Paul Roberts/The Seattle Times (TNS)
Like many small businesses in downtown Seattle, the Pure Food Fish Market has had to adapt to an economy that still lacks some of its pre-COVID-19 players.
While cruise passengers and other tourists have returned to buy fresh salmon, halibut and crab from Pure Food, office workers who came to the Pike Place Market fish market before returning home have been largely absent.
So much so that owners Carlee Hollenbeck and Isaac Behar have changed their schedule. Pure Food, which for 70 years stayed open until 6 p.m. for commuter sales, now closes at 5 a.m. because office workers “just don’t show up as often,” says Hollenbeck.
The changing customer mix of Pure Foods highlights an emerging, not entirely expected, trend in downtown Seattle’s pandemic recovery.
At the start of the pandemic, some business leaders and pundits imagined a downtown recovery led by the return of office workers followed by a resurgence in tourism and other recreation seekers.
But to some extent, the reverse is happening. Even as the repatriation of office workers has stalled, downtown tourism and other leisure activities, including sporting events and live entertainment, have steadily returned, despite lingering stories of crime in the area. downtown and a recent increase in COVID-19 cases.
Visits to Pike Place Market between late March and early May averaged 74% of 2019 levels for the same period, according to Placer.ai cellphone location data released by the Downtown Seattle Association. Downtown hotel occupancy from March to May averaged 84% of 2019 levels.
“The return to leisure has been stronger than I think many of us would have anticipated,” says Craig Schafer, whose two downtown hotels, Inn at the Market and Hotel Andra, are respectively busy in about 80% and 70% in May. . After a slow January and February due to omicron, he says, “mars just took off.”
“We’ve heard a lot about Seattle and wanted to see it for ourselves,” said Shirley Ellis, an Ohio resident who was at Pike Place Market last week with her family.
They are not alone, apparently. Seattle is the second most popular domestic destination for Memorial Day travelers, after Orlando, Fla., according to AAA booking data.
By contrast, downtown offices are getting much less love this spring.
Although parts of downtown have seen a modest office revival — at lunchtime on some days, the streets around the Seventh Avenue and Lenora Street Amazon spheres are filled with badged workers — the overall presence of office workers is still a shadow of its pre-COVID self.
Since late February, downtown office occupancy has stalled at around 33%, Placer estimates, despite efforts by many employers to entice workers with everything from hybrid schedules to free food.
Some observers say it is even lower. David Gurry, senior vice president of commercial real estate agency Colliers, which covers downtown office buildings, said office occupancy “any day is around 22% right now” .
These estimates likely miss some returnees. Placer’s figures, for example, only count people in the office three or more days a week. But they follow with low office occupancy rates in several other U.S. cities, including San Francisco and San Jose, Calif., which were both at 33.4% as of May 18, according to Kastle Systems, a security firm that measures office occupancy by employees. ‘ use of the key card. They also echo national office occupancy rates, which have hovered around 43% since March, Kastle data shows.
“Everybody’s trying to figure out, ‘What can I do to get my people back to the office?'” Gurry said. “And I can tell you that buying everyone lunch is not enough.”
Two different economies
To some extent, the resurgence of the split screen between tourism/leisure and the office economy reflects the very different drivers of these two sectors.
The most obvious difference: tourism and recreation are done for pleasure rather than necessity, which may explain why they have been quite quick to reappear whenever COVID-19 restrictions are eased or the number of cases rises. decreases.
Consider: While national office occupancy is 43%, NBA game attendance is back to 95% of 2019 levels and passenger volume at airport security checkpoints is 89%, according to Kastle’s data. (Passenger volume at Seattle-Tacoma International Airport is at 84% of 2019 levels, according to Port of Seattle statistics; Seattle does not have an NBA team.)
Another big difference: Downtown tourism and recreation is benefiting from pent-up demand from consumers who have postponed activities in 2020 and 2021. “We haven’t been anywhere for about two years,” says Chad Chisholm, a resident of Denver, who was visiting Pike. Marketplace last week.
The desire to make up for lost time is evident everywhere in the city centre. As of May 22, about 155,000 cruise ship passengers have passed through Seattle this season, up 50% from the same period in 2019, despite an outbreak of COVID-19, according to statistics from the Port of Seattle.
