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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

#131

Post by Schiendelman »

xnx wrote: post #98
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…

Is there any more to this story than "extend and pretend" that's been going on for 6 years?

Tell me more? As commercial leases are ending the owners are finally having to accept foreclosure or sell.

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

#132

Post by Schiendelman »

com2kid wrote: post #118
Schiendelman wrote: post #54

Earlier quoted context omitted.

We made a lot of gains there just before covid, but it's a fight against empty space. We simply need more residential growth in the core. South Lake Union has improved a lot in the last two years, and Denny Triangle is coming along too. That will help north downtown, it's just going to take time, and there's not much we can do now to speed it up. There was a 1993 initiative that seriously fucked up our planning proce…

One of my regrets is not joining my area's design review board when it had an opening just so I could rubber stamp everything yes.

Oooh I would have appreciated you! Maybe you can do that where you live now!

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

#133

Post by Schiendelman »

fhrow4484 wrote: post #125
Schiendelman wrote: post #42

Earlier quoted context omitted.

Amazon didn't "relocate" - they just moved most of their new hiring to Bellevue.

If you pay attention to the WARN layoffs notices you'd also see they fired at a much higher rate in Seattle compared to Bellevue. So faster hiring east side. Faster firing west side. It's a soft relocation

I think raw numbers are misleading - they have more Seattle employees, so per capita WARN rate is more interesting. Do you know what the percentage impacts were?

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

#134

Post by adam_arthur »

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…

An increase in vacancies across the board is reduction in demand, plain and simple.

That the new equilibrium price to re-tenant all the buildings is lower is evidence of that.

But the OP is correct that when enough of the building owners default on their debt, the building will be foreclosed, sold for less and asking rents will go down towards the new equilibrium price.

Thus occupancy is likely to improve again down the line.

But, yes, this is not a bullish situation for Seattle. Office generally hasn't been doing well nationally, so it's more of a question of relative performance.

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

#135

Post by bartread »

danudey wrote: post #106
bartread wrote: post #55

Earlier quoted context omitted.

It’s an interesting thought. One wonders if a lot of the utility infrastructure they need would be more readily available and/or be less negatively impactful to build as well.

Just for reference, Peer 1 has a data centre in downtown Vancouver which, fifteen or so years ago, was able to accept my then-employer as a client and offer us a quarter, half, or full rack, but could only offer us enough actual power to run about two servers. The reason being that they had a huge number of old, grandfathered-in clients with old systems from ten or fifteen years ago which were using massive amounts o…

Your 3rd paragraph: I wondered if something like that might be the issue, hence my somewhat tentative musing.

Legacy of all kinds seems always to be so expensive to deal with.

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

#136

Post by hirsin »

danudey wrote: post #106
bartread wrote: post #55

Earlier quoted context omitted.

It’s an interesting thought. One wonders if a lot of the utility infrastructure they need would be more readily available and/or be less negatively impactful to build as well.

Just for reference, Peer 1 has a data centre in downtown Vancouver which, fifteen or so years ago, was able to accept my then-employer as a client and offer us a quarter, half, or full rack, but could only offer us enough actual power to run about two servers. The reason being that they had a huge number of old, grandfathered-in clients with old systems from ten or fifteen years ago which were using massive amounts o…

Fwiw there's a 290k sqft DC on Denny a few blocks from the Amazon towers https://h5datacenters.com/seattle-colocation.html If you live in Seattle you've probably walked right past it. Small potatoes compared to a 10M sqft DC but it hosts real traffic.

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

#137

Post by edg5000 »

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…

Your argument is that it's simply because of dropping prices. Maybe that does explain the bulk of it. But the article seems to suggest it's the WFH transition. How much of the vacancy rate would be explained by that?

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

#138

Post by Schiendelman »

BryantD wrote: post #114
Schiendelman wrote: post #108

Earlier quoted context omitted.

I don't think they closed their office - have they reduced their actual leased footprint?

They kept at least the main floor in Russell Investment Center. I don’t know if they have all ten+ floors any more. They were trying to sublease around 100K square feet right after the pandemic but I haven’t seen any news since then.

Yeah, if they're subletting they probably can't get out of the space. I bet they were successful.

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

#139

Post by siren2026 »

lukeschlather wrote: post #129
naturalmovement wrote: post #126

Earlier quoted context omitted.

> 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/

They're looking at national politics, and on that score, yes, the ST is liberal. When it comes to local politics the Seattle Times is conservative. Your objection is a bit like people who object that the Democrats are conservatives, from a European perspective, except this is about the city itself. The current mayor is liberal, the previous mayor was conservative. They're both Democrats and would be defined as libera…

As a European, Democrats are absolutely not conservative from a European perspective. There are multiple dimensions but at least socially they push everything further to the left than in Europe. (Which is also in my opinion why they are losing elections)

Almost every social topic is pushed to the extreme left by the Democrats. Simply look at how many weeks abortion is allowed in blue state and compare with most European countries. Most European countries are way more conservative.

Economically yes, they are more conservative but even that is now changing as well (see: New York and AOC).

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

#140

Post by hedgehog »

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…

I'll add a few bits. Commercial leases are typically "triple net" so taxes are passed pretty much directly through to tenants and land lords don't need to worry too much about them. A very visible part of the "dead downtown" effect is due to small businesses that have terrible margins, high fixed costs (including rent), and don't survive losing 20% of their customer base. And finally, anyone paying attention saw that Seattle core downtown is a highly concentrated bet on office rental to the exclusion of almost any other use of space or reason to go there.

A few years back I did an art installation in one of the storefronts at the 2+U building and in the process got to study up on some of the issues and talk to a few people, the general theme was that everyone had a vested interest in focusing on possible causes that were external and fixable within a short time. I don't think that's reality.

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