3 Simple Ways to Solve Seattle’s Rental Crisis

3 Simple Ways to Solve Seattle’s Rental Crisis

Posted on by Plemmons

Seattle’s rental crisis cannot be solved with rental caps. 

Acting as such will only make the situation worse.

Seattle

Real estate is a living market.

Simply demanding that it meet demand is not sufficient.

Instituting Rent Control and calling it a day will not solve Seattle’s rental crisis.

Only when zoning laws, availability, and smart rental regulations work in tandem can Seattle’s rental crisis be dealt with.

Fix restrictive zoning

Seattle “simplified” zoning laws in 2015. Multi-Family zoning now falls into one three categories. LR 1, 2, and 3 respectively. The main difference with regards to the rental crisis is the restrictions on the number of units by overall building square footage.

At best, new construction is only allowed at a single unit per 800 sq ft. With others having a limit of one unit per 1,200 sq ft.!

Unfortunately, this creates an awkward scenario where lack of supply increases demand but developers cannot build to meet all the demand even if it would make financial sense.

Simply put, Seattle must allow for increased density in construction to supply the studio and one-bedroom apartments required to solve the crisis.

The case for Rent Stabilization

If you recall from our first piece, Rent Stabilization is different from Rent Control as it doesn’t set the maximum price units can rent for rather, a maximum rate for yearly rent increases.

This rate is determined by inflation, local residential real estate market, and other economic factors.

In particular, Rent Stabilization has the massive benefit of reducing the financial risk for developers when it comes to building. Property Management companies can buy units doing their profit analysis on the value the units are worth on the open market.

This means the developer does not have to worry about Rent Control making certain building types unattractive for sale post-construction.

Developers can focus on creating supply to meet the demand of would-be renters instead of worrying about if those projects will be able to turn a profit based on Rent Control regulation.

Regulations must be enforced

Solving Seattle’s rental crisis requires smart decision making and a well-constructed plan.

Additionally, regulations must be well thought out, written to have maximum impact, and pragmatic in their wording and execution.

Poorly planned or toothless regulation will be like pouring gasoline on a raging fire.

The last thing Seattle needs is a situation like London or New York are currently in.

Reports of family members pretending a parent is alive when they actually passed away years ago are not uncommon. Hard to blame them when the rent on their parents place was $270 when the market value is over $2,000!

Now what?

The only way to get this crisis solved is to find solutions that make it profitable for developers and landlords to participate.

As well as, ensuring Seattle residents have safe and affordable rentals to call home.

Solving Seattle’s current rental crisis has no single solution. 

Specifically, easing zoning laws, implementing stabilization systems, and smart laws that take the human element and market into account will allow natural change to begin loosening the rental market.

Harmony between supply and demand will help every business in Seattle. When people have more money left in their pockets, businesses have more money in their tills.

Rent Control. An Overview, Analysis, and Potential Impact on Seattle.

Posted on by Plemmons

 

Seattle is in a Rental Crisis

To sum up the Seattle rental market:

It is not pretty. 

With rising rents in the Seattle area, finding a one bedroom apartment now requires a take-home income in excess of $60,000.

Rapidly increasing rents, explosion of short-term rentals and developer discouraging building regulations are fueling a shortage of rentals that worsens each month.

Seattle City Council members have requested the 1980’s ban on Rent Control to be overturned in a letter written to Olympia.

While intended to solve a crisis, rent control by itself will not resolve the issue.

Rent Control. What is it?

MoneyThe concept of “Rent Control” relates to a system of laws that aim to keep housing affordable to keep the bargaining power between property owners and renters balanced.

Rent Control’s intended outcome is more to prevent rental rate gouging due to a competitive market.

In the most basic form, Rent Control laws will cap how much a landlord can increase the rent each year. This percentage is usually sourced from inflation rates. (“Rent Stabilization” is the technical term for this. For simplicity we throw it under the same umbrella.)

The other tool of Rent Control is simply capping the amount that a landlord can charge for rent.

The Best Intentions. The Worst Outcomes.

Rent Control legislation forcing units to rent below market value often leads to backlash from landlords and developers.

The incentive for landlords to invest in their existing units is severely diminished since their return on investment is no longer based on the market, it becomes tied to a fixed rate.

Developers are better served building single family homes and condominiums that can sell for the price set by the market rather than what Rent Control law says.

Additionally, Rent Control often forces developers to set aside a portion of the space in any proposed multi-family housing.

What About “Inclusionary Zoning or Social Housing?”

ApartmentsDepending on who you ask, this is the London or New York solution.

The idea is that for a developer to get their building project approved they agree that a portion of the units go to specific tenant types or rent below the market rate.

The rent for a London flat is $2,486/mo. Central London is well over $3,000/mo.

