Seattle-Tacoma Retail Market Report

Dwindling pipeline enables fundamental gains. Seattle-Tacoma enters the year tied with Raleigh for the lowest vacancy rate among major U.S. markets. Given the current demand-to-supply conditions, further compression could take place during 2023. A diversifying economy is supporting above-average in-migration to the Puget Sound, with the metro projected to welcome nearly 30,000 new residents in 2023. Additionally, metro hiring will continue amid nationwide job market uncertainty, helping boost the median household income to nearly $110,000 per year, fueled by a pace of wage growth that exceeds the national benchmark. Rising incomes, paired with a steadily growing consumer base, will reinforce consumption in a year when many operators expect to see a slowdown in discretionary spending. As such, these factors should encourage vendor expansions, stimulating demand for available retail space. Most of these businesses will comb through the metro’s existing vacant stock, as a historically-low delivery volume is slated for 2023. Sustained space demand and meager supply pressure will facilitate rent acceleration during the coming quarters, while retaining nationally-tight availability.