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A Real Estate Forum offers answers from a market perspective

How to position Thurston County to be attractive?

Growth was still the grail at the Thurston Economic Development Council’s Real Estate Forum on Oct 7. Specifically, growth in the commercial and industrial sector –with opportunities for South Sounders to make money in related real estate development.

Attendees were primarily from local real estate firms and banks, title companies, attorneys, prominent builders and engineers like Thomas Architects, Kaufman Construction and SCJ Alliance. Also present were elected officials and staff from Thurston County, Olympia, Lacey and Tumwater, Port EDC and staff and a handful of local businesses and nonprofits, including Homes First and Enterprise for Equity.

Heather Burgess, a high-profile real estate attorney, kicked off the forum touting Thurston County’s attractive investment environment. Burgess is President of the Board of the Economic Development Council (EDC) whose Executive Director, Michael Cade, hosted the event.

The focus of the virtual event was on how to perpetuate business-as-usual in the face of “changing commercial and industrial market impacts.” One focus was on local conditions—how to keep traffic flowing on I-5 and how remote work expanded the residential market—and the other was on how to reach beyond the local economy.

There was no recognition that “business as usual” has brought about a future of catastrophic weather events and encroaching sea levels—not to mention locally creating ever-increasing traffic congestion, a housing affordability crisis, significant loss of agricultural land, worsening water quality and marine habitat, and more.

Adding transportation capacity never gets old

“Business as usual” was the approach presented by Marc Daily of Thurston Regional Planning Council (TRPC) who identified the I-5 corridor as the highest transportation priority for our region. TRPC predicts that by 2045, normal weekday traffic on I-5 will be backed up 4 to 5 miles between Nisqually and JBLM, and at the US 101 interchange.

Plans are underway to invest $2-4 billion in new capacity, including development of SR 507 through Yelm as an I-5 alternate and adding HOV lanes from Marvin Road to Mounts Road. I-5 acts as a dam across the Nisqually River, causing erosion that is predicted to undercut the roadway between 2040 and 2055, endangering the highway as well as salmon habitat. The solution for this dilemma anticipates several billions to replace bridges and to put I-5 on piers, elevating it above the intertidal waters at the Nisqually Delta.

Remote work ushers in an “era of innovation”

According to the presentation, for every 1% of vehicles taken off the roadway, there is a three-fold decrease in congestion. This suggests telework could have financial implications for our transportation infrastructure—but also for the real estate market.

EDC’s Michael Cade predicted these last 2 years of the pandemic will be looked on as an “era of innovation” in business, as people worked from home and residential markets expanded in a regional context. Cade cited 2021 as a record year for housing permits issued in all three jurisdictions, with Olympia running 55% above last year’s total. He touted the high volume of permits issued, but didn’t reference the fact that none of the new housing is affordable to the 47% of Olympia households who live on a low income. While almost 1000 market rate apartments have come online in the last 4 years, or are currently under construction in the downtown core, only 62 would serve low-income people. There was no response to a later question about how the market might address this imbalance.

From global to national

Keynote speaker Didi Caldwell is the founder of Global Location Strategies, a company that helps corporate leaders decide how and where to deploy their assets for greatest return. She now advises corporations to move back to the US, citing benefits like “the fracking boom” that [aided by federal subsidies] drove down energy costs. Surprisingly, she cited immigration as a positive contribution to population growth that’s providing a supply of younger workers not available in other developed countries. Other advantages she cited are a stable currency, strong rule of law and limited regulation. Risks that might deter corporations are an emerging nationalism, tariff uncertainties and climate change – all accelerated by COVID.

From local to regional

She identified Olympia’s relatively educated population as offering an advantage for constructing a workforce. Caldwell noted the almost double cost of living between Seattle and Olympia, but then she added that creating more residential development, with its requirement for new services and schools, is expensive. Instead, she proposed strategies that focused on developing projects to attract business, like office parks, and diversifying existing properties to make them investment-ready. By enhancing workplace flexibility through remote work, Olympia businesses could employ workers who live outside the area.

Get beyond “buy local” or even regional

Caldwell advised the attendees to capitalize on Thurston County’s proximity to large cities by attracting workers from outside and leveraging “trade clusters” that serve needs beyond the region. Caldwell said that 80% of businesses in the Olympia area are in “local clusters” meaning they serve the regional population. These clusters, though important for the well-being of the local population, don’t inject money into the local economy. That role is played by “traded clusters” serving the needs of entities beyond the regional borders and this is where business needs to go.

Among several expanding options for “traded clusters,” Caldwell listed some that have already begun to show up in Thurston County: distribution, transportation and logistics enterprises. A slew of proposals to rezone agricultural land to locate warehouses in South County, if approved, would follow a new warehousing project next to the Port of Olympia airport and an existing logistics and distribution center in Lacey. Caldwell also described clusters that are weakening, including paper and wood products. This suggests that the Port’s reliance on forestry and log shipments which already lose money, could bring deeper losses.

Keep calm and embrace chaos

The forum was promoted as a way to find out how Thurston County could “position itself to be attractive” and “what are the critical elements…to be aware of in terms of augmenting, promoting and strategizing to compete?”

But attractive to whom? Competing for what? The answer is important, but nothing in the forum acknowledged this. Will the goal of economic development in Thurston County be sustainable and serve the people who call Thurston County home? Will it protect our natural resources and diminish our reliance on fossil fuels? Or will it be to maintain “business as usual” even if it means becoming attractive to investment that uses our resources to serve needs beyond our boundaries?

Caldwell’s parting advice at the forum to “keep calm and embrace chaos” is not reassuring.

Esther Kronenberg attended the forum and reports regularly on development issues in the Thurston County area.

(1) The EDC is a “public-private” organization, one of many created by statute to coordinate economic development activities in Washington counties. Most recently, officials at the Thurston EDC handled the distribution of over $12 million in federal funds received to aid recovery from the pandemic.


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