Theaters, nightclubs and other venues, among the hardest-hit businesses in the city, are also benefiting from consumer catch-up.
In January, the 5th Avenue Theater’s first show in two years, “Beauty and the Beast,” drew 15,000 viewers a week, more than the popular “Mamma Mia!” of 2018. The first performances of “Beauty” were “very emotional for the public and for the artists”, explains Bernie Griffin, general manager of the theater.
And, ironically, many workers who don’t want to be back in the office seem fine with resuming business travel and conventions. The Seattle Convention Center, which lost most of its bookings in 2020 and 2021 due to COVID-19, will return to around 70% of its pre-pandemic numbers in 2022.
All of these returning business and leisure travelers have brought a much-needed boost to many downtown businesses. Downtown hotels, for example, are seeing these higher occupancy rates without having to cut prices like they did in 2020 and 2021. In April, the average downtown room rate was of $195, up nearly 60% from a year ago and roughly equal to April 2019. , according to Visit Seattle, a trade group.
Although visitor-dependent businesses know those gains could disappear with another wave of COVID, they are “very cautiously optimistic” for 2022 and “optimistic for the summer in particular,” says John Boesche of Visit Seattle. “It’s going to feel a lot like a pre-pandemic summer.”
But tourists are not enough
Yet even if downtown tourism were to fully recover this summer, it won’t begin to offset the loss of office workers, whose prolonged absence is creating more uncertainty per month across the whole of the country. downtown economy.
Many office owners and developers aren’t sure what to expect from a downtown market with a 20% vacancy rate in March, down from 11.4% in March 2020, according to Colliers.
Many employers whose office leases are expiring “don’t know what they need in the long term,” says Colliers’ Gurry. Prospective clients can request to view 50,000 square foot spaces one day “then a week later they want to come and view 20,000 square foot options,” he adds.
Likewise, restaurants and stores that once relied on office workers during lunchtime or after work have no idea when or whether to re-staff or return to a full schedule. That means even fewer workers coming downtown, further affecting other businesses and further reducing the downtown workforce, which was 348,000 before the pandemic, according to Downtown estimates. Seattle Association.
Many transit stops that once hosted many commuters are no longer as busy. At the northbound stop at South Jackson Street and Fourth Avenue South, boarding and exiting King County Subway buses this spring are only 37% of fall 2019 levels. At Third Avenue and Pine Street, they were just 48% of 2019 levels at the end of March, shortly before the stop loss closed following several shootings.
These lower numbers may also reflect safety concerns for commuters in parts of downtown. But other regions also saw declines. April ridership to downtown from Snohomish County via transit, for example, was just 23% of April 2019 levels.
Office workers ‘have tremendous leverage’
Some employers cite safety concerns as one of the main reasons inner city workers don’t want to return. But another reason is that COVID-19 has undermined the case for being in an office.
While the pandemic has reminded tourists that things like Pike Place Market and the Space Needle are best experienced in real life, it has also shown “much of America’s workforce, as well as the people who run them , that work can be … a digital experience,” says Margaret O’Mara, a University of Washington historian who has written extensively about tech hubs like Seattle.
This finding, coupled with the tight job market, has given remote office workers leverage over their employers that could last long after COVID-19, some business experts and employers say.
Eric Johnson, CEO of Nintex, a Bellevue, Wash.-based process automation company that often competes with Seattle tech companies for talent, says many of those companies have had to relax their return plans to avoid losing workers. Employers “who might want more people to come back have been a bit reluctant to really push it,” he says.
Some other observers believe the leverage will fade if a recession hits and the labor market cools.
If employers start to put the brakes on hiring or look for ways to cut costs, any attrition caused by a back-to-work mandate could be viewed as “a workforce-sizing approach,” Gurry says.
Others are not so sure. Demand for labor is so high in the Seattle area, especially in the very large office tech sector, that the influence of workers “might not change significantly even if we have a recession. “, says James McCafferty, director of the Center for Economic and Business Research at Western Washington University.
That might be a conservative scenario, but it’s one that many downtown businesses seem to be planning.
Back at Pure Food, Hollenbeck and Behar say they aren’t counting on a return from office workers.
“There are a lot of people who are going to work from home permanently,” says Hollenbeck. “We kind of adjusted our business plan.”