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As downtown Seattle offices empty, city facing years of 'zombie' towers

seattletimes.com

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Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#141

Post by hedgehog »

asveikau wrote: post #35
wxw wrote: post #2

Back in 2019, I was amazed to learn just how many buildings in Seattle's downtown were Amazon offices. IIRC, it was dozens of buildings, some entirely owned by Amazon, some WeWork leases, etc. Downtown isn't very big, so that's a huge presence. It was also fun to check out the company-city that is Redmond, not far away. Seattle's a great city, and it's got great tech presence. I'm optimistic for its recovery.

The neighborhoods they built that stuff in (mostly South Lake Union and Denny Triangle) used to be so sleepy in 2010 and earlier. It was a big transformation.

They were (maybe still are?) around 20% of sq feet overall and a lot of that was leases in buildings far from SLU with no obvious Amazon branding.

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#142

Post by zmgsabst »

wenc wrote: post #90
operatingthetan wrote: post #89

Earlier quoted context omitted.

I think you may be the only person in the world who thinks Lynnwood has better energy than Seattle. Complaining about Seattle being too suburban and then praising its suburbs is too contradictory to take seriously.

We can disagree about Lynnwood (that's my opinion). But Seattle does have very low social wattage. p.s. I should clarify about Lynnwood since this is contentious for folks. For me, Lynnwood produced more social collisions that I care about than Seattle does. It had a lot of immigrant businesses, actually good restaurants, bookshops, hobby shops, etc. where people lingered, even though it's true you have to drive ever…

Lynnwood is where the fun parts of Seattle moved when rents got too high.

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#143

Post by thorncorona »

halestock wrote: post #123
dlcarrier wrote: post #117

Earlier quoted context omitted.

In Bellevue, office vacancies are low because most have long term tenants… Well yeah, Bellevue isn't trying to drive all of the office tenants out of their city.

I'll bite, how's Seattle doing that?

Crime. Everyone moves from DT Seattle to the eastside when they start a family. It’s normalized at this point, where if you see a potential threat u just walk across the street and go on with your business.

Hostile business environment. Jumpstart, inflationary wage environment, etc.

Living in DT Seattle is just meh. Expensive and the food scene is terrible due to local labor policies.

Inability to get anything done from the local govt. Wilson spent her campaign promising to make it easier to build housing and just gave in to nimby interests again.

Local politics is lunacy. Constant issues with the the unhoused population but it’s ok let’s just keep pushing it to little Saigon / Chinatown! Close your eyes since it doesn’t happen if you’re in Wallingford, QA, or Ballard!

Fewer and fewer major cos investing into the area.

And then there’s 0 transit enforcement or even any attempt at it. We don’t even have fare gates on the link for gods sake.

It’s just completely absurd how mismanaged this city is, despite how much potential there is.

Nowadays more and more offices opening in Bellevue.

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#144

Post by toast0 »

IG_Semmelweiss wrote: post #128
Schiendelman wrote: post #67

Seattle here, and a real estate nerd. This is almost entirely an artifact of the financial instruments used to pay for these buildings, regardless of any Seattle policy changes. The Seattle Times has always been a conservative rag, and their editorial board hates the new mayor, so they hit the "Seattle is dying" story as often as possible. They've got a long history of this whenever there's leadership they don't like…

What are the financial "instruments" ? The main claims from the article seem worrysome, IN particular, the 37% vacancy rate, as well as multiple buildings underwater[3], etc. Now, lets dissect the claims that this is part of some cycle, and not the result of new city hall management. The reality is that with Jumpstart, and with the vacancy rate, enterprises are not renting. But, the owner is stuck with the asset in w…

> So, the downtown core is going to produce far less in property taxes in the foreseeable future, with fewer tenants paying (at least in short term) occupancy taxes, etc. This is going to play out in a decade.

> According to this, commercial property taxes are about 26 %[1] of the Seattle budget

In WA state, the property tax collected isn't related to the total of the assessed value. The total tax billed across all existing properties typically goes up 1% per year (the "levy lid"), unless voters have allowed a "levy lid lift". That total is apportioned amongst the properties by value.

