Condo Demand To "Outstrip Supply"

With the talk of all the new condos that are allegedly on their way to downtown, we've been wondering where all the demand will come from to fill them. Here are three possible answers:

Suddenly, a proliferation of new high-rise residential tower projects is on the books, in for permits, or under construction. In downtown Seattle, there are 13 projects already under construction, with another 49 proposed. If all of these projects proceed to construction, over 8,000 new residential units will be built by 2010 in the most rapid expansion of high-density development in the history of our city. It is anticipated that this number could easily grow to 10,000 new units as additional projects are queued up to meet continued demand.

The question that many are asking is: Will there be enough people moving into downtown to fill all of these towers? According to local economist Matthew Gardener, the market could readily absorb up to 2,500 new units per year. Based on a current assessment of when projects are slated for occupancy, the market will have difficulty providing this supply for the next couple of years because the typical high-rise tower takes three to four years to design and build.

Three significant trends will bring people to live in the urban center, and help maintain strong demand for downtown living:

1) Restrictive land-use rules

Land is scarce — what little land is left is comprised largely of farmland, wetlands or critical areas that need to be preserved. Growth management and jurisdictional planning restrictions on suburban development -- in combination with a push for sustainable and responsible growth — is forcing high-density development in the urban center of Puget Sound where mature infrastructure is already built. Because fewer units will be built in the suburbs, demand for in-city living will escalate.

2) Road rage

With gas about $3 a gallon and traffic getting more congested every day, many people are questioning a lifestyle that keeps them on the road for up to 12 hours a week. Free time is precious. The ability to live, work and play in an urban setting that allows a walking commute has a special appeal to many individuals contemplating a move back into the urban center.

3) Seeking new life-styles

Many people are tired of the frenetic pace of modern life and are seeking a new lifestyle that is less stressful. People are seeking calm from the storm; a place of refuge that is connected to something greater but that also affords privacy and security. Living in the city affords a more carefree, pedestrian lifestyle that is less complex and more enjoyable. Downsizing is not a fad, it is a major trend as people look to simplify their lives, and as boomers empty the nest. People are also buying second or third homes to live part-time in the city.

Maybe it's just me, but I don't see how forking over half a million or more for a tiny box of a home downtown is the gateway to a "lifestyle that is less stressful." The whole article is very pie-in-the-sky, so take from it what you will.

(Blaine Weber, Daily Journal of Commerce, 06.29.2006)