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Seattle, WA vs. Tacoma, WA: Which Is Better for Businesses?

Published: 05-24-22 Category: General CRE

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

If you’re considering starting a business in either Tacoma or Seattle, you’ll need to make some important decisions.

Both cities are home to thriving business communities, making them both great places to start your company.

However, there are many factors that will influence which of the two cities is best for your specific venture.

With so many considerations and trade-offs, choosing the right place for your business can be challenging.

This guide details the pros and cons of each city so that you can make an informed decision about where to base your new business.

Population Comparisons

Seattle and Tacoma are both located in the Pacific Northwest region of the United States: 222,975 people live in Tacoma, Washington; 787,995 people live in Seattle, which means that it’s nearly 3.5 times more populated than Tacoma.

Average Demographics

In Tacoma, the population demographics in 2022 were:

Median age 35.9 years old.
50.3% of the population is female.
13.2% of the population is between the ages of 25 to 34.
60.3% of the population identifies as White.
9.7% of the population identifies as Black.
11.6% of the population identifies as Hispanic.

In Seattle, the population demographics in 2022 were:

Median age 35.7 years old.
49.8% of the population is female.
15.8% of the population is between the ages of 25 to 34.
65.3% of the population identifies as White.
7% of the population identifies as Black.
6.5% of the population identifies as Hispanic.

Despite the differences in population size, Seattle and Tacoma have very similar demographics.

Average Household Income

The average household income in Tacoma is $80,460.

The average household income in Seattle is $128,184.

Commercial Real Estate Comparisons

Seattle is a major city for commerce, with many notable companies located here. This includes Starbucks, Jones Soda, Getty Images, Amazon, Redfin, and Zillow.

Average Commercial Rents

The average cost of commercial rent in Seattle is:

Class A Office Space: $46.50 per square foot.
Class B Office Space: $33.99 per square foot.
Class C Office Space: $24.80 per square foot.

The average cost of commercial rent in Tacoma is:

Class A Office Space: $28.14 per square foot.
Class B Office Space: $25.23 per square foot.
Class C Office Space: $23.64 per square foot.

It is much more expensive to lease commercial real estate in Seattle than to lease commercial real estate in Tacoma.

Commercial Vacancy Rates

The commercial vacancy rate in Seattle is 10.7%.

The commercial vacancy rate in Tacoma is 6.49%.

CRE Market Outlook for 2022

Seattle is home to many different companies that offer a variety of goods and services, both online and offline.

Tacoma’s economy has historically been based around industries such as manufacturing and shipping. Its economy was built on the area’s railroad connections and access to Puget Sound.

Commercial real estate should be fairly stable in 2022. The majority of the area’s retail space is occupied, which should make for a more competitive market.

Commercial Activity Comparisons

The comparison of commercial real estate between Seattle and Tacoma reveals distinct differences in the market for each city.

Seattle’s commercial real estate market is more favorable to some businesses than Tacoma’s.

Seattle contains a large number of Class A properties, making it an attractive and competitive market for new businesses.

The following are a few key areas to consider.

Retail: In-Person Shopping Versus Online Shopping

Seattle is home to a high number of retail storefronts, which may appeal to some businesses.

Tacoma has a lower number of retail stores in its downtown area, which can be an advantage if you’re starting an online business that doesn’t require in-person customer interaction.

Industrial: Warehouse Storage Activity

Seattle’s industrial sector is home to many warehouses. This can be a good option for some businesses, especially if you plan to operate out of a warehouse or store your goods in it.

Tacoma has less industrial space, and most of it is located in the northern part of the city, in the Nalley Valley area and the Port of Tacoma.

Office: Office Space Activity

Seattle has many options for office space within the city limits. Also, the city is home to a number of large corporations that are consistently ranked as some of the best places to work in the country.

Tacoma’s office market is more limited. The city has a lower vacancy rate than Seattle, and there are fewer Class A office spaces available, making it difficult for new businesses to find adequate space.

Multifamily: Vacancy Rates & Leasing Activity

There is a higher density of multifamily units in Seattle than in Tacoma. This can be a positive attribute to some businesses, but not others.

If you’re planning to open a retail store or restaurant, a high density of multifamily housing can mean better foot traffic.

Deciding Which Location Is Right for Your Business

If you want to expand your business in the Seattle area, it’s important to know which location will work best for you.

Some businesses might be more inclined to choose Seattle. If your company operates online and you don’t need storefront space, Tacoma may be a better option.

If you have a brick-and-mortar operation, Seattle has more retail space in close proximity to your business location. The most important thing is to do your research before making any decisions about the location of your business.

The Seattle vs. Tacoma decision should focus on the specifics of your business, as well as your personal preferences.

If you want to live in a vibrant city with an abundance of businesses and a selection of quality housing options, Seattle is the best option.

However, if you want a lower cost of living, Tacoma may be the better choice for your company’s home base.

Businesses that operate in the Seattle area have a lot of advantages because of its strong economy and location.

However, there are many more things to consider before deciding which city is best for your business.