So if everybody's property values drop in half, their property tax rate doubles (plus a little) and their tax bill stays about the same.

Of course, if commercial property assessments drop and residential assessments stay the same or go up, commercial bills will drop and residential bills will go up. But the total tax bill will still be 1% more than last year.

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#145

Post by hitekker »

naturalmovement wrote: post #126
Schiendelman wrote: post #67

Seattle here, and a real estate nerd. This is almost entirely an artifact of the financial instruments used to pay for these buildings, regardless of any Seattle policy changes. The Seattle Times has always been a conservative rag, and their editorial board hates the new mayor, so they hit the "Seattle is dying" story as often as possible. They've got a long history of this whenever there's leadership they don't like…

> The Seattle Times has always been a conservative rag The Seattle Times is Left-Center with a high credibility rating. [1] Such a deliberate distortion of the facts renders the rest of your screed null and void. [1] https://mediabiasfactcheck.com/seattle-times/

[dead]

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#146

Post by hnburnsy »

>Some commentators have blamed the downtown office apocalypse on Seattle’s taxes, antibusiness rhetoric and perceptions of public safety.

That is very hand-wavy of the author, Seattle literally taxes gross receipts of every business that does over $100,000 [recently raised to $2 million], with no deduction for expenses, and on top of an employer paid payroll expense tax.

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#147

Post by murderfs »

halestock wrote: post #123
dlcarrier wrote: post #117

Earlier quoted context omitted.

In Bellevue, office vacancies are low because most have long term tenants… Well yeah, Bellevue isn't trying to drive all of the office tenants out of their city.

I'll bite, how's Seattle doing that?

They passed a tax on basically just Amazon in 2018 and there were rumblings of Amazon leaving the city for Bellevue/Redmond. The city council repealed it within a month and things quieted down, but then COVID happened, they passed basically the same tax again, and this time it stuck. Since then, Amazon's been slowly leaving Seattle for the eastside by moving employees as their building leases expire: https://www.seattletimes.com/business/amazon/amazon-no-longe...

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#148

Post by 33MHz-i486 »

with all the new taxes the city and the state have piled on, compensation above $1m is going to be taxed (federal + state) at a marginal rate of 56% by 2030, which I believe will be the highest in the country. Not to mention the state is in budgetary deficit, the county is losing population, and the city has extremely business hostile politics. No C-level exec has any economic incentive whatsoever to contract for a large presence there over other places.

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#149

Post by [deleted] »

hnburnsy wrote: post #146

>Some commentators have blamed the downtown office apocalypse on Seattle’s taxes, antibusiness rhetoric and perceptions of public safety. That is very hand-wavy of the author, Seattle literally taxes gross receipts of every business that does over $100,000 [recently raised to $2 million], with no deduction for expenses, and on top of an employer paid payroll expense tax.

[deleted]

Re: As downtown Seattle offices empty, city facing years of 'zombie' towers

#150

Post by lotsofpulp »

Schiendelman wrote: post #130
IG_Semmelweiss wrote: post #128

Earlier quoted context omitted.

What are the financial "instruments" ? The main claims from the article seem worrysome, IN particular, the 37% vacancy rate, as well as multiple buildings underwater[3], etc. Now, lets dissect the claims that this is part of some cycle, and not the result of new city hall management. The reality is that with Jumpstart, and with the vacancy rate, enterprises are not renting. But, the owner is stuck with the asset in w…

The financial instruments are commercial real estate loans. Those loans often do not allow the borrower to charge lower rent. Property taxes are not calculated that way. The property tax rate for a given year is backed into (a "mill rate") based on approved dollars of spending divided by total property value. If total citywide property value drops by 50%, the property tax rate doubles that year. So no, the property v…

>Those loans often do not allow the borrower to charge lower rent.

I have never seen it substantiated that a promissory note in commercial real estate has a clause that dictates how the borrower can price their products or services.

There will be terms for the borrower to be in default if they lose too much revenue or their expenses go up too much, such as leaving spaces empty:

https://www.investopedia.com/terms/d/dscr.asp

Whether a lender wants to foreclose on a borrower in default is far from guaranteed. Often times, they are loathe to take over management of a building so they simply work out a new agreement with the borrower.

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