN 2021 ECONOMIC REPORT
ECONOMIC COMPETITIVENESS / 08STATE OF DOWNTOWN 2021 ECONOMIC REPORT
Economic Competitiveness
Seattle has been the envy of the nation, adding jobs and residents faster than nearly every major city most years since 2010. Unfortunately, greater Seattle was the first area in the nation to be impacted by COVID-19. Because of the growth of the tech sector and the area’s diverse, talented and educated workforce, Seattle will have advantages over other cities in the years ahead. Still, a full recovery will likely take two or more years.
Without intervention, the economic recovery will be uneven. Many of the industries hit hardest are in sectors dependent on foot traffic and visitors. With most office employees working from home and a once-thriving visitor industry decimated by the pandemic, businesses in the downtown core face ongoing challenges. This especially impacts people in lower-income job categories — those who
can least afford it. Hotels, retail, restaurants, arts and entertainment have been particularly affected. Those industries will likely take years to recover to pre-COVID-19 levels of activity. Federal aid and downtown Seattle’s residential population of nearly 90,000 have been key components in supporting small businesses that reopened. Downtown neighborhoods saw restaurants and stores spill onto sidewalks and streets over the summer and innovate with tenting and heat to serve customers through the fall and winter.
In the section that follows, we look at the characteristics that have made downtown Seattle the economic powerhouse of the region and use these to assess the current health of the downtown economy.
Downtown Seattle Is the Heart of the City’s Economy
Despite being less than 6% of Seattle’s landmass, downtown accounts for approximately half of the economic activity in Seattle, including more than half the jobs, about a third of brick-and-mortar retail sales, more than a third of leisure spending (including dining) and half the taxes paid by businesses in the city. Downtown businesses contribute 49% of the gross regional product within the city of Seattle.
Sources: CoStar, Emsi, Esri, Puget Sound Regional Council, Smith Travel Research and Visit Seattle. Figures are for 2020 unless otherwise specified. Leisure spending includes
dining, arts, entertainment and recreation.
Downtown as a Percent of the City’s Total:
Office Space Inventory
Source: Esri Community Analyst. These data are as of July 1, 2020. Note that Esri’s models reflect COVID-19’s estimated impacts for economic statistics but not for demographic statistics.
Downtown’s Most Vulnerable Populations
13,895 residents are senior citizens (65+)
8,664 7,853 residents work in the
service industry households include someone
with a disability
residents have no health insurance
6,044
4,157
households receive food stamps/SNAP
of downtown residents who are in the workforce are unemployed
5,128
1,400
4,669
15.4%
The coronavirus pandemic brought into clear focus socioeconomic disparities across our country, state and city. People of color, the elderly, low-income individuals, people working in service industries and those without access to health resources have proven to be at much higher risk.
The uprising against racial injustice over the summer of 2020 further elevated the inequities that exist and the work that lies ahead. For downtown to be healthy and vibrant, we must commit to an inclusive recovery, meaning one that welcomes everyone to the city and that provides economic opportunities and social support for marginalized communities. As the heart of city life, downtowns should represent and welcome residents, employees and visitors of all incomes, races and ethnicities, genders and ages.
With the rollout of vaccines creating the potential for a further reopening of our economy, it is important to
Working Toward Inclusive Recovery
ensure that the economic recovery supports the most vulnerable among us and provides opportunities for more people to share in future economic prosperity.
As we work to rebuild, we must remove unnecessary barriers to permitting and housing development so more people who want to live here can do so. This must be met with investments in infrastructure that support our growing communities, particularly low- and middle- income families, with greater investment in public schools, recreational amenities, and open space. We must fulfill our promise to complete the Sound Transit 3 package, bring back buses to our streets, and improve the transit rider experience because we know that transit is the great equalizer for accessing jobs and housing. Finally, we must elevate our private sector partners who are boldly reinventing ground-floor spaces to increase opportunities for small businesses and entrepreneurs and then support them by providing a safe and welcoming place to conduct business.
Source: International Downtown Association, 2020 Downtown Vitality Index
Affordability Metrics Downtown Seattle percent difference from nationwide downtown average
135% Median Owner-occupied
and Transportation
The diversity index represents the likelihood that two persons chosen at random from the same area belong to different races or ethnic groups. It also captures the racial and ethnic diversity of a geographic area in a single number, zero to 100 (a higher score represents a more diverse population). From 2010 to 2019, downtown Seattle’s diversity index increased 6 points from 46 to 52. This is still 11 points lower than the 2019 average of 63 for downtowns nationwide.
52 downtown’s current diversity index score
-11 downtown Seattle compared
diversity index 2010–2019
Diversity Index
In the 2020 International Downtown Association Vitality Index, downtown Seattle scored high marks for its economy and vibrancy, on par with New York City and San Francisco. Seattle’s center city also improved on its diversity index score over the past decade. However, compared to other U.S. downtowns, Seattle scored low on other measures of inclusion, including residential diversity, the share of the population that is middle income and home ownership affordability.
