Whatcom County Economic
Trends and Forecast
Whatcom County is the northwestern most county in Washington State bordering the Strait of Georgia to the west, Okanogan County to the east, Skagit County to the south and British Columbia, Canada to north. The county has an area of 2,810 square miles of which approximately one-third is made up of the Snoqualmie-Mount Baker National Forest, located in the eastern portion of the county. Most of the county’s population is located in the western portion and is largely oriented around the Interstate 5 corridor which provides access from the Puget Sound region to the south into British Columbia, Canada to the north. Bellingham is the largest city and the county seat of Whatcom County. Bellingham is located 88 miles north of Seattle and 55 miles south of Vancouver, British Columbia.
According to the 2019 Washington State Office of Financial Management data Whatcom County has a population of 216,300 which is the 9th largest in Washington State. Of the total, 91,724 lived in unincorporated areas and the remaining 124,576 lived in seven incorporated cities. Bellingham had a population of 86,720 followed by Lynden with 13,620 residents, Ferndale with 13,470 residents, and Blaine with 5,075 residents. Population growth has followed the trend of much of Washington State growing from 201,140 in 2010 which is an increase of 7.5 percent over the nine year period. Growth within the county has been weighted more towards the incorporated areas. These areas had a 9.2 percent increase in population, compared to a 5.4 percent increase in unincorporated areas over the past ten years. However, some of the incorporated area increase is a result of annexation.
Whatcom County’s main transportation route Interstate 5, runs north/south through the western portion of the county and extends from the Canadian border to the Mexican border. Bellingham, Ferndale and Blaine are all bisected by Interstate 5. The city of Bellingham is accessible by interstate freeway, rail, water and a port owned airport. The city of Blaine provides a point of entry to a high volume of Canadian traffic every day that cross the border and utilize Interstate 5 to access a variety of business and shopping destinations. There are four ports of entry into Whatcom County with two crossings into Blaine, one into Lynden and the fourth into Sumas.
Bellingham is served by the Bellingham International Airport with passenger service provided by Alaska Airlines, Allegiant Airlines, Southwest Airlines and San Juan Airlines. Air cargo is provided by Federal Express and UPS. The port of Bellingham has two, deep water, ship berths. Bellingham is also in the process of redeveloping approximately 220 acres of waterfront much of which was the former Georgia Pacific mill on the CBD waterfront. To date, what is commonly known as the Granary Building has been completely renovated and is being leased out with several leases signed. A small park known has Waypoint Park has also been added near the Granary Building. Squalicum Harbor, on Bellingham Bay, is the Puget Sound’s second largest marina. Bellingham is also served by 16 Burlington Northern Railroad spurs, Amtrak and there are numerous trucking firms which serve the Whatcom County region.
Whatcom County employment has historically been based on fishing, agriculture, timber, and other natural resource based industries. Recent trends have led to somewhat of a diversification of employment with education, government and the retail/service sectors flourishing in the county. Oil and aluminum reserves were identified in the 1960’s and still provide a stable employment base in the form of the BP Cherry Point and Phillips oil refineries and the Alcoa Intalco aluminum smelter. All three of these large employers are located in rural Whatcom County west of the city of Ferndale and south of Blaine. However, in April of 2020 Intalco announced that it would be closing its plant at the end of July of 2020. The closing resulted in the loss of 700 jobs which has had a negative effect on the Ferndale economy.
Industry diversification has led to a variety of natural resource based and service/retail based employers in Whatcom County. Major employers include Western Washington University, Peace Health/St. Joseph’s Hospital, Haggen’s Grocery, City of Bellingham, Bellingham School District, Whatcom County, BP Cherry Point, the Lummi Tribal Office and Matrix Service.
Civilian labor force statistics in the Whatcom County statistical area showed an August of 2018 civilian labor force of 111,670. The unemployment rate for Whatcom County was 3.2 percent in May of 2023 which represents an increase from the May of 2022 of 4.5 percent and a decrease from the 7.10 percent in December of 2021. Statewide, the May of 2023 unemployment rate stood at 4.1 percent. Both the unemployment rate for Whatcom County and for Washington State have decreased over the past year as a result of the rebound from the economic shutdown due to the worldwide COVID-19 pandemic took effect.
Over the past ten years the exchange rate has ranged from a low of $.63 in early 2002 to a high of $1.07 several years ago. In July of 2023 the exchange rate was hovering around $.75. A weak Canadian dollar has a negative effect on retail sales in Whatcom County. Conversely, a strong Canadian dollar has a positive effect on retail sales in Whatcom County. Bellingham’s Bellis Fair Mall is one of the largest shopping malls in the state of Washington with 900,000 square feet. The population of Vancouver, Canada and the surrounding communities continues to expand and Canadian consumers tend to adapt to a weak Canadian dollar. Specific goods including gasoline, milk and other dairy products and shoes are all significantly less expensive for Canadian shoppers in spite of their relatively weak dollar. The temporary closing of the U.S. – Canada border to non-essential workers during Covid had a devastating effect on retail sales within the county over the past year.
Land use in Whatcom County is dominated by agricultural, forestry and recreational uses. Aside from the Mt. Baker National Forest which occupies approximately one third other county’s area, the Whatcom Basin, in the western portion of the county is the location of the agricultural and population centers of the county. Diversity of land use is the greatest in the Bellingham area and includes industrial, office and retail centers. Most of the commercial activity takes place in Bellingham although there are a variety of uses in the other western population centers.
A survey published by a local broker in October of 2022 indicated that vacancy rates for retail spaces have recently decreased from 3.6 percent to 3.3 percent with increased demand in downtown Bellingham and along the Meridian corridor in the northern section of the city. Within the Bellis Fair Mall the vacancy rate within the mall has decreased from the second quarter of 2022 from 14.8 percent to 12.2 percent. Vacancy rates for office space within Bellingham have increased from 3.6 percent in the second quarter of 2022 to the October of 2022 rate of 4.1 percent. And the vacancy rate for industrial properties increased from 1.4 percent to 1.7 percent over the same time period. Over the past five years the commercial vacancy rate has fluctuated between four and eight percent.
Multifamily and apartment vacancies have remained low in most areas of Whatcom County as supply and demand of new apartment units have remained in balance. The overall county apartment vacancy rate as of the first quarter of 2023 was 2.2 percent. The vacancy rate for one bedroom apartment units in the first quarter of 2023 was 1.0 percent and for two bedroom units it was also 0.9 percent. There are several apartment projects planned and under construction within Bellingham and throughout the county which should help to relieve some of the tight residential rental market.
Summary
Whatcom County continues to experience moderate increases in population due to its quality of life and relatively low costs of living compared to other counties in the greater Puget Sound region. An expanding population base typically creates demand for all types of real estate. Over the long term economic trends appear to be positive within the region.