With rising home prices, bidding wars and a lack of supply, it’s no secret that Seattle’s housing market is one of the hottest in the country. Major employers like Amazon, Starbucks and Microsoft are already headquartered in the Seattle area and tech companies like Google have moved in with new campuses under construction. The resulting increase in job growth and quality of life has created an influx of new residents leading to a construction boom of new apartments, condos and office spaces.
One of the city’s newest and most anticipated residential development is Nexus by BC-based Burrard Group. The 41-story, 378-unit condominium is currently under construction in downtown Seattle’s East Village and is already 83 percent sold since debuting in March 2017. When completed in 2019, the building will transform the Seattle skyline with its dynamic architecture by Weber Thompson Architects that features a series of offset stacked glass cubes.
We caught up with Christian Chan -- the man behind the project and the Executive Vice President of the Burrard Group -- to learn more about Nexus, his experience in the industry and his thoughts on the Seattle housing market.
BuzzBuzzNews: Tell us a bit about your background and how you got into real estate.
Christian Chan: My background is in urban design and architecture, and my family has been active in real estate since the late 1970s. I guess you could say that in many ways I was bred for it. I feel lucky that I am able to exercise both the left and right sides of my brain in the work I do every day. It doesn’t feel like work when you are passionate about what you do.
BBN: When did you join the Burrard Group? Can you give us a brief history of the company including when it was established and any high-profile projects that you’ve worked?
CC: I joined Burrard Group in 2013 after doing a few real estate projects of my own. Burrard is my family’s company, and was established (under a different moniker) in San Francisco in the late 1970s. Our company has built large-scale hotels, boutique resort properties and a variety of residential projects, from high-rise residential to master-planned communities.
Perhaps one of our most visually recognizable projects (at least for Vancouverites) is Eugenia Place on English Bay, which was named after my grandmother and is noted for the large Oak tree that sits atop the building. Iconic developments tend to be our focus, where and when the opportunities arise, rather than production development.
BBN: One of your latest development projects -- Nexus -- is located in Seattle, which according to the Seattle Times, has experienced rapid growth in recent years with price gains and bidding wars becoming the norm. What do you think is driving this growth?
CC: I think it’s the confluence of a variety of factors that the city is experiencing. Factors like an increase in economic prosperity resulting from job growth (clearly the tech sector has much to do with this), an increased focus on quality life from Gen X and Millennials and an urban center that is becoming highly livable thanks to improved planning policies implemented by the municipal government. All of these things have led to the rise of Seattle as a major metropolitan gateway city that the world is taking note of and wanting to invest in.
Furthermore, if you combine these factors with a relative lack of supply (the vast majority of construction in downtown Seattle being for-rent as opposed to for-sale products), you see what the result is.
With an urban center of more than 70,000 residents, it’s remarkable that only 42 resale homes are listed for sale on the NWMLS with a median asking price of $1,175,000. At the same time, there are 46 pending resales, which suggests the rate of sales are eclipsing the supply of new listings. When looking at resale properties alone, the total sales in July were off by 33 percent to 43 closings compared with the year prior but median home prices increased by 27 percent to $660,206. Clearly there’s a need for new construction of condominiums for sale. Nexus is well positioned to serve this pent up demand but our project is just one of a few in the pipeline as developers have overwhelmingly preferred to build apartments for rent.
BBN: The city is also reported to have the most cranes in the US for the second year in a row. What do you think makes the city so attractive for new construction projects?
CC: All of the above. But unfortunately this has caused major escalation in construction pricing, which only drives up the pricing for the end user, including renters and buyers.
BBN: You’ve also had a lot of experience in the hot Vancouver market -- just 150 miles north of Seattle. How does the Vancouver real estate market compare to Seattle?
CC: While philosophically very aligned, the economic fundamentals are vastly different. While we have an incredible wealth of creative and technology focused businesses that have done very well and that we are very proud of, it pales in comparison to Seattle as an actual economic driver. Because of its incredible beauty, multiculturalism and quality of life, many tend to look at Vancouver as an urban resort, where global citizens come to live and play. This has resulted in a staggering increase in property value, which continues to run.