Myrtle Edwards Park, Waterfront
Employment peaked in the first quarter of 2020 with an estimated 348,000 jobs based downtown. After adding 129,000 jobs between 2010 and 2020, downtown lost 45,000 jobs in the second quarter of 2020. This compares to 28,000 jobs lost during the Great Recession. While some jobs are coming back, we estimate downtown ended the year with approximately 20,000 fewer jobs compared to the first quarter.
Most job losses are expected to be temporary. However, with remote working becoming more common and the effects of COVID-19 on transit service, it is uncertain how long it will take before the daytime worker population returns to previous levels. In a September 2020 DSA survey of businesses and organizations in Seattle, nearly half of respondents said that at least 25% of their employees had already returned to their office or worksite and most expect at least 25% to return by mid-2021. These workers, along with residents and visitors, support a vibrant, diverse array of urban amenities such as restaurants, bars, brick-and-mortar retailers and a lively nightlife scene.
Downtown has increasingly been a place for people to gather, share ideas and enjoy the benefits of proximity. Amid a pandemic, however, people are cautious about unnecessary time spent outside the home. Many workers express a desire to return to the office at least a few days per week. Downtown’s return to vibrancy is tied to getting COVID-19 under control and providing safe spaces conducive to the return of urban life and the downtown workforce.
Jobs Are Key to Downtown’s Continued Success
Source: U.S. Census Bureau (onthemap.ces. census.gov). These represent 2018 figures.
Who Works Downtown?
51% are male and 49% are female
60% are between the ages of 30 and 54
6% also live downtown
15% identify as Asian (the fastest-growing employee population downtown by race)
50% travel less than 10 miles to get to work
In 2020, downtown Seattle office rents fell by 6% and vacancy increased from 5.4% to 8.7%. Much of the new vacancy was due to new construction as occupancy did not decrease. Rent growth is expected to be flat through 2021 before beginning to climb again the following year. The amount of occupied office space downtown is expected to continue to increase annually but at a much lower rate than was seen over the past few years. Including new construction, vacancy is expected to top out at 11.5% in the third quarter of 2021 and remain above 10% until 2024.
COVID-19 Impacts Create Uncertainty for Downtown’s Office Market
Despite the pandemic, investors continue to show confidence in the Seattle market. Lab space is in high demand. In fact, the vacancy rate for Seattle lab space at the end of 2020 was less than 1%, according to CBRE. The area also saw some of the highest-priced office deals in the nation since the start of the pandemic, including the $652 million sale of 2+U (Qualtrics Tower). This was the highest price for a single-asset property in the Puget Sound region and the seventh-largest in the U.S.
Source: CoStar
Denny Triangle
Change in Occupied Square Feet of Office Space Among peer downtowns, year-over-year change, 2020
Denver -2.7%
Portland -2.8%
Salt Lake City -2.5%
Peer-city Comparisons Occupied office space downtown grew only slightly in 2020, yet our center city experienced one of the best performances among peer downtowns. San Francisco fared the worst, with downtown occupancy decreasing 7.2%.
Source: CoStar. The cities were selected based on similarities to Seattle that make them competitive markets (for example, strong growth in tech talent). For consistency, CoStar’s “multifamily” downtown boundary was used for each city except for Seattle, where DSA’s boundary was used. Note that these are preliminary numbers.
Office Vacancy Downtown Seattle (year-end data)
Office Rent Downtown Seattle (year-end data)
$0
$20
$10
$30
$40
$50
0%
5%
10%
15%
*2021-2025 show forecast data
Change in Occupied Office Space Net change in occupied square feet in downtown Seattle each year
0.9 M
Office Space Square Footage by Status and Completion Year
63,000
2016
2019
Predevelopment
The numbers next to each bar indicate the total square feet of office space completed or scheduled for completion each year. Please note that those in predevelopment have uncertain timelines and do not yet have land-use or building permits.
Completed
Demolition, Shoring and Excavation
With an inventory of 79 million square feet of office space, downtown supports a dynamic economy. This sector has experienced a net gain of 17 million square feet since 2010. This has expanded the downtown office inventory by 27% over that period.
Currently, there are 3.1 million square feet of office space under construction downtown. This is about on par with the average over the past 10 years. Despite this new supply, downtown occupancy rose from 86% in 2010 to 91% by the end of 2020.
In addition to space under construction, there is more than a half-million square feet in demolition, shoring and excavation phases in preparation for future development. An additional 7.7 million square feet are in earlier stages of development (“land-use issued” and “predevelopment” phases) and do not yet have building permits.
Source: DSA 2020 Year-end Development Guide
Downtown Office Construction
The past decade was one of incredible growth in the residential sector. Approximately 45% of apartment units downtown were built since 2010 and yet vacancy was at a record low of 5% by the end of 2019. High demand drove rent increases faster in Seattle than in most U.S. cities, though this was tempered somewhat by unprecedented residential construction bringing new supply to the market.