Landlords in New York often choose Rent Control unit tenants in comically corrupt ways. They are often rented to those with personal or business ties to landlords. Often, the tenants are far above any income maximums

What sounds like a perfect solution, has turned out to be better in theory.

Effect on Small Business & Possible Solutions

Empty WalletA general economic principal states that a fiscally responsible person or household should spend no more than 30% of their income on their rent or mortgage.

With this theory in mind, it is no wonder Seattle is supporting this principle. Yet, as seen in other cities the cost of living and citizens disposable income can fluctuate.

When push comes to shove, people are going to pay their rent before they go out to have a drink at the local bar.

Seattle’s rental crisis has no easy solution. However, we can say with certainty that Rent Control on its own will not be a silver bullet. Multiple factors play into the exponential cost of living increase in Seattle. The solution must also be a multi front approach. These solutions deserve thorough analysis and will have their own article.

The solution must go beyond real estate & small business.

Amazon’s Relationship With Seattle, Our Thoughts on What Happens Now.

Amazon’s Relationship With Seattle, Our Thoughts on What Happens Now.

Posted on by Plemmons

It is no secret, Amazon’s HQ2 will be built somewhere in North America. Ultimately, the Seattle area will not be host to that new headquarters.

In our opinion, we are better off that way.

Labor market drought

Amazon has received over 230 proposals across the country because of its proven result of major job growth to that area. Thus resulting in an economic boom for that small area. However, small businesses will feel the available labor force drought almost immediately. Many industrial areas cannot sustain the personnel demands of Amazon as well as their own local businesses.

Amazon can support substantial wages, offers benefit packages, and stable employment, but generally, there are only a finite amount of people to fill the demands Amazon has.

Furthermore, the response “People will just move to the area,” has an entirely different problem.

The cost to live near Amazon

Take it from those near Seattle, when an area has a massive economic growth period real estate prices will keep pace.

The average cost of a home in Seattle is $730,000 as of writing this. Up 13.2 percent since last year. Well over double the national average of 6.1 percent.

This can create a rather odd situation where Amazon’s own employees cannot afford to live in the city which they work.

As of Mid October, there were three condos available in Seattle under the $500,000 mark, in the entire city.

Our thoughts on the future

Amazon owns 16% of the office real estate space in Seattle. Their distribution centers are massive employment centers across the greater Seattle region. Amazon is a piece of a much larger economic picture in the Pacific Northwest.

Seattle and Amazon’s relationship seems well balanced. Consequently, Amazon hit the market at the correct time and have not saturated it. Amazon’s next step is to seek an area for HQ2 that has the population, real estate availability, and infrastructure to support their continued growth.

Where should Amazon’s HQ2 be located?

A few options that crossed our mind:

Detroit 

Detroit

Detroit was formerly known as one of the manufacturing capitals of the United States.

Additionally, Detroit used to be known as Motor City. Amazon could revitalize that American working spirit under the banner of a 21st-century tech giant.

Amazon would be hard-pressed to find a large urban area with real estate space Amazon could acquire and a city that would openly embrace a new titan of industry like Detroit would.

This city has proven they know how to work. As a result, Amazon’s HQ2 would find staff in an eager to work populace

Pittsburgh 

Amazon is one of the largest employers of recent college graduates in the United States. While Pittsburgh has multiple world-renown colleges nearby.

Pittsburgh has the populace to support Amazon’s HQ2, the city makeup to allow them to grow, and the local institutions to feed into Amazon’s personnel at all levels.

While Pittsburgh may not need the revitalization like other cities, it cannot be denied they are a good fit for HQ2.

Atlanta 

Atlanta

Atlanta is the turn-key fit for Amazon. Atlanta’s a major supply chain hub, tech company friendly, and hosts an international airport.

An international airport would be of particular importance for Amazon employees going between HQ1 in Seattle and HQ2 in Atlanta as well as abroad.

Nice weather and affordable housing combined with a large populace make an attractive proposal for Amazon.

Four Ways to Manage Expectations for a Productive Business

Four Ways to Manage Expectations for a Productive Business

Posted on by Plemmons

Expectations. We all have them, about everything. What happens when expectations do not match reality?

Disappointment. As a small owner, disappointment in team members leads to discontent. Discontent leads to departure.

Managing expectations is the only proactive way to ensure your team members are satisfied with their position.

Be open. Be honest.

Honesty is always the best policy.

First of all, write an honest job description that includes a realistic overview of the position and responsibilities.

Have a direct and honest interview process. This should always involve a Hiring Member that is symbolic of the brand. This is the time, before the expectations to see if this person is naturally on-brand. Inauthenticity on both sides of this process will lead to a troubled relationship from the beginning.

