December 11, 2015

As downtown booms will Sodo be next?

The population in and around downtown is expected to increase by more than 50 percent over the next 20 years, according to Gary Johnson, coordinator of Seattle's Center City Strategy.

Downtown and close-in neighborhoods today have about 67,000 residents, and Johnson said the city expects another 38,000 people will move into those areas by 2035, along with an additional 50,000 jobs. Johnson spoke at a Bisnow event Wednesday.

Construction downtown already is booming, with about 12,000 new housing units since 2010, and another 2,600 units expected to open next year. Some people wonder if developers have gone overboard.

Holly Gardner, a vice president at The Schuster Group and a panelist at the Bisnow event, is not one of those people: “We can't build fast enough to meet that (projected) demand.”

Limited land and population growth are part of what led to the rise of South Lake Union and then the Denny Triangle. The next logical place for downtown to expand could be Sodo, the panelists said.

But that may take a while. Most land south of the stadiums is zoned for industrial uses, and the Port of Seattle and other industrial groups want to keep it that way.

The city wants to improve the area around the stadiums while still protecting industrial uses to the south. City planners envision an entertainment-oriented district with more housing and retail in the area bounded by the stadiums, First and Fourth avenues south, and South Holgate Street. The City Council is expected to discuss amending the comprehensive plan next year to make this possible.

“The city believes that we can allow some better, healthier mix of uses in the stadium district without negatively impacting the industrial uses south of Holgate,” Johnson said.

If the city ever decides to move away from purely industrial zones south of the stadiums, the neighborhood could become a popular destination for office tenants, according to Laura Ford of Colliers International, who spoke on Thursday at a Commercial Real Estate Women Seattle & Sound panel about Sodo.

Industrial-style offices with high ceilings and exposed beams are hot right now for both tech companies and more traditional firms. Many companies would jump at the chance to rehab an old industrial space in Sodo, Ford said, because the neighborhood has character.

As Bay Area tech companies move into the Seattle area, they drive competition for office space and push up rents downtown. Tenants looking for less expensive space near downtown would be naturals for Sodo, Ford said.

Ford said Sodo is a great place for office tenants, now and in the future.

“I can see development happening there and it being the next place that we really see transformation into more urban and office,” she said, “but it's all dependent upon the zoning.”

One challenge to redeveloping Sodo is the land itself: a lot of it is fill. Jim Allison of Urbis Partners, who was on the Bisnow panel, said fill makes it hard to dig underground parking. But he said as self-driving cars and car-share companies like Uber and car2go expand, the need for parking could be reduced and that could open up the area to more office projects.

Equity Residential has 1,800 units under construction in Seattle, many of them near downtown. Bradley Karvasek of Equity Residential was on the Bisnow panel and said it may take awhile, but Sodo could be the next big thing in real estate.

“South Lake Union was a very industrial area just to the north of downtown, and Sodo is a very industrial area just to the south of downtown, so I think that eventually it will get there,” Karvasek said. “I don't know when it will get there, but eventually it seems like it's natural for that to happen.”