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June 28, 2018
Just about every analyst agrees that the Northwest is one of the fastest growing areas in the nation.
Not surprisingly, the region’s demand for newer housing and office space is greater than the available inventory. With the increase in growth, and space at a minimum, comes the challenge to find affordable space. And so enters Tacoma, right in the heart of the Northwest.
Tacoma is reaping the benefits of an economic boom that is spilling over from Seattle/King County. Just 20 miles south, jobs are shifting, and businesses are heavily investing in the Tacoma region.
As a key investor in the region, The Rush Companies realizes Tacoma’s development boom first hand.
“It’s clear to us that the Northwest region’s space shortages, the need for affordable land, homes and offices, and an extremely accommodating city infrastructure are elements that combine for the ‘perfect storm,’” says Matt Smith, president of The Rush Companies. “The players in Tacoma do an excellent job capitalizing on these opportunities, making Tacoma an ideal place for Rush to invest in.”
If anyone would know how these forces have impacted Tacoma it would be The Rush Companies. Rush is the South Sound’s only vertically integrated real estate firm (five divisions include Development, Commercial, Residential, Properties and Capital). Because it plays in so many areas of Tacoma’s development, Rush has a unique perspective on the benefits of doing business in Tacoma.
With a lower cost of living and working compared to its neighbors to the north, Smith notes, “Tacoma is seeing workforce spill over from Seattle, especially as King County has become pricey and traffic-jammed. For many looking for relief, and strong investments, we are starting to see a significant gain of momentum this way.”
Mixed-use projects for Rush have seen record lease-up in Tacoma. Proctor Station (151 apartments with first floor retail) in the Proctor District was fully leased in eight months. Down the street, Madison25 is under construction and is already 10 percent leased.
“We have been extremely successful with projects in Tacoma,” says Karen Fairall, Rush’s director of brokerage services. “Our reputation helps us keep commercial property spaces at higher occupancies than most others. First quarter of 2018 alone had 98 percent occupancy for our buildings in Tacoma, higher than average for this area.”
Single-family housing is also moving fast, according to Scott Walker, vice president of Rush Residential.
“When people from King County discover the quality and size of a home they can get for their money in Tacoma, they’re quickly willing to manage a 20-mile commute,” says Walker. “Our new home communities in the Tacoma area are selling out faster than our projections, which is a good problem to have.”
Tacoma’s lower land costs also help keep project costs down as construction material costs rise. Developers and business owners are taking notice, and available land moves quickly.
“As a developer and commercial contractor, we’re always looking for the best return on our investment,” says Chris Dewald, vice president of Rush Development. “Since land in the Tacoma region is significantly less expensive than King County, we make purchase decisions that enable our projects to have lower overall costs.
Lower costs in a rising market often means we can more effectively deliver projects with less financial uncertainty.”
One shouldn’t forget about the Port of Tacoma. As one of the largest container ports in North America, it offers access unlike few other metropolitan areas. With an abundance of land zoned for industrial use, it’s this region of Tacoma that is specifically poised for growth.
Tacoma has taken advantage and been smart in its investments. Tacoma’s continued investment in multiple public transportation options (light rail, train, Pierce Transit) easily integrates the city with surrounding areas. This investment offers an advantage and smart foresight by Tacoma managers.
The city of Tacoma also focuses on being accommodating and solution-based. Kim Orr, Rush land development manager, says, “The city is extremely supportive of responsible development. They are always responsive and helpful when it comes to finding sensible solutions to overcome challenges.”
Chris Rawlins, Rush commercial operations director agrees. “You can be sure this has helped our projects move forward at a quicker pace,” he says.
Tacoma’s property tax exemption program for multifamily housing is another financial benefit, and it doesn’t just apply to low-income projects. An additional financial factor is that Tacoma has mature utility providers who offer lower fees and faster response times than most in King County.
The Urban Land Institute may coin it best when it refers to Tacoma as one of the nation’s top regions to watch: “As the lower-cost alternative to Seattle and King County, employers can take advantage of the lower real estate and labor costs while still serving greater Seattle and the Pacific Northwest region.”
Considering the future, as well as the sprawl outside of King County, there’s plenty of reason to believe that Tacoma will continue its upward growth trend.
Becky Susan handles marketing at The Rush Companies in Gig Harbor.