Know who you are hiring.

Join Our Company

You posted your position over three weeks ago. So far, you have yet to get a decent bite until today when you have what seems like a dream applicant shows up in your inbox. They are brought in for an interview, and they seem like the solution to everything needed in the position. In addition, they have years of experience in similar work and here they are, applying for your position when you required minimal experience.

Should you hire them? Likely, but you should also realize that an over-qualified individual applying for a position is generally looking for this role temporarily. Can you offer them realistic advancement?

You never want great talent to walk away from you.

Do not let things stew.

Difficult conversations make everyone sweat.

Know what can be worse? Coming to work and having something to say but not having the courage to face the conversation. As a result, you’re miserable for days, weeks, months, even years?

If a team member is dissatisfied with their position, responsibilities, hours, etc. they cannot be on brand. The focus is now on discontent.

Don’t wait for things to blow over as they may boil over instead.

Plus, happy employees are 12% more productive.

Make them feel valuable.

“Wealth consists not in having great possessions, but in having few wants.” -Epictetus

Team Members

Take care of your team members and in turn expect them to take care of you. Genuine care is priceless. To receive value from a team member they have to be shown that they are valuable. From earlier articles, more employees want time off than anything else.

A great example of this in our business is the concept of valuing all people’s time the same. Giving a team more flexibility with their time can be a value add to all team members.

Giving your team members a sense of value and flexibility in their time breeds loyalty. The type of loyalty you can rely on.

Team members with faith in their work, faith in their company, and faith in their leadership are team members who you want to keep around.

Why’s the Water Up to my Knees? A Flood Guide.

Why’s the Water Up to my Knees? A Flood Guide.

Posted on by Plemmons

If you live in western Washington, you likely live near a river. Enjoy the view and don’t worry, you’ll be prepared for mother nature.

Thanks to our friends at King County for these important flood tips:

Know if you’re in a flood plane.

If you own a home, this is something that should be disclosed when you purchased. If you’re unsure, here’s King County’s mapping tool.

Assuming your home is in a flood plane, your mortgage likely stipulated you having flood insurance but, it never hurts to call your homeowner insurance agent and confirm it. Especially going into what’s shaping up to be a rather wet winter.

Have a plan.

The time to establish what your family should do in the event of a flood is now, when there’s not actually a flood.

Some tips:

  • Pull all valuables off the floor and stash them in the highest and most well ventilated location you have.
    • Make sure to have images and receipts for these items for insurance purposes.
  • Know how to evacuate any pets/family that cannot move themselves.
    • Animals in particular can be swept away in a current, if possible do not have them in water above their mid-section.
  • Know multiple routes out of your neighborhood in case one is flooded/disabled.
    • Typically the route leading away from the river along the highest road possible is your best bet.
  • Have a dedicated meeting location in case family is not all at home. Cell Phone towers can be damaged during extreme flooding so discuss this in advance.
    • Closer to your home but away from the flood plane the better. In case someone ends up evacuating on foot.
  • Have an emergency kit. All the usual suspects: water, bandages, flashlights, etc. Here’s some more suggestions

The news just said my house will likely flood tonight. Now what?

Well, at least you’ve got some prep time right? Note, these are mostly money saving tips in the event of a severe flood, do not waste time doing them in an actual emergency.

  • Turn off your gas valve.
    • Water+Gas Line = No fun.
  • Turn off circuit breaker and main electrical line.
    • Helps prevent burnouts and makes home safer to re-enter post flood.

Oh, there’s water in my house.

Don’t panic. Like most natural disasters, panicking does not help. Stick to your evacuation plan and keep these tips in mind:

  • Don’t walk, run, wade, meander, bike, or drive through flooded areas. We like King County’s saying for this:
    • Turn around. Don’t drown.
  • If your vehicle stalls in water, abandon it. You can swim. Your car? Not as much.
    • We’ve yet to see a life jacket for an F-250 or Prius.
  • If water is too deep for you to safely evacuate your home/area get to as high a point as possible with an escape route or your roof. Make sure to take as much warm clothing and supplies as you can carry up with you.

We survived a flood!

Perfect! Now here’s how to not end up a post-flood-freak-accident statistic:

  • Examine your home for structural damage before going inside.
    • If your roof is drooping in, we’d suggest not going inside. Same goes for odd crackling electrical noises outside.
  • Hire professionals to examine your home for damage.
    • It’s worth your deductible to have a professional check your gas, electrical, water, etc. Before attempting to use it.
  • Document damaged property and all water lines.
    • You’ll want pictures and documentation of this for insurance claims
  • Drain basement if needed.
    • Only 1/3 of the water per day. Draining the entire thing at once can cause severe structural damage or collapse.

