2. Market Analysis

Employment Trends

According to the Puget Sound Regional Council (PSRC), in 2010, the Pioneer Square District had an estimated 14,729 jobs mostly concentrated in the services and government sectors. In 2022, the District had an estimated 14,612 jobs1 primarily concentrated in the services sector.

Between 2010 and 2022, The Pioneer Square District had relatively stable employment totals but saw a shift in the distribution of employment by industry. Most notably, this shift in employment saw an increase of jobs in the services sector, and a large decrease of employment in the government sector. These major shifts in employment are somewhat related to the COVID-19 pandemic, and other changes in the region.

Employment and Demand for Commercial Space

The services employment is a broad sector that includes a wide range of subindustries; these include healthcare and social assistance services, accommodation and food services, professional and business services, arts, entertainment, and recreation.

When the services employment sector grows, there is typically an increase in demand for commercial space as companies in healthcare and professional services often require office space to operate and have their employees work. Retail and food services fill retail space to support the increase in office-based employees. However, the COVID-19 pandemic has dampened this demand with a higher share of office-based employees working from home, a slow return to the office, and the impact of reduced demand for retail and food services.

Given these trends, it is certain that office vacancies will continue to rise as some current office leases expire through 2025 and employers shift their office needs in an environment where hybrid work is here to stay.

Recent conversations with stakeholders and real estate professionals indicate a shift in the preference of the type of office space that businesses are gravitating toward post-pandemic.

As more companies bring their employees back to work, the demand for highquality office space has become a key priority. Class A office spaces are in the highest demand as businesses want their employees to work in great office spaces with the latest amenities as a way to entice employees to return to the office. This trend is causing class B and C properties to struggle, and landlords may need to consider alternative property uses or make upgrades and renovations to meet the needs of potential tenants. Despite this trend, many Pioneer Square stakeholders anticipate continued demand for cost-conscious office tenants who seek more affordable Class C office space in older buildings in Pioneer Square.

These trends indicate that the Pioneer Square District could take advantage of these changing trends to help accommodate new and returning office tenants to the area as businesses start to get clarity around their office-space needs in a post-pandemic Seattle.

1 Estimate number of jobs based on census tract approximation to Pioneer Square and PSRC data

Visitor and Employee Foot Traffic

Before the pandemic, over 200,0002 office workers commuted Downtown daily, resulting in a surge in daytime population that supported local businesses and retailers and creating a vibrant atmosphere that made Downtown feel safe and lively. The slow return to the office and decreased foot traffic in Downtown pose significant challenges to businesses and retailers who rely heavily on office workers as their main customer base.

The Pioneer Square District has acutely felt this problem as employee visits to the neighborhood are only at about 26 percent of what they were in January 2019. This is substantially lower than the 44 percent of workers that have returned to Seattle’s Downtown3 . Getting the City of Seattle and King County employees back to the office is critical for the success of the Pioneer Square District’s recovery.

Seattle’s oldest neighborhood, Pioneer Square District, boasts historic architecture, parks, art galleries, and underground tunnels, attracting visitors from all over the world to explore and shop. Foot traffic data from Placer.ai suggests that visitors have returned to visit Pioneer Square but at lower rates seen prior to the pandemic. However, challenges in attracting and retaining visitors to the area persist due to the closure of businesses and ongoing public safety issues.

The COVID-19 pandemic has brought significant changes to the Pioneer Square District, primarily in the office market which has had ripple effects on retailers, food services, and other businesses that rely on demand from office employees. Faced with a long-term future of hybrid work and uncertainty in what King County will do with its properties4 in Pioneer Square, the district will need to rely heavily on its assets, businesses, and partners to create a resilient district and neighborhood where people can live, play, and work.

2 https://www.commuteseattle.com/resource/2019-center-city-commuter-mode-splitsurvey-results/

3 https://downtownseattle.org/programs-services/research/economic-recovery/

4 https://kingcounty.gov/initiatives/civic-campus-master-plan.aspx