Furthermore, Vancouver has been familiar with urban real estate products for much longer than Seattle as people have been living in and buying condos and apartments for many decades. As such, it’s much more recognized as a sort of commodity, bought and sold with ease and in volume.
In Vancouver, developers generally don’t build apartments for rent, virtually everything is sold to the investor community and they in turn rent out their condos to supply the apartment stock. In Seattle, developers tend to build apartments for rent in order to avoid certain liabilities and limitations on non-refundable deposit structures imposed under the Washington State Condominium Act. With high rents and low cap rates, these new apartment towers can be worth as much as condominiums. We’ve taken a different view at Nexus knowing that condo prices will continue to rise so we feel we are building into an escalating market where demand will outstrip supply.
BBN: Based on your observations, have recent changes in BC government legislation, including the introduction of a foreign buyer’s tax in summer 2016, made an impact? Even though it’s across the border, do you think investors will turn to Seattle as a result?
CC: It had made somewhat of an impact, but it hasn’t totally slowed down our market. Presales of condo products have kept on chugging along, but the single-family market has softened a bit from what it was one to two years ago. We posited that this will result in foreign buyers looking to Seattle given its proximity to Vancouver and similar lifestyle, and we have begun to see that trend play out to a certain extent. For very affluent overseas buyers, they’ll simply pay the tax. Others that are more sensitive are looking at alternative markets, including Seattle.
BBN: Let’s talk more about Nexus. Where is the project located? Can you tell us a little bit about the neighborhood?
CC: The basis for the name Nexus is in recognition of both the project’s pivotal location, as well as the shifting/rotating architecture. As far as location, the emerging East Village location is truly at the ‘meeting point’ of the best that Seattle has to offer, where Capitol Hill, South Lake Union, and the retail core meet.
The East Village is certainly a neighborhood in flux, but we firmly believe that it is the new center of gravity in downtown. It will have a significant critical mass of both residents and workers that will feed a healthy mix of forthcoming neighborhood serving businesses. There’s about $6 billion in capital investment with more than two dozen high-rise projects including the expansion of the Washington State Convention Center.
Combine this with the incredible architecture and streetscape design that various developers are executing (not the least of which Nexus of course), and to me that is a clear recipe for a fantastic neighborhood.
BBN: The 41-story tower boasts quite a unique stacked-and-shifted exterior design. Who was the architect that you worked with and what was the inspiration for the design?
CC: We worked closely with Weber Thompson on this design and Blaine Weber personally drove the concept for the building’s massing, which is the iconic feature of this tower. The design was influenced by a variety projects around the world but not one in particular.
Nexus enjoys a very front and center position in the downtown Seattle cityscape, especially when approaching from the north down Interstate 5 and from many vantage points on South Lake Union and Capitol Hill. We didn’t want the tower to blend into the background and it certainly won’t.
BBN: The project has just released a limited collection of suites called the Sky Series Residences. What can prospective homebuyers expect to see in these suites? Who was the interior designer?
CC: The interior design is also by Weber Thompson, and the Sky Series units feature elevated finishes, spacious floor plans, higher ceilings and commanding views. A limited number of the homes also offer exterior living spaces and just three include two-story living areas known as our Sky Lofts. Much like we didn’t want our building’s architecture to be lost in the sea of towers downtown, we wanted our homes to be distinctive and resist the trend of condo-commoditization. Our consumers are savvy and they want to own distinctive properties.
BBN: What’s next for the Burrard Group? Any plans to expand into other North American cities?
CC: While we always like working in San Francisco, we are also interested in Portland, Denver and Austin. However, most importantly, we have a major focus on Seattle for the long term; we love what is happening in this city and find working here exciting and inspiring. We are looking at some hotel opportunities as well as urban mixed-use developments at the moment and will be sure to reach out to you all when we have more to report.