Flooding is a part of life in the PNW. Preparedness = Safety, this is what insurance is for.

Holiday Office Party? Try This Instead.

Holiday Office Party? Try This Instead.

Posted on by Plemmons

‘Tis the season. What are you doing for your staff?

What they want the most,

Time off.

Randstad US published a study regarding what workers prefer over the holidays in the workplace. The results?

70% of American workers said time off is what they loved most about the season. Seems obvious right?

Well, here’s what might be less obvious:

Your workers are taking time off, what are they doing?

62 percent of workers said they’re going to take vacation during the holiday season even when 52 percent noted their employer doesn’t give extra time off during the holidays.

28 percent use accrued sick time at the end of the year regardless of health to have more time off.

63 percent of employees admit to checking their email when on vacations and 31 percent will even call into the office to come across as more diligent.

Almost 1/3 of employees job search or explore during the holidays since business slows down in most non-retail industries.

Office party? Not interested.

90% of those surveyed said they’d rather have an extra day off or a bonus than an office party.

62% say they feel obligated to attend an office party with an even higher percentage the younger the age group.

47%  of those 18-34-year-olds believe their company should participate in some sort of charity.

What can you do?

The way our small business does it is to give more holidays. We want our employees to enjoy their families, travel, relax, and recharge. With this in mind, our team knows the new year is the time for our best effort! Everyone is rested.

Perhaps in a little more debt but ready to pay that off. ‘Tis the season to reboot and charge into 2018 with a new commitment to the team.

 

Email Marketing: Effective, Efficient, and Engaging

Email Marketing: Effective, Efficient, and Engaging

Posted on by Plemmons

Email Marketing: Efficient, Effective, and Engaging

Email marketing is a modern tool that business owners must use to keep their business and brand front and center. Everything is a powerful opportunity to build a connection with your audience when done properly. Email marketing done poorly will tarnish your brand.

Here are some tips for success:

Make it Personal.

Have you ever opened up a business email it feels like the content and products are speaking to you?

Spoilers: This email was not created ONLY for you. The fact that you thought it meant the marketers are doing it right. There’s a reason that people occasionally jokingly call Emails, “electronic letters”, and that’s because a personal touch goes a long way.

Pick a certain client to write the mass email to. Make sure to keep the tone neutral enough to have it easily relevant to anyone reading. Get familiar writing this type of email as well as utilizing the tools of your respective platform. Nearly all email campaign services will have built-in tools for inserting client information into the email to make each one personal to the targeted recipient.

Don’t overkill it. 

Nobody likes spam. You do not want to be a business known as an inbox spammer. You will likely have a large number of recipients who mark you as spam and you can find yourself getting the boot from your email campaign provider. Seriously, some providers give the boot for anything over a 1% spam complaint rate.

Your content hungry subscribers will be much harder to scare away with content as long as you keep it relevant to their interests.

Avoid clickbait.

“One weird trick to lose 4 inches off your waist in 4 days!”

You’re marking that as spam. Everyone is marking that as spam.

Those email tags I mentioned earlier for client information can usually be inserted into your subject lines. Don’t be afraid of the OCCASIONAL name drop in the subject line. Don’t abuse this. It becomes less personal if you do it too often and this is an ace up the sleeve that you do not want to lose.

Simple subject lines. 

Your subject line should be exactly that, a subject line. Give them a reason to click on your email. They can see the first sentence of the email before clicking on it so don’t oversell the subject. It displays poorly on mobile devices and you are more likely to get slammed by automated spam programs.

It’s not free, even if it’s free.

We all know the saying that you “get what you pay for,” email campaign and automation software isn’t an exception to this rule. As someone who has used well over a dozen different email campaign and automation systems in their time, want to know which ones are the best?

I’ll give you an objective top 3:

MailChimp

Campaign Monitor (Cheaper version of MailChimp Essentially)

Constant Contact

The most cost efficient one of those with a moderately sized database is going to run $100 plus a month.

And, it’s worth every penny. Every. Single. One.

A year-long email drip campaign in one of those programs once you’re an expert can build complete with A/B testing, link backs, and social media plugins in an afternoon.

This is a tool, not the shed. 

Email marketing is just ONE piece of your marketing. Traditional word of mouth, social media, etc. Also, play key roles when it comes to the advertising of your small business. Growing your presence without years of operation requires you to play smarter AND harder to legitimize your brand.

Done strategically, email marketing can be a massive boost to your business and once it’s going well, one that doesn’t require much micromanagement.

You’ve got other things to do, like figuring out where your next office space will be 😉

Want to have us discuss anything in particular on our next blog? Curious as to what Plemmons Industries can do to help you grow your business?

Get in touch with us: ContactUs@PlemmonsIndustries.com