In downtown, there are some signs of residential demand slowing down. For the first time since at least 2000*,
A Hot Housing Market Cools
the center city had fewer occupied apartments at year-end than at the start. Downtown lost 1,594 apartment households in 2020, with vacancy rising to 10.4%. Suburban markets saw a modest increase in occupancy and a slight increase in vacancy, mostly driven by new construction.
The condo market downtown was also not immune to a downturn. Through the summer of 2020, downtown experienced increases in the number of listings and decreases in closed sales and prices while other areas of the Puget Sound saw
Annual Change in Occupied Apartment Units Downtown Seattle
2000 2005 2010 2015 2020 2025
Sources: Costar, Northwest Multiple Listing Service
0
2,000
-2,000
4,000
6,000
decreased supply and increased demand and prices.
One outcome of lower rents and condo prices downtown is that they may become more affordable and therefore accessible to a more diverse spectrum of individuals. Younger artists, middle-income families and working-class households may find downtown more affordable in the wake of geographic shifts caused by COVID-19.
*2000 is as far back as this data set goes.
Actual Forecast
The numbers next to each bar indicate the total units completed or scheduled for completion that year. Please note that those in predevelopment have uncertain timelines and do not yet have land-use or building permits.
Residential Units by Current Status and Delivery Year
3,292
2016
2019
Demolition, Shoring and Excavation
Percentage of Units Vacant at the End of Each Year Downtown Seattle
0%
5%
10%
15%
20%
Source: CoStarActual Forecast
Peer-city Comparisons In 2020, downtown Seattle’s apartment rents decreased more than all of our peer downtowns except for Boston. All but Atlanta and Vancouver, British Columbia saw decreasing rents.
In terms of the change in the number of occupied units, roughly half of the downtowns saw decreases and half increases. The number of occupied units in downtown Seattle decreased 3.1%. Downtown San Francisco fared the worst, with a 5.4% decrease in occupied units.
Year-over-year Change in Apartment Rents 2019-2020 Percentage change in rent among peer downtowns
-9.4%
-2.1%
Atlanta
2.4%
4.6%
With an incredible natural backdrop, outstanding visitor amenities and an array of things to see and do, Seattle has long been the Northwest’s leading destination for tourists and conventioneers. The loss of this business due to COVID-19 has had a devastating economic impact. Before the pandemic, 15 million people visited Pike Place Market each year and 12 million visited the Seattle Center, where more than 5,000 events were held annually. Locals, along with visitors, have enjoyed downtown’s unmatched entertainment options, including art galleries, performances, museums, professional sporting events and myriad dining options.
Hotels Downtown is the center of the visitor industry for Seattle, with 37% of the Airbnb listings in the city, 78% of the hotel rooms and more than 80% of the hotel revenue. However, due to COVID-19 impacts, hotel revenue was down more than 90% nearly every day through the spring and summer of 2020. As many as 29 hotels closed at least temporarily. By June, the number of units listed on Airbnb in Seattle had decreased by 26% year-over-year.
The hotel sector is expected to take a long time to recover from the downturn, not returning to 2019 levels until 2023 or later.
A Visitor Industry Devastated by COVID-19
Sources: Airbnb, Pike Place Market, Seattle Center, Visit Seattle and Smith Travel Research
Ben Paris, The State Hotel
Hotel Revenue Downtown Seattle
0M
2M
1M
3M
4M
5M
$0M
$250M
$500M
$750M
$1B
2012 2014 2016 2018 2020
Downtown Hotel Occupancy Compared to Peer Cities July 2019 vs. 2020
Sources: Visit Seattle and Smith Travel Research. Cities selected from those that Visit Seattle considers Seattle’s peer downtowns.
San Francisco
Thompson Seattle, West Edge
Jobs at downtown hotels decreased by approximately 4,000 in the second quarter of 2020 due to furloughs and layoffs. This represents a loss equivalent to almost half the estimated 2019 hotel employment downtown.
Source: Puget Sound Regional Council. Note that the 2020 figure was estimated using data from PSRC and the Washington State Employment Security Department. While PSRC figures are for March of each year, we estimated 2020 using data from April to better capture the effects of COVID-19. The 2013 jobs data were unavailable and were therefore interpolated.
Hotel Jobs Downtown Seattle
citizenM, South Lake Union
Cruise Ships Seattle serves as the leading U.S. West Coast port for Alaska cruises. The Port of Seattle has hosted more than 1 million passengers annually since 2017* and is homeport to the largest ships on the West Coast, including Norwegian Bliss, Norwegian Encore and Ovation of the Seas. The major cruise lines serving Seattle include Carnival, Celebrity, Holland America, Norwegian Cruise Line, Oceania, Princess and Royal Caribbean.
Cruise Passengers Port of Seattle
961,698
885,949
870,994
823,780
898,032
983,539
1,071,594
1,210,722
1,114,888
934,900
2016
2019
2015
2014
2013
2018
2012
2011
2010
2017
2020 0
The 2020 Seattle cruise season was canceled with a loss of roughly $900 million in economic impact and 5,500 jobs.
