United States -  Seattle

Overview:

Known as the Emerald City, Seattle is the hub for the greater Puget Sound region and home to corporate giants like Microsoft, Starbucks, Amazon.com, Nordstrom, Expedia.com, and Costco, among others. Much of the growth surrounding Amazon, a strong tourism and convention market, and negligible levels of new supply have contributed to accelerated levels of value growth since 2012. The Seattle lodging market continues to perform extremely well, with market-wide occupancies approaching 80% and average rates increasing at near double-digit figures. During the summer months of June, July, and August 2015, hotels within the city’s Downtown core registered occupancy levels above 90%, and annual occupancies surpassed historical peaks.

Several hotel projects have either recently opened, are currently under construction, or are in planning stages; however, with the exception of R.C. Hedreen’s 1,264-room convention hotel, most of these proposed properties represent small to mid-sized hotels that will be geared toward commercial and leisure travelers. Additionally, the planned expansion to the Washington State Convention Center (WSCC) is scheduled for a mid-year 2017 groundbreaking and 2020 opening. Seattle has missed out on a significant amount of group meetings in recent years, owing to capacity constraints at both the convention center and downtown hotels, and the planned expansion is expected to add a substantial amount of hotel demand to the market in the long run. Other large development projects, particularly the expansion of Amazon’s global headquarters in the South Lake Union neighborhood, and a slew of office and residential projects are underway. Reportedly, the Amazon expansion will total more than $1 billion and add 12,000 new jobs. With strong fundamentals in place, values are forecast to continue on an upward trajectory; however, the addition of new hotel supply is forecast to temporarily moderate growth levels in 2018 and 2019 while the WSCC is expanded.

Transaction activity in the Puget Sound area has not been especially voluminous, as owners continue to take advantage of strong profit margins and value growth. Nonetheless, investor interest remains strong as ever in the Seattle market, as evidenced by the recent sale of the Hotel 1000 in January 2016, which sold for over $685,000 per room, representing the highest per-room purchase price in the city's history and a more than 30% increase over the previous sale price 18 months earlier. As values reach and exceed prior peak levels, likely to occur in 2016, transaction activity is expected to increase.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Seattle United States
Previous Year -1% (61 of 71) +1% (49 of 71)
Growth in 2017 +2% (20 of 71) +2% (36 of 71)
Growth in next 3 years +8% (47 of 71) +10% (36 of 71)

Change In Value For Market:

Seattle RevPar % Change

For more information, please contact:

Aaron Solaimani
asolaimani@hvs.com
  • +1 425 761-1699 (w)
Kasia Russell, MAI
krussell@hvs.com
  • +1 970 227-7799 (w)
Desiree Flanary, MAI
dflanary@hvs.com
  • +1 970 381-9794 (w)