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Federal Way's economy picks up slowly but surely
For the first time in a while, economic development director Patrick Doherty said he had good news to report in regards to the city and regional economy.
Doherty gave a brief economic update at the Federal Way City Council's Jan. 15 meeting.
"While the Great Recession technically ended in 2009, I think we all know that recovery from that theoretical point has been slow," Doherty said. "The Puget Sound region and Federal Way are indeed recovering, and in fact, at a faster pace than other parts of the country."
One of the improvements for the region and city's economy has come in the gradual decrease in the unemployment numbers. Reaching a high of 9.7 percent in 2009, by the end of 2012, unemployment in the region had been reduced to 6.5 percent. The nationwide unemployment rate was 7.8 percent at the end of 2012, down from a high of 10.2 percent in 2009, according to the Bureau of Labor Statistics.
Drawing on numbers from the Economic Development Council of Seattle and King County, Doherty indicated that group's forecasts show a brighter picture for 2013 and beyond.
"You'll see employment will pick up this year. Personal income will also grow. The consumer price index, in other words, inflation, will stay relatively low," he said. "You'll notice that housing permits, those saw a huge spike in 2012…and that will continue to be robust."
The spike Doherty referenced was a significant jump in housing permits between 2011 and 2012, going from an 11.9 percent change in 2011 to a 50.2 percent change last year.
Office, retail and housing
For Federal Way specific metrics, Doherty reviewed the office sector, the retail sector and the housing sector.
For the office sector, Doherty said things are going well.
"At it's nadir in 2009, the Federal Way office market saw an approximately 43 percent vacancy rate, which is obviously quite high," he said. "At the end of 2012, the local vacancy rate is 28 percent. That, by itself, is not a number we would put up and say, 'Isn't that great?' But we're going in the right direction, and all the brokers tell me there are more deals in the making out there, and deals sort of beget deals."
Since 2009, companies have taken up 315,000 square feet of office space, which would equate to about four City Hall buildings, Doherty said. That leaves about 589,000 square feet of vacant office space remaining in Federal Way out of a total of 2.1 million available square feet.
The economic development director credited places like the ACS/Xerox call center that inhabits the former DeVry building, and the recent addition of the DaVita kidney dialysis company, as helping put dents in that vacancy figure.
"That building (that DaVita is in) is also going to be completely filled out by a physicians group," he added.
For retail, Doherty said the numbers aren't as clear cut as the office sector, but that Federal Way is experiencing about the same vacancy rate as the rest of the Puget Sound. CoStar.com reported in October 2012 that the region's retail vacancy was 5.5 percent, and that the submarket of South King County (which includes Federal Way) had a retail vacancy rate above 7 percent.
However, Doherty said that those numbers will improve in the near future, as he hinted at a new development opening next year to The Commons Mall. The Mirror has learned the new retailer is a Kohl's department store. A public announcement is expected in the spring.
For housing, things are definitely on the upswing, Doherty said, with something of a mini-boom happening for multi-family housing projects.
"Multi-family home permitting has soared over any year in the past 10 years, with approximately 600 units currently contemplated, and another major project on the horizon," he said. "Another 300 or 400 beyond that, that we're talking to developers about. This is a huge increase in residential housing stock."
According to the city's statistics, housing permitting applications were up 19.4 percent between 2011 and 2012, with 3,490 permits applied for in 2011, compared to 4,166 in 2012.
Actual permits issued increased by 21.9 percent between 2011 and 2012, jumping to 3,115 last year from 2,556 in 2011. Along with that, Doherty indicated that the "value" of permits increased between the years because more actual full-scale projects are taking place now, as opposed to smaller scale projects in previous years.