Source: Port of Seattle
*Due to the COVID-19 pandemic, all 2020 sailings were canceled.
C re
d it
The Washington State Convention Center has been a powerful economic driver for our community. Since its opening in 1988, people from outside Washington have spent over $6.9 billion locally when coming to WSCC events. In 2019, this spending added an average of $986,062 per day to Washington’s economy and directly generated some 3,616 jobs (full-time equivalent).
At least 76 future citywide conventions previously booked at the Washington State Convention Center have canceled, resulting in a loss of at least $512 million in economic impact. Cancellations represent a definite loss to the region because of Seattle’s lack of available future dates and the fact that we have a smaller convention center compared to other major cities.
Convention Attendance Washington State Convention Center
390,000
420,000
404,000
420,000
380,000
380,000
383,000
390,000
400,000
95,000
422,000
2016
2019
2015
2014
2013
2018
2020*
2012
2011
2010
2017
Opening in 2022, WSCC’s Summit building will be transformative, adding an estimated $260 million in annual visitor spending and 3,900 direct and indirect jobs when fully operational. The Addition is also supporting as many as 6,000 union jobs during construction, including an estimated 900 apprentices. Located just one block northeast of the existing Arch building, Summit will double the capacity of the center’s offerings.
Looking Ahead: The Washington State Convention Center Addition
*2020 figure is an unofficial estimate. Sources: Pine Street Group, Washington State Convention Center
Washington State Convention Center Addition, Summit building
In conjunction with the State of Downtown Economic Report, the Downtown Seattle Association publishes a development guide each year to summarize construction and investment activity downtown. These statistics are a measure of optimism and confidence in the future of the downtown economy.
COVID-19 has so far affected downtown construction activity less than many other industries. There were fewer
In 2020, downtown developers completed 21 projects, including: 2,020 560 1.2M
As of December 2020, 54 projects were under construction, including: 8,840 369 3.1M
Data Snapshot
Downtown Development
new residential units new hotel rooms square feet of new
office space
new projects announced in 2020 and some were canceled or put on hold. Safety measures also delayed some projects underway. However, Seattle remains one of the top markets in the nation for new construction, once again outpacing all other U.S. cities in Rider Levett Bucknall’s crane index (July 2020).
Source: DSA 2020 Year-end Development Guide
C re
d it
Transportation & Access
Credit: @transit_culturalism
COVID-19 Had a Profound Impact on Transportation in 2020
Seattle was the first major metro area in the nation impacted by COVID-19. On March 5, King County recommended that anyone who could work from home do so until at least the end of that month. This led to a massive contraction in the number of people moving around the city. When Washington Gov. Jay Inslee issued a statewide “Stay Home, Stay Healthy” order on March 23, Seattleites were already driving 45% less, taking transit 81% less frequently and walking 41% less, according to the Apple Mobility Index (which uses a Jan. 13, 2020 baseline). When Seattleites emerged from their homes again, driving was the dominant mode of travel. By December 2020, transit ridership remained down nearly 70% compared to the baseline, while driving and walking were near pre-pandemic levels.
As the employment center of the region, it is essential to have a variety of options to get to, through and around downtown. Safe and reliable transportation is a priority for DSA. Before COVID-19, Seattle had some of the highest transit demand in the nation. COVID-19, however, has impacted how people move about the city. Preferences for transit and shared mobility options have given way to a desire for personal space. Between diminished transit service, social-distancing requirements limiting capacity, and a large share of the population expressing apprehension about riding transit, bringing the downtown workforce back to 2019 levels of ridership will be a challenge. Shifting to driving is simply not an option and is not consistent with Seattle’s climate goals. What is needed for continued economic prosperity for downtown and the region is a smart, forward-looking, multi-pronged mobility strategy.
In the section that follows, we look at how transportation to and around downtown has changed over the past year and explore some of the challenges and opportunities ahead.
-7%
48%
19%
Apple Mobility Index Average percent change from Jan. 13, 2020
DRIVING WALKINGTRANSIT
Source: Apple Mobility Index. Data indexed to where Jan. 13 = 100. Based on phone searches for directions by mode of travel. Note that this data is particular to users of Apple products and therefore may not be representative of the entire population.
2020 Q2
2020 Q4
2020 Q3
TRANSPORTATION & ACCESS / 27STATE OF DOWNTOWN 2021 ECONOMIC REPORT
In 2020, transit ridership, including ferries and long-distance rail, dropped 50% or more according to each agency’s data, but has started to increase again. Driving showed the fastest return to normal by the end of the year, with vehicular traffic on I-5 just north and south of downtown down only 16%. According to the Seattle Department of Transportation, vehicle traffic counts on downtown surface streets are starting to tick up again as well. Having been down approximately two-thirds from pre-COVID-19 levels in April and May, surface traffic was down roughly a third from 2019 levels toward the end of 2020.
