Published April 2006
it comes to attracting
At a recent meeting attended by local investors, a principal with a Seattle-based venture capital firm described the challenge he faces convincing top CEO types to move to Seattle to lead his ventures. His primary competition seems to be Silicon Valley, where a robust venture market chases the same business leaders.
Ask a typical Seattleite, though, and heíd be surprised the contest is even close. Seattle or Silicon Valley? Heíll tell you that the Silicon Valley is all about expensive homes, snarled freeways and an embarrassingly low espresso-stand-per-capita ratio. Bad schools, smog and crime, too. Offered a choice, any CEO-for-hire would accept the invitation to Seattle without a thought, right?
It turns out not to be so anymore. According to our local venture firm principal, traffic is becoming a major Achillesí heel for our region ó to the point where it spooks some CEO targets away before they get to the interview. After all, CEOs measure the same things anyone would: affordability of housing, lifestyle, quality of schools for their kids, commute distance to work, etc. Apparently, our traffic is nastier now. In the beauty contest to attract CEOs, it looks like Miss Silicon Valley is leading.
If you own investment real estate, you have a dog in this fight. If you care about job creation, youíre in it, too. If investors canít get top talent to run their ventures, theyíll take the venture elsewhere. Business success happens on the strength of the leadership and talent it employs. You take your product idea to the talent rather than the other way around in todayís American economy.
Perhaps we can concede the traffic mess to Miss Silicon Valley. But we must have the other parts of the contest won, right? How about affordable housing? Surely we have expensive California beat on that one.
Well, not so much anymore. Our rising housing prices have now put Seattle neck and neck with our competitor to the south. Call this part of the contest a draw.
How about schools? We all know about the crowded and underfunded California public schools.
Guess again. Seattleís schools just arenít what they used to be, apparently.
CEO types are flying everywhere and making deals, right? So letís compare access to air travel. Silicon Valley and the Bay Area have three viable airports; we have one. Itís likely a CEO living north of Seattle (there are 1.5 million others of us in this category) will spend more time getting to Sea-Tac International Airport on I-5 than he or she will in the air flying to a meeting in a major West Coast city. Miss Puget Sound just tripped on her gown.
So how did we get into this mess? We were winning beauty contests every year until now.
In our zeal to plan growth, no one has figured out how to preserve the environment and do it without increasing the cost of real estate. The notion that the market will accept more dense living by limiting sprawl outside the urban areas is a notion, but not a market reality that buyers are apparently willing to go to just yet. Weíre pushing on a balloon with our planning finger and itís popping out the other end as higher-priced homes. Tinkering with markets might be necessary, but itís dangerous.
By artificially pushing up home prices, middle-income types ó those with kids, especially ó are choosing the suburbs over Seattle because thatís where they find affordable housing they like.
The implications are interesting: One is that our freeways need to be expanded if people move outside the urban areas in order to find affordable housing that suits their needs. If you donít expand capacity, you get crowded freeways. This happened not because the developers or planners had bad intentions, but because they arenít being invited to the same meetings with politicians and planners who make the rules.
The reality is that the market just didnít move to the urban areas quite to the degree that was expected. Consequently, the farther out folks move, the more time they spend on the roads.
The impact of affordable housing on school districts is interesting. One of the unanticipated side effects of planning is that as middle-income homebuyers choose affordable housing farther outside the city, they leave the high- and low-income people behind in the urban areas.
The profile today of an urban dweller is a lower per-household head count of school-aged children. So the soccer moms are out pushing for strong schools elsewhere as a result. That leaves a vacuum in the city.
Seattle loses the schools part of the beauty contest against the now relatively attractive Silicon Valley area as the region shifts the demographic around based on where the affordable product fits what they want. Bellevue and other areas around Seattle have a better chance to win the schools part of the CEO contest as a result.
Regardless of how Seattle got here, losing this competition for business leaders is bad for business, bad for jobs, bad, bad, bad. After we get over being drunk on the local Boeing recovery and begin to see straight again, weíll still need other horses in the race to support our economy.
Interestingly, itís a disjoint between what the growth management effort contemplates and where the market wants to go to buy affordable housing that is a contributing cause of our traffic problems. Unfortunately, no one is talking about affordable housing as a solution. Itís too often explained, if at all, as a symptom. And too often explained with only one side of the table doing the explaining and the developers getting the blame.
If thereís any shame in this, itís that Miss Silicon Valley didnít develop a new talent to improve her chances. Miss Seattle just started growing warts that took her down a notch or two.
The good news is that with time and attention, even the nastiest of warts can be removed, and weíll once again be back twirling and swirling our way to victory. But first we have to look in the mirror and realize we arenít the same pretty face we once were.
Even though we can always rely on the espresso-stand-per-capita part of the competition going our way, we need developers, Realtors, planners and electeds to get to the table and work up a plan to address the affordable housing problem.
Tom Hoban is CEO of Coast Real Estate Services, a commercial sales, leasing, investment and property management company with offices in Everett, Tacoma, Spokane, and Boise, Idaho. He can be reached at 425-339-3638 or send e-mail to email@example.com.
© 2006 The Daily Herald Co., Everett, WA