CAPITOL BOULEVARD PLAN MARKET ANALYSIS PREPARED FOR: CITY OF TUMWATER AND MAKERS ARCHITECTURE AND URBAN DESIGN PREPARED BY: PROPERTY COUNSELORS JULY 2012 DRAFT: FOR REVIEW AND COMMENT ONLY TABLE OF CONTENTS Table of Contents ................................................................................................................. i I. Introduction and Summary ............................................................................................. 1 Introduction ..................................................................................................................... 1 Summary ......................................................................................................................... 2 Economic and Demographic Overview ...................................................................... 2 District Profile ............................................................................................................. 2 Demand for Retail ....................................................................................................... 2 Demand for Office ...................................................................................................... 3 Demand for Residential .............................................................................................. 3 Demand for Lodging ................................................................................................... 4 Summary of Potential Demand ................................................................................... 4 II. Economic and Demographic Overview ......................................................................... 6 Employment .................................................................................................................... 6 Population ..................................................................................................................... 12 Population Characteristics ............................................................................................ 13 Visitor Industry ............................................................................................................. 15 III. District Profile ............................................................................................................. 19 Land Use ....................................................................................................................... 19 Business Mix ................................................................................................................. 19 Taxable Sales and Business Performance ..................................................................... 21 Trade Area Served ........................................................................................................ 24 Perceptions .................................................................................................................... 25 CAPITOL BOULEVARD PLAN MARKET ANALYSIS PROPERTY COUNSELORS PAGE I DRAFT: FOR REVIEW AND COMMENT ONLY IV. Demand for Retail....................................................................................................... 26 Current Retail Demand ................................................................................................. 26 Existing Development ................................................................................................... 31 Neighborhood Scale Retail ....................................................................................... 34 Cinema/Entertainment .............................................................................................. 34 Specialty Retail ......................................................................................................... 34 Retail Rental Rates ........................................................................................................ 35 Potential Retail Demand ............................................................................................... 37 V. Demand for Office ...................................................................................................... 44 Historical Office Market Activity ................................................................................. 44 Existing and Planned Office Space ............................................................................... 46 Existing Buildings ..................................................................................................... 46 Planned Buildings ..................................................................................................... 47 Potential Office Development ....................................................................................... 48 VI. Demand for Residential .............................................................................................. 50 Overview ....................................................................................................................... 50 Rental Market ................................................................................................................ 52 Market Area Statistics ............................................................................................... 52 Existing Apartments.................................................................................................. 54 Condominium Market ................................................................................................... 56 Potential Residential Demand ....................................................................................... 59 VII. Demand for Lodging ................................................................................................. 63 Regional Market Performance ...................................................................................... 63 Existing Hotels .............................................................................................................. 67 Potential Lodging Demand ........................................................................................... 68 CAPITOL BOULEVARD PLAN MARKET ANALYSIS PROPERTY COUNSELORS PAGE II DRAFT: FOR REVIEW AND COMMENT ONLY I. INTRODUCTION AND SUMMARY INTRODUCTION South Capitol Boulevard through Tumwater was a segment of Highway 99 through Washington and along the Pacific coast. With the development of Interstate Highway 5 in the 1960’s, the boulevard no longer served as a regional transportation facility, but it continued as a major arterial in this area of the county, and continues to serve significant volumes of vehicular traffic. Much of the development along the corridor is auto- oriented by business type and physical form, including quick serve restaurants, motels, and auto services. The City of Tumwater considers the corridor to be an important location for higher density residential and commercial development. The City has a stated goal “to improve the corridor’s visual appeal and economic functioning through infrastructure enhancement and the development of attractive places in key nodes near residential concentrations.” The City has initiated a Capitol Boulevard Corridor Plan to identify key opportunities, necessary improvements and associated actions to accomplish both. The plan will be based on a realistic assessment of economic conditions and trends, and an identification of opportunities that are achievable. To this end, the plan includes a market analysis that provides the economic background for plan recommendations. This report documents the results of the market analysis for potential uses. It is organized into seven sections. I. Introduction and Summary II. Economic and Demographic Overview III. District Profile IV. Demand for Retail V. Demand for Office VI. Demand for Residential VII. Demand for Lodging The major findings and conclusions of the analysis are summarized in the remainder of this section. CAPITOL BOULEVARD PLAN MARKET ANALYSIS PROPERTY COUNSELORS PAGE 1 DRAFT: FOR REVIEW AND COMMENT ONLY SUMMARY ECONOMIC AND DEMOGRAPHIC OVERVIEW The State of Washington is the largest employer in Thurston County with 24% of total wage and salary employment. State employment has declined since its peak in 2008. Tumwater has increased its share of State workers from 17% in 1998 to 33% in 2008. Much of that growth has occurred at the south end of the Corridor. Tumwater is the smallest of the three major cities in the County, but the City and its surrounding urban growth area are projected to grow faster than the other two. The average household size in Tumwater is lower than in the other two cities; the median age is lower; and the median income is higher. The visitor industry in Thurston County is comparable in terms of number of employees to the wholesale or manufacturing sectors. Tumwater is easily accessible within the region by automobile, and offers several park, recreation and museum attractions. DISTRICT PROFILE The Capitol Boulevard Corridor includes approximately 142 businesses with over 3,000 total employees. The business mix is noteworthy for three sectors: government (with two-thirds of total employment), food services (12%), and health care and social assistance. Food service dominates the taxable retail sales with 57% of total sales. Two categories of business have particularly strong performance in terms of dollars per square foot: food services and motor vehicles and parts. Corridor businesses are generally auto-oriented. They serve a combination of local users (particularly State