Sources: Seattle Department of Transportation, Washington State Department of Transportation COVID-19 Multimodal Transportation System Performance Dashboard
Washington State Ferries (Downtown)
I-5 (Downtown)
-16% -16%
Many employees based downtown are currently working from home due to COVID-19. Cell phone data aggregated by Placer.ai showed that weekday daytime visits to the neighborhood by those who work downtown have consistently been down about 80% compared to pre- pandemic levels. In a Commute Seattle survey, 89% of employers said that some portion of their employees are working remotely, with nearly three-quarters saying that between 81% and 100% of their employees were doing so as of May 2020. In that same survey, 50% of employers anticipated a post-COVID-19 work culture where their employees would work from home at least a few times per week.
This is in line with national surveys of employers as well as employees. In a meta-analysis of several national office employee preference surveys, CoStar found that 21% of employees favor a fully remote work environment, 55% prefer partially remote and 25% prefer to work entirely at
A Shift Toward More Remote Work
Source: Commute Seattle
A few times a week
9%
41%
27%
9%
Questions asked:
Which best describes your organization’s remote work culture prior to COVID-19?
After COVID-19, what do you anticipate your organization’s remote work culture to be?
Pre-COVID-19
Post-COVID-19
the office after the pandemic is over. In addition to worker preferences and a shift in office culture, COVID-19-related school closures and lack of daycare options could keep employees from returning to their offices in the near term.
The current work-from-home period has some clear downsides and a mix of in-office and remote work is likely in the future. A study published by Cushman & Wakefield shows that not all people want to work from home and among those that do, most prefer a hybrid model. Working exclusively from home, office workers feel disconnected, and there are fewer opportunities, particularly among new hires who benefit from in-person mentoring when working in an office setting. Cushman & Wakefield’s research also showed that work-from-home scenarios are likely to have only a slight impact on office absorption as offices increase space per employee and utilize more square footage for flexible meeting spaces.
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In 2019, 74% of workers came downtown by some other means than driving alone. That number had been steadily rising for more
than a decade. The largest share (46%) came by transit.
How Workers Commuted Before COVID-19
Source: Commute Seattle 2019 Commuter Mode Split Survey. Note that this data does not include workers who live downtown but commute to locations outside downtown; nor does it include the SoDo neighborhood. Figures are based on those who begin work between 6–9 a.m. on weekdays.
Pre-COVID-19 Commute Choices Downtown Seattle workers
46%
26%
9%
6%
In the face of the pandemic and beyond, Seattle and the region are still actively investing in a world-class transportation system to meet the future needs of the city. As workers return to their offices, there must be viable options other than driving alone. Before COVID-19, nearly half of downtown employees took transit to work. Shifting even a quarter of these trips to cars is not a viable solution. Downtown has a limited supply of parking and roadways were already at capacity pre-COVID-19. The closure of the West Seattle Bridge due to structural issues has decreased road capacity further. Some city projects are getting pushed out into the future, such as the Center City Connector streetcar along First Avenue. Without additional resources to increase service levels and ensure riders have enough personal space, the system cannot sufficiently bring back downtown’s workforce.
When we move to a post-COVID-19 world, there may initially be trepidation around transit use. Other commuting options such as biking and walking can help fill the gaps.
Budget constraints may also limit the ability of transit agencies to provide adequate service as workers begin to return downtown. The 2021-22 King County budget noted that projected sales-tax revenues for Metro in 2021-2022
The Need to Invest in a Variety of Transportation Options
are approximately $200 million less than the pre-COVID-19 forecast. Sound Transit projects a revenue gap of $6.1 billion from 2020 through 2041.
There is some positive news. Light-rail stations opening in the University District, Roosevelt and Northgate will connect these neighborhoods to downtown as early as fall 2021. New stations in Bellevue will allow for a 24-minute ride from downtown Bellevue to Westlake Station by 2023 and commuters from Lynnwood will be able to access downtown by light rail starting in 2024. Also, while funding issues could cause some delay, the implementation of Sound Transit 3 is still on the horizon, with opportunities to create greater, long-term access across the region. Passed in 2016, ST3 is the region’s largest investment in our transportation future. It will dramatically increase connectivity to, through and within downtown. The levy will fund an additional 62 miles of light-rail lines, expand bus rapid transit, increase Sounder train capacity and add a second downtown transit tunnel to serve six new stations. In addition, 88% of Seattleites recently voted to fund 150,000 hours of transit service over the next six years through the Seattle Transportation Benefit District.
Credit: Sound Transit
Help your business get ready for the future of commuting. DSA partner Commute Seattle provides free consultations and resources to businesses on topics like transportation benefits, telework policies, carpool and vanpool programs and supporting active commutes. Visit commuteseattle.com to learn more and connect with their transportation specialists.
It is important to provide a variety of safe, reliable ways to travel. Long-term trends favor high transit usage. However, in the wake of the pandemic and with restricted road and transit capacity, other options must also be explored. This could include flexible remote-work options. Encouraging walking and biking by providing ample welcoming safe public spaces would also encourage the adoption of these alternatives. Spreading out the workday with staggered start times or compressed workweeks is another potential way of bringing workers back safely in the short term while transportation capacity is limited. In the long term, robust transit funding to sustain and grow Seattle’s transit service will help ensure a downtown and a region that are poised for recovery and continued investment.
