Convert some to cheap residential. Solves both problems: affordable housing as well as rebalancing supply and demand for office space.
As downtown Seattle offices empty, city facing years of 'zombie' towers
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Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#72New York City: Hold my Negroni aperitivo. I have faith in the Big Apple administration's ability to become a leader on this metric.
According to the graph in the article, NYC is doing about average, and LA/SF are the other front-runners.
SF will recover after a few more AI billboards
Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#73Earlier quoted context omitted.
It will be interesting to see how that changes with mamdani. Depending on who you ask, it will either bring in the Utopia or it will be a devastating waste, but very few people expect not much to change. Thing is, it takes years to move so it will be a while until we see the results. Regardless of which side you tend to be on, it seems like it will be a useful experiment!
Mamdani is going to destroy the entire pre-1974 multifamily housing stock of the 5 boroughs. It will happen really quickly (values already down 40%, 11% of owners are behind on their mortgages).
Even if (a big ‘if’) that’s true, how is stock being destroyed? Investment returns maybe, but not supply.
Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#74Earlier quoted context omitted.
Are you saying we need to be in the office and not remote to do interesting things? Or are you misunderstanding the context and talking about employment or something?
Yes. I think remote works for a lot of people, but at a societal level we need real-time in person collaboration among a large swath of society to accomplish interesting tasks. I say that as someone who works entirely from home and really enjoys it.
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Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#75If you haven't lived in Seattle, it's hard to understand the problem. It's multifaceted; business climate, generally poor quality of the city itself as a walking / working destination, extremely hostile to business city government, and greener pastures (literally) east across the bay, which happen to be closer to some very large headquarters. The die was largely cast when Amazon called Seattle's bluff during COVID an…
The city has a notorious open air drug market within 2 blocks of one of its main tourist attractions at Pike Place. Downtown is generally not a pleasant place to visit.
A few years back when I worked in the Seattle downtown, I used to have a walk around the office during lunchtime. I still remember seeing a drug addict baking what I assume was heroin just a block away from Pike Place Markets. It's crazy
Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#76Seattle 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…
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?
Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#77Seattle 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…
> This is almost entirely an artifact of the financial instruments used to pay for these buildings, regardless of any Seattle policy changes.
Why would this be different in Seattle than in other cities? Many downtown office towers are bought or built using a lot of debt throughout the U.S. What do you think makes Seattle special?
> We just saw another building turn over, US Bank Center. The new owner bought it at a price where they'll be able to lease it competitively, and it won't sit empty. We'll see that continue to happen.
The news story mentions the U.S. Bank Center example. What it says that you're leaving out is just HOW big that discount is:
> The new owner of the U.S. Bank Center, having paid just $280 million, or less than half of what the building went for in 2019, presumably can afford to lower rents enough to fill the place, which is now 45% vacant, according to CoStar.
A discount of more than 50% is a bubble bursting. It's great that the new owner can offer fire-sale rent, but where does that leave the old owner, if they were truly as leveraged as you suggest they were likely to be?
> 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, ask me about it!
OK, I'll ask you about it. This "Seattle Times = Blethen family propaganda" line has been tiring for the 25 years I've been hearing it. What exactly are they not covering about Seattle's downtown today that you think they should be? Why do you think that their opinion staff influence the news coverage so much? In short, if the Seattle Times has a conservative bias in its news coverage, why does the Wall Street Journal famously have a liberal-biased newsroom?
Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#78Yet rents won't drop -- the commercial mortgage covenants prevent landlords from dropping rental rates, so they'll just sit there fallow until the market recovers.
Or government pushes them to change. Regulators have tremendous power over banks.
Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#79If you haven't lived in Seattle, it's hard to understand the problem. It's multifaceted; business climate, generally poor quality of the city itself as a walking / working destination, extremely hostile to business city government, and greener pastures (literally) east across the bay, which happen to be closer to some very large headquarters. The die was largely cast when Amazon called Seattle's bluff during COVID an…
Seattle here. The problem isn't that there's too little "planning" or "zoning". Where that's relevant, there's too much. The city has used those tools over and over to slow growth and tack on requirements for businesses. I'm not aligned with the new mayor's business-hostile policies. But as far as making the city better for walking, things are going very well. We've been narrowing crossing distances, improving sidewa…
> And the number of people in tent encampments has dropped dramatically, it's become rare and short lived in most of the city.
Do you have any data to support this claim?
Re: As downtown Seattle offices empty, city facing years of 'zombie' towers
#80Seattle 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…
This tracks with what I’ve heard around as well. What changed in the financial instruments?
My understanding is a lot of the loans have gone PIK or otherwise essentially aren’t serviceable at current prices. Do you think that’s resolvable somehow or just lagging implosion?