IRR-Seattle Mid-Year Viewpoint 2015 Local Market Report - Lodging
The Seattle lodging market continues to perform well above the national average. Hotel supply is constrained due to limited well-located sites for new development, and demand is well diversified, with substantial corporate, convention, leisure, and international segments. For the first time since the late 1980s, downtown Seattle hotel occupancy rates have exceeded 80 percent. Spurred by tight supply and rising room rates, 18 hotels are currently under construction in the Seattle/Everett/Tacoma area and 30 additional projects are proposed.
The biggest demand generator in downtown Seattle is the expansion of major employers. Amazon currently has 5 million square feet of real estate and according to its facilities director plans to have 10 million square feet within downtown over the next 5-years that could support more than 70,000 employees.
Downtown Seattle has about 13,000 hotel rooms; 8 projects currently under construction plus 17 more in planning that will add 6,200 more rooms. Seattle-based Touchstone Corp. was the first out of the ground with construction of a new 222-room Hilton Garden Inn to be named Hill7, together with a 300,000-square-foot office in an 11 story building at Stewart and Boren. The hotel will open in 2015. As additions to the supply increase competition, occupancy rates could begin softening in 2017.
Significant investor demand for hotel investments is evidenced by the February 2015 sale of the 151 room Roosevelt Hotel to NBP Capital and Provenance Hotels. Located at Seventh and Pine in downtown Seattle, the sale price was $37 million, or about $245,000 per room. This is an older property and is proximate to the Washington State Convention Center. In addition, the 72 room La Quinta in downtown Seattle and the 91 room Heathman in downtown Kirkland have already sold in 2015 within a range of $180,500 to $227,000 per room.
With strong growth in technology employment (led by Amazon.com) and its position as an international gateway city, metro Seattle remains a highly desirable market for hotel investors. The outlook for the Seattle hotel market remains positive moving forward.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.