URBAN EXPERIENCE / 32STATE OF DOWNTOWN 2021 ECONOMIC REPORT
Urban Experience
Downtown has a strong economic foundation. In recent years, the center city has seen growth and investments that position Seattle for resiliency. Downtowns are strong due to their density, access to public spaces and diversity of residents compared to car- centered neighborhoods. Downtown Seattle’s walkability and accessibility make it a place that a large cross-section of society can access and enjoy. To ensure the resilience of downtown and the region, these assets should be protected and built upon. Ongoing attention to affordability, public amenities and safety are critical.
Downtown is the center of Seattle’s cultural life. Before COVID-19, downtown saw more foot traffic, more park users and more tourists than anywhere else in the city. While the pandemic created a major economic setback, we are confident that downtown will remain an attractive place to visit, shop, live, work, play and invest.
In the section that follows, we look at what makes a vibrant urban experience and how downtown Seattle is performing against these metrics.
Holidays at Westlake Park
*Our downtown total population estimate from Esri was adjusted using residential occupancy data from CoStar to
account for changes due to COVID-19.
Source: Esri Community Analyst
$82,586
Downtown Demographics
Downtown Seattle has evolved into one of the most dynamic urban centers in the country. During the past decade, a prospering job market, a beautiful natural environment and vibrant shopping, arts, restaurant and cultural scenes attracted record numbers of new residents. While growth slowed in 2020 due to COVID-19-related factors, the downtown core is expected to remain an attractive place to live in the years to come. Today more than one in 10 Seattleites — 84,000 people — live in the center city.
The following is a snapshot of who makes downtown their home. Please note that all statistics on downtown population and households are estimates for July 1 of each year. Given the speed and severity of the COVID-19 crisis, the data inputs used for these estimates may not yet capture the full impact of the pandemic.
Who Lives Downtown?
Educational Achievement Among downtown Seattle residents, age 25+
While the city of Seattle ranks the highest in the nation for educational attainment, according to U.S. Census Bureau data, the downtown population scores even higher on education than the city or county.
More than 5,500 children under 18 live downtown. In the past decade, school- aged children (ages 5-17) increased by 168%. Downtown has the densest and fastest-growing child population in the city but, is the only neighborhood without its own public school.
Children Under 18 Downtown Seattle
2010
2020
966
2,022
1,252
Downtown has a larger share of low-income households and a lower share of high-income households compared to
Seattle or King County.
Difference in Share of Households by Income Downtown Seattle compared to King County
Households by Income Downtown Seattle
12.1%
6.2%
8.5%
12.7%
11.5%
17.7%
10.1%
14.8%
6.4%
Loss of Foot Traffic Means the Loss of Business COVID-19 led to the closure of many businesses downtown and across the region. In DSA’s Business Outlook Survey conducted in May and September, restaurants and retail were hit particularly hard and were more likely than those in most other industries to express concern about having to close locations or pay rent. These industries, along with arts, entertainment and hotels, also said it would take longer to bring employees back and become profitable than those in other industries represented in the survey.
COVID-19 Had a Profound Impact on the Urban Environment
*Note that this count refers to specific brick-and-mortar locations. Some of these businesses shifted to other models such as online and delivery and some may still have open locations downtown or elsewhere. While it’s assumed that the majority of these locations closed due to the
pandemic, there may be other reasons for business closures. DSA’s business closure tracking is not a complete inventory. Rather, it is primarily based on news reports, announcements by individual businesses, and listings and direct observation of spaces that have gone up for lease.
Business Closures • According to a study by Yelp, more than 4,500 businesses
in the Seattle Metro area had closed between March and April. By the end of August, that number was still over 3,000, with 59% being permanent.
• DSA has tracked more than 220 permanent street-level business location closures in Seattle in 2020, including more than 160 downtown alone.*
• Despite a decline in foot traffic downtown, roughly 90 businesses overcame all odds to open new storefronts in 2020.
Fifth & Pine
Creative Solutions in the Face of Crisis
Outdoor Seating Many restaurants added outdoor seating. Some brought shelters by way of tents, canopies or plexiglass. Others experimented with dining bubbles. In response to the impacts of COVID-19 on local businesses, the Seattle Department of Transportation has issued special permits allowing for expanded use of sidewalks and street space by restaurants. At the start of 2021, there were 61 downtown restaurants with these temporary outdoor seating permits. DSA’s Park Ambassadors spaced out tables and chairs for social distancing and added spacing indicators for food truck lines.
Economic recovery could be a two- or three-year time horizon, but actions can be taken now to sustain downtown’s treasured mix of amenities and ensure a thriving urban core. Support for small business is essential. Creative adaptation of shared public space is key to addressing the economic effects of the pandemic and impacts of social isolation. Also,
maintaining outreach, clean and safe services, which the DSA provides through the Metropolitan Improvement District, are a foundation for recovery and renewal.
