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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

#201

Post by rayrey »

Schiendelman wrote: post #58
asveikau wrote: post #35

Earlier quoted context omitted.

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.

Earlier than that, they were actively dangerous. I spent a lot of my childhood in Belltown, and it was not a safe place in the late 80s and early 90s. SLU and Denny Triangle are amazing now. Those are some of the few places with restaurants open into the evenings. Amazon, like them or not, does a great job prioritizing local businesses in the retail spaces in their buildings. They can't all survive, but they've had a…

Streetwise is a great documentary about the mid 80s in Seattle

https://youtu.be/Lu10UUtgxoM?is=t4Q7o4FyI6HlydhL

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

#202

Post by twoodfin »

lotsofpulp wrote: post #179
bruce511 wrote: post #160

Earlier quoted context omitted.

No there won't be clauses about rental amounts. It's not that straightforward. It boils down to collateral for the loan. A building has a value based on future rents. The owner borrows from the bank based on that value. The building is collateral for the loan. The rental rate (not occupancy ) determines the current building value. (Occupancy affects cash-flow, but not building value.) Reducing rent improves cash flow…

> Reducing the rent triggers a re-evaluation of the building value, which in turn affects the loan. There's no discretion here, it's just math What is “the” rent? The building has multiple tenants (usually), at various prices. It makes no sense that there is a specific price that the landlord cannot rent at to any one tenant that “triggers” a re-evaluation. If the lender wants a continuous view into the collateral’s…

The discourse about commercial real estate in downtowns (well-beyond this thread) has taken on a kind of “one neat trick” wishful thinking.

If only the greedy owners or banks would recognize their massive investments had lost hundreds of billions in value due to declining demand, then… the underlying causes of that decline in demand and the consequences if it persists can be waved away?

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

#203

Post by Schiendelman »

zeafoamrun wrote: post #156
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/

Just goes to show how loony politics are in Seattle for ST to seem conservative to people.

It's very conservative - just along certain axes that are especially locally relevant. For instance, they've opposed both our 2008 and 2016 mass transit ballot measures (both of which passed with strong support). They were supportive, until we replaced the primary owner's express onramp on Interstate 90 with a train.

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

#204

Post by lokar »

Schiendelman wrote: post #93
lokar wrote: post #76

Earlier quoted context omitted.

And you have to wonder, what kind of boom in innovation could lots of reasonably priced office space support? What gov policy cold push landlords and banks to accept reality? Vacancy tax? Change to bank regulations?

The timeframe of regulatory changes here is not worth any investment. The turnover will continue to happen, it's too complicated to try to change, and you'd probably create nasty unexpected side effects.

Some could be fairly simple. Require banks to re-calculate collateral values after 6mo of vacancy, with a large requirement to reduce.

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

#205

Post by beej71 »

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/

Fallacy of composition.

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

#206

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

#207

Post by snypher »

0x1d7 wrote: post #195
solid_fuel wrote: post #163

Earlier quoted context omitted.

It always plays out like this. "Downtown seattle is a war zone, if you don't live there you can't understand!" Then it turns out they live in Enumclaw.

It’s all love and horses in Enumclaw.

The world's most tired comment.

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

#208

Post by lotsofpulp »

aardvarkr wrote: post #193
lotsofpulp wrote: post #180

Earlier quoted context omitted.

Residential real estate has a lot of sweetheart terms due to government subsidies, especially in the US. That is why you don’t see 30 year fixed rates anywhere else, and 0% down loans anywhere else. The DSCR equivalent for residential real estate is debt-to-income ratio. In a free market, it is conceivable that lenders offer lower interest rates for borrowers who periodically prove their DTI is sufficient. That is ba…

Residential real estate appraisals are done by under employed real estate agents. They’ll always find a way to justify the number that you paid, like during Covid when I bid $200k over asking for a $1M house, the appraiser didn’t bat an eye and got to that number. That was totally based on vibes.

I don’t know what “under employed real estate agents” means, but the appraiser that the lender cares about is in no way associated with the real estate agents. The lender picks the appraiser (a licensed professional usually working as an independent contractor) who submits a report to the lender, who then determines whether or not they want to use it.

Asking price also has nothing to do with market value, so offering $200k more over asking would be irrelevant to the appraiser. You should have received a report showing recently sold houses similar to the one you were buying and other physical features that justified the appraisal.

There is even an appraisal contingency in most purchase agreements that outline what to do if an appraisal comes in lower than what a buyer offers to pays. Typically, the buyer can exit the purchase and get their earnest money back, or they can put additional money down to cover the gap between the appraisal and the offer price.

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

#209

Post by consensus1 »

bombcar wrote: post #176
bruce511 wrote: post #160

Earlier quoted context omitted.

No there won't be clauses about rental amounts. It's not that straightforward. It boils down to collateral for the loan. A building has a value based on future rents. The owner borrows from the bank based on that value. The building is collateral for the loan. The rental rate (not occupancy ) determines the current building value. (Occupancy affects cash-flow, but not building value.) Reducing rent improves cash flow…

This is exactly the key - residential real estate is based on tons of pricing effects, and appraisals are much more "feels" than "reals", if you will (how people feel about the area, how they feel about the tower the previous owner added, how they feel about the location, etc). Commercial real estate valuations are almost entirely a mathematical formula based on rents, current, whether they're collecting them or no .…

This sounds like a conspiracy theory. Why would a bank be willing to accept a valuation based on a fictional rent number?

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

#210

Post by consensus1 »

aardvarkr wrote: post #193
lotsofpulp wrote: post #180

Earlier quoted context omitted.

Residential real estate has a lot of sweetheart terms due to government subsidies, especially in the US. That is why you don’t see 30 year fixed rates anywhere else, and 0% down loans anywhere else. The DSCR equivalent for residential real estate is debt-to-income ratio. In a free market, it is conceivable that lenders offer lower interest rates for borrowers who periodically prove their DTI is sufficient. That is ba…

Residential real estate appraisals are done by under employed real estate agents. They’ll always find a way to justify the number that you paid, like during Covid when I bid $200k over asking for a $1M house, the appraiser didn’t bat an eye and got to that number. That was totally based on vibes.

If a house is getting so many bids that it sells for 200K over asking, then that is pretty clearly the market price as determined by auction. Of course the appraisal would sat that is the value because it is.
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