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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

#181

Post by carlosjobim »

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…

> However, when a space loses a tenant, the bank can't just drop the price for the owner, the same as you can't just pay less on your mortgage if you get a lower paying job.

You can always pay less on your mortgage or any other debts if you are in a crisis and negotiate with the lenders. They prefer this immensely over not receiving anything at all. And in the long run they also receive more interest this way.

It's very common especially for businesses to enter these kind of negotiations with the banks, and not very uncommon for individuals either.

So it makes much better sense for everybody involved to sublet these spaces for market value, even if that income doesn't cover the original mortgage, because something is better than nothing. Somewhere there's a giant perverse incentive in situations like this.

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

#183

Post by philwelch »

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…

In Seattle you’re considered conservative if you’re not a Marxist.

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

#184

Post by ETH_start »

AvAn12 wrote: post #71

Convert some to cheap residential. Solves both problems: affordable housing as well as rebalancing supply and demand for office space.

This was covered in the article, only a small fraction of the office space can be converted to residential.

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

#185

Post by philwelch »

brookst wrote: post #157
siren2026 wrote: post #139

Earlier quoted context omitted.

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 Europ…

How do Democrats’ policies on health care, paid leave from work, unions, public funding of political campaigns, and public transit compare to European conservatives? If you’re a single-issue abortion voter, yes the US democrats tend to propose fetal viability (22 weeks or so) as the limit, while most of Europe is 12 weeks. UK and Netherlands are 24. But if you genuinely believe US democrats are wildly liberal, you mu…

> If you’re a single-issue abortion voter, yes the US democrats tend to propose fetal viability (22 weeks or so) as the limit

No, the standard Democrat policy is to allow abortion on demand at any point prior to birth—40 weeks or so.

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

#186

Post by [deleted] »

Schiendelman wrote: post #91
jmyeet wrote: post #83

Earlier quoted context omitted.

I'm not sure the bank has that much to do with it. Commercial real estate valuation is based entirely on its ability to produce income. Lower the rent, lower the value. And that's a problem because most commercial leases are long (5-20+ years) so you're locking in an asset writedown for a long period of time. So it can be better to leave it vacant and pretend the value hasn't changed. You can still run into problems…

Yes, that's exactly the lag I'm talking about. The banks won't allow the buildings to lease for less than they need to make per sqft to pay back their loans. They'd rather foreclose, apparently. There's some reporting around this recently, I'm not in a position to look it up today but it should be easy to find!

[deleted]

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

#187

Post by awakeasleep »

Schiendelman wrote: post #91
jmyeet wrote: post #83

Earlier quoted context omitted.

I'm not sure the bank has that much to do with it. Commercial real estate valuation is based entirely on its ability to produce income. Lower the rent, lower the value. And that's a problem because most commercial leases are long (5-20+ years) so you're locking in an asset writedown for a long period of time. So it can be better to leave it vacant and pretend the value hasn't changed. You can still run into problems…

Yes, that's exactly the lag I'm talking about. The banks won't allow the buildings to lease for less than they need to make per sqft to pay back their loans. They'd rather foreclose, apparently. There's some reporting around this recently, I'm not in a position to look it up today but it should be easy to find!

[dead]

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

#188

Post by IG_Semmelweiss »

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…

>>> 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.

When the LLCs that own the commercial buildings declare themselves bankrupt, and walk away from the asset and throw the keys on the table, who pays the 50% increase ? The banks?

Will banks own a 50% increase in property taxes ?

What about residents ? Renters ?

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

#189

Post by Schiendelman »

edg5000 wrote: post #137
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?

"Explained by" is complicated - 100,000 square feet of empty space that is leased to a company and unused is not vacant.

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

#190

Post by will4274 »

bragr wrote: post #162
siren2026 wrote: post #139

Earlier quoted context omitted.

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 Europ…

I think you have a particularly poor read on American politics. >they push everything further to the left than in Europe. (Which is also in my opinion why they are losing elections) No, the democratic electoral base is consistently and loudly complaining that after the primaries, most democrat candidates become moderates in the general election (even actively courting Republicans) and do not follow through on the pri…

> No, the democratic electoral base is consistently and loudly complaining that after the primaries, most democrat candidates become moderates in the general election

Actually, about the same number of Democrats say their candidates are too liberal as not liberal enough. E.g. for Harris, both numbers hover between 10 and 15 percent.

The not liberal enough cohort is especially loud, particularly online, but the data shows candidates end up about at the primary voter average, as you might expect.

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