Below are just a few of the creative responses that emerged in 2020.
Takeout and Delivery As COVID-19 impacted the ability to serve large groups of patrons with the same density, businesses and nonprofits shifted gears. Some restaurants enhanced delivery services and added take-out options and to-go windows for food and cocktails. Some offered products that were not previously part of their business model. And some began using their kitchens to make food for those in need.
Pike Place Market
Urban Art DSA helped coordinate corporate and private funding to hire artists and create many storefront murals on boarded-up buildings during business shutdowns. The murals added a touch of vibrancy, creativity and positivity and helped to deter graffiti and damage while stores were closed. With these shutdowns, there was more than an acre’s worth of plywood spread across the facades of businesses in the Pike-Pine corridor alone.
Through the work of DSA and others, numerous murals were created in downtown neighborhoods:
53+ Pioneer Square
39+ Retail Core
38+ Belltown Chinatown-ID
50+ Capitol Hill
Photo credit: Matt McDonald
Street art, downtown Seattle
Assuming that downtown followed the trends for King County, the center city lost an estimated $103 million in taxable retail sales in 2020 (a 5% drop for the year). We also estimate (based on county trends) that approximately 4,400 brick-and-mortar retail jobs were lost downtown in the second quarter, though some of those have come back. This was after downtown had seen a 5% increase in brick-and-mortar retail employment in 2019.
Sources: Esri, Opportunity Insights, Puget Sound Forecaster, Puget Sound Regional Council.
A Changing Retail Landscape
Actual Forecast
Downtown’s Retail Real Estate Downtown currently has 10.3 million square feet of retail space, with nearly a half million more under construction. After achieving a record low of 1.7% in 2019, downtown’s retail vacancy is estimated to have reached 2.5% by the end of 2020 and rent growth slowed to a halt.
2010 2015 2020 20252010 2015 2020 2025
Retail Rent Downtown Seattle
$0 0%
Peer-city Comparisons Seattle was about on par with other downtowns nationally for retail performance. Retail occupancy was either flat or down in all of these downtowns. Overall, they fared somewhat worse than their metro areas but, retail struggled at both the downtown and metro levels.
Change in Occupied Square Feet of Retail Space Among peer-city downtowns, year-over-year in 2020
-1.6%
-1.6%
0.0%
-1.8%
-0.1%
-2.0%
-1.0%
-0.3%
-2.1%
-0.4%
-0.8%
-1.2%
Chicago
Denver
Austin
Boston
Parts of the economy have already started to reopen with new protocols in place to ensure safety for workers and customers. Nevertheless, national polling and evidence from other areas that have reopened show that — regardless of the level of reopening — the pandemic will continue to have a depressing effect on the economy, particularly for sectors related to travel or in places where people congregate such as fitness centers, restaurants, hotels, sports, arts and entertainment venues.
Arts, Entertainment and Restaurant Industries Were Hit Hard in 2020
The Paramount Theatre
Food-Service Jobs Downtown Seattle
2010 2012 2014 2016 2018 2020
Economic Impacts to the Arts Nearly all arts organizations canceled programs due to COVID-19 and a majority called off annual fundraisers, a critical source of revenue for these organizations. ArtsFund surveyed its members in March 2020 and projected that Puget Sound-area arts organizations would see the following as a direct result of COVID-19:
Job Impacts While many of the jobs lost have already started coming back, COVID-19 shutdowns had a profound impact on these industries. There were approximately 13,700 job losses among downtown food-service workers in the second quarter of 2020. This is the equivalent of approximately 60% of the total food- service jobs downtown in 2019. Center city jobs in arts, entertainment and recreation industries decreased by roughly 6,300 in the second quarter, the equivalent of approximately three-quarters of the employment in these industries downtown in 2019.
Source: Puget Sound Regional Council. Note that the 2020 figure was estimated using data from PSRC and the Washington State Employment Security Department. While PSRC figures are for March of each year, we estimated 2020 using data from April to better capture the effects of COVID-19. The 2013 jobs data were unavailable and were therefore interpolated.
Arts, Entertainment and Recreation Jobs Downtown Seattle
0
2,500
5,000
7,500
10,000
$135M5,000 in lost revenue in 2020workers furloughed
or laid off
AS MUCH ASNEARLY
Violent Crime in Downtown Seattle Includes aggravated assault, homicide, rape and robbery
Before downtown can return to viability, some key challenges must be addressed. Public spaces must feel accessible, safe and welcoming to everyone. Before COVID-19 and the civil unrest triggered by the murders of George Floyd, Breonna Taylor and others, the issue of homelessness nearly always topped the list of concerns in downtown stakeholder surveys, along with transportation and housing affordability. Recently, there has been a notable increase in the number of people citing concerns about public safety as well.
