Upcoming Boeing Layoffs and Their Effect on Everett Market

[Viktor R.]

Recently I've read the news of Boeing laying off several hundred workers at its Everett plant. Biz Journal article here. I am thinking to myself that layoffs come in waves and that this is just the first wave this year. Also, Boeing contracts support a large supply base in the Puget Sound area and that Boeing layoffs may be a forerunner of a slowdown of Boeing orders to its suppliers. Of course, job losses impact the ability of the workers to pay their mortgages and rents. So, fellow Puget Sound investors, what do you think about the news and do you think that these layoffs will significantly affect the Everett real estate market? 

[Giovanni Isaksen]

We tend to think of Boeing as a local company but ever since the C suite packed up and moved off to Chicago all we are to them is a high-cost legacy burden. WA state, the counties and cities like Everett bent over backwards to give them Yuge tax breaks in return for commitments to keep jobs here but since the day they signed Boeing has been trying to weasel out of its end of the bargain.

And it's really not even Boeing anymore. Ever since the snafu on the 777 created by trying to build a plane with all subcontractors (Warning to RE investors as well) the McDonald-Douglas faction pretty much took over running the company and it's Boeing in name only.

That said, the hope in Everett* was that the Dreamliner's composite construction would spawn an industry hub of high-tech composite development and manufacturing. Looking at the layoff list in the article it seems to be mostly the engineers and technical workers who are getting the ax... not a good sign for those higher paid employees who could afford class A rents. Class B & C properties in Everett and surrounding Snohomish county will probably continue to do as well as ever. 

B and even A props there will benefit from people being priced out of Seattle but there's a lot of new A supply coming online which depends on continued local hiring at MSFT, AMZN, EXPE, GOOGL, DATA, FB, AAPL, SNAP, etc. If these companies continue to fill all the office space they're bulding, buying or leasing then rents will continue to grow in the Seattle core; those not rolling in tech green will have to look further out for affordable rents and that should benefit Everett.

*In 2015 I did extensive research on Everett employment and the apartment market there for a client.