COVID-19 Heightened Challenges Facing Downtown’s Urban Environment
A Safe Urban Environment for Everyone Seattle’s criminal-justice and behavioral-health systems are fractured and fail to protect all Seattleites, deter crime, support, or help those who become trapped in a cycle of crime, arrest and release. In the face of a public-health crisis, this puts downtown small businesses in further jeopardy. Concerns over personal safety are compounding concerns about returning to the office. Citywide and downtown polling shows that Seattleites believe there is an urgent need to help people struggling in crisis on our streets. In this environment, downtown is in a fragile state and without action, this could have long-term impacts.
Without a cohesive solution, downtown has seen an increase in reports of violence, theft, vandalism and individuals in crisis. All of these make the neighborhood feel less safe. The increase in violent crime is particularly disturbing. Between 2015 and 2020, these crimes increased by 23%.
As downtown reckons with the current health and economic crisis and continued social injustice, our city leaders must come together to forge a way that allows Seattle to be a model for cities around the world by becoming a safe and welcoming place for everyone and an attractive destination for visitors, residents and investment.
Source: City of Seattle
A January 2020 point-in-time count conducted by All Home King County tallied 11,751 individuals experiencing homelessness in King County — a 5% increase over 2019. Roughly half of those were sleeping outside, mostly within the city of Seattle.
The need has only gotten more urgent in the face of a public-health crisis. As COVID-19 outbreaks created fear of sleeping in shelters and capacity was limited due to social-distancing requirements, the number of tents throughout downtown’s neighborhoods multiplied dramatically. By the end of 2020, the number of tents downtown had increased to more than three times the highest previous record.
As a region, we must address our growing homelessness crisis. The city of Seattle and King County are moving forward together on plans to merge operations and policy- making for homelessness services. This is a much-needed step toward housing the incredible number of people experiencing homelessness in Seattle and King County. However, this work has only begun. We can’t lose focus on what’s happening downtown, where hundreds sleep outside on any given night. A sustainable solution requires working together on many fronts. This includes increasing coordination, diversion and prevention, state and regional investment, and increased housing supply.
Seattle Continues to Face a Growing Homeless Crisis
DSA Outreach Team near Western Avenue
A Vision for Downtown For downtown Seattle and urban centers across the country, 2020 proved to be a very challenging year. But we believe our future is bright. As we rebuild, we have the opportunity to double down on what makes Seattle strong and reinvent what needs improvement. By investing in our neighborhoods, businesses, parks and infrastructure and creating a downtown that is truly everyone’s neighborhood, downtown will emerge even more resilient, more inclusive and more dynamic than before.
Getting Our City Back to Work Downtown provides more than half of the city’s jobs and business taxes. City operations and municipal services depend on its economic recovery. Over the past year, more than 160 downtown businesses were forced to close permanently and our tourism and hospitality industries ground to a near halt. A successful recovery means supporting business owners and employers as they get back on their feet. It means ensuring a welcoming center city for employees, residents and visitors. And it means a downtown that is clean, safe, well-maintained and with a stable, predictable business climate.
Connecting Our Region A successful recovery is dependent on ensuring that people have many ways to move around our region. As more people are vaccinated and it becomes safe to gather in greater numbers, we must ensure our transit network keeps pace and can meet demand. Last year, Seattleites overwhelmingly voted to bring 150,000 transit service hours back to our streets, and we’ll carry forward generational investments in streetcar and light- rail networks. In the coming years, Sound Transit 3 will add six new light-rail stations in downtown and connect downtown to new corners of our region.
Innovating a Better Crisis Response The COVID-19 pandemic further challenged our capacity to serve Seattle’s most vulnerable and provide immediate services to people in need. The urgency of the crisis gave rise to programs that demonstrated a new, successful model for serving the unsheltered in hotels rather than crowded, congregate shelters. King County laid plans to house thousands of the area’s chronically homeless by purchasing available hotels and assisted-living facilities. But with a growing unsheltered population, we must do more. We must make good on our values as a compassionate city by streamlining resources and innovating new strategies to efficiently deliver additional emergency housing capacity, new crisis response programs and evidence-based treatment services.
Fulfilling Our Promise for a Safe and Just Downtown
Violent crime downtown increased 23% between 2015 and 2020, and vandalism during the pandemic crippled businesses with already razor-thin margins. Meanwhile, Seattleites — like peers across the country — are demanding substantive changes to policing strategies and greater accountability. Identifying appropriate and effective solutions will require intentional planning, a deliberate and inclusive public process involving the business community, and an evidence-based approach.
Art Installation: Holding Hope
Fostering a Vibrant Public Realm This past year, we saw the advancement of transformative public projects, including the waterfront redevelopment and the opening of the city’s newest park, Pier 62. Climate Pledge Arena moved closer to completion, building anticipation for the games, concerts and events that will delight locals and attract new visitors to downtown. As we build toward recovery, we must recommit to the care and maintenance of our parks and public spaces and plant the seeds for more public and private investment to ensure Seattle remains a desirable place to live, work, visit and do business for years to come.
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