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Thursday, January 8, 2009

Boom Ghost Town in the Sky

Posted by Dominic Holden on Thu, Jan 8, 2009 at 2:04 PM

Seattle's building boom, which hit its stride planning new office buildings in 2006, is about to deliver a skyline of vacant buildings.

The Daily Journal of Commerce reports today that Cushman & Wakefield, a firm that monitors commercial real estate, says rents are plummeting by 10 to 20 percent. Among reasons rents are dropping: JP Morgan Chase is giving up 500,000 to 800,000 of space in WaMu Center and vacating roughly a half-million square feet of space in other downtown buildings; Safeco is freeing up its ~~University District~~ downtown office space following a buyout from Liberty Mutual; Microsoft announced it’s backing out of 300,000 square feet in South Lake Union; and Starbucks has moved employees out of a building on King Street.

“There are going to be some empty buildings for a while,” says Brett Allen, director of Triad Development.

And more inventory is on the way. Currently, 2.5-million square feet of downtown office space is under construction, Allen estimates. Developers Opus, Vulcan, Touchstone, Martin Selig, and Schitzer West are among the those constructing office buildings. Schnitzer West, for example, is constructing a 40-story tower on 8th Avenue and Stewart Street. “They are definitely completing the structure,” says Maragert Nicoll, a spokeswoman for Schitzer. However, sources say the building doesn’t yet have tenants, and Nicoll is unsure if the developers plan to complete the tower’s interior.

Meanwhile, developers are planning ambitious office towers. A hole on 5th Avenue and Columbia Street is the proposed site of a 41-story tower. The site’s developer, Kevin Daniels, hasn’t returned calls to comment. A block north, Schnitzer West is planning a 40-story office tower on 5th and Madison. Both buildings, if built, will contain about 750,000 square feet of new office space.

In all, Seattle is looking at over five-million square feet of office space hitting the market in the next few years. But Jesse Ottele, Vice President of CB Richard Ellis, says the rate of new rentals in Seattle is only about a half-million square feet in an average year. "It’s going to get uglier than it is right now," says Allen. In other words, Seattle has about 10 years of empty office buildings on the way.

Comments (27) RSS

Oldest First Unregistered On Registered On Add a comment

Less buildings, more copy editors.

Posted by ROAG on January 8, 2009 at 2:06 PM

The great news is that it will be cheaper for building owners to shutter the empty space than rent it!

Oh wait, that's terrible news.

Posted by dwight moody on January 8, 2009 at 2:07 PM

"Meanwhile, developers more office buildings are planning ambitious office towers."

That's Bongtastic

Posted by Porkchop Sandwiches! on January 8, 2009 at 2:09 PM

What is the direction of your Urb -- depopulation especially downtown.

What is the direction of your policy planners -- increasing infrastructure centered about downtown.

Make sense?

Posted by Your Urb Just Died !! on January 8, 2009 at 2:13 PM

How much of the formerly Safeco tower is still occupied by Safeco? I thought a majority of it is now filled by the UW. Or does the UW only occupy a few of the floors?

Posted by stinkbug on January 8, 2009 at 2:17 PM

Safeco moved out of the UW tower years ago.

In fact, it's not even the safeco building any longer.

Get with it!

Posted by andrew on January 8, 2009 at 2:30 PM

I bet those empty floors would make good homeless shelters

Posted by spock on January 8, 2009 at 2:37 PM

This downcycle will certainly be bad, but it's not likely to be a ten year trough. The 2.5 million square feet already under construction will hit the market, but nothing new (the 5th & Madison or 5th & Columbia) will start. After the WaMu givebacks there should be about 3.5 million of space available downtown (less than 3 million in the central business district) at the peak. Compare this to 1989-1990 when we had 4 million square feet of new space (2 Union, WaMu Tower, US Bank Center, Gateway Tower) become available in an overall market that was much, much smaller. Took us about 6 years to make it through that storm.

@5 - You're right about the UW building. Before they were bought, Safeco moved to 2nd & Seneca (the Ban Roll-on building).

Posted by downtowner on January 8, 2009 at 2:37 PM

We are still number one in the country for investment in commerical real estate.

We're number one! We're number one!

Posted by JesseJB on January 8, 2009 at 2:40 PM

love your headline...

Posted by MEC on January 8, 2009 at 2:46 PM

@ 3) No bong required--my typos happen even when I'm high on life!

Posted by Dominic Holden on January 8, 2009 at 2:51 PM

In the world I see, you're stalking elk through the Grand Canyon forests around the ruins of Westlake Center. You'll wear leather clothes that will last you the rest of your life. You'll climb the thick kudzu vines that wrap the WaMu Tower. And when you look down, you'll see tiny figures pounding corn, laying strips of venison in the empty car-pool lane of the viaduct.

Posted by tyler durden on January 8, 2009 at 2:53 PM

@3: Many *have* to keep building (and on schedule, mind you) per their loan agreements. You can't just stop building any time you like. The banks get reallllll pissed.

Also, goddamn economy! Please don't let me lose another job.... :(

Posted by Original Monique on January 8, 2009 at 2:53 PM

Just think of all the artists lofts!

Gonna be fun!

Posted by Will in Seattle on January 8, 2009 at 3:01 PM

oh and @6 is right - my building has a giant UW sign on it - you can't miss it, we're burning the midnight oil and glowing fierce as we work way more hours than we get paid for ...

Posted by Will in Seattle on January 8, 2009 at 3:02 PM

That should be " Fewer buildings" #1. Apparently they won't be hiring you for one of those copy editor jobs!

Posted by pot-> kettle on January 8, 2009 at 3:05 PM

ING, the insurance company, is moving into the King Street space that Starbucks left in March (1st & King, southwest side), but the building that Starbuck's was putting up just south of the King Street building isn't even past the underground parking building point, and it's already on the block. Want a good deal on a brand new building that can hold 1000 employees?

Posted by MonkeyNose on January 8, 2009 at 3:11 PM

So who's staying at the WaMu building then?

Posted by Will in Seattle on January 8, 2009 at 3:13 PM

Low-income and housing and arts spaces.

Posted by flamingbanjo on January 8, 2009 at 3:40 PM

AT&T could stand to consolidate all of its Puget Sound employees into one or two locations.

Posted by laterite on January 8, 2009 at 3:45 PM

It is time for the next big thing to start, and with this much cheap office space available it's probably going to happen downtown.

Posted by Greg on January 8, 2009 at 4:03 PM

This nothing new. Why do you think we have the Seattle Municipal Tower? It got built by AT&T during the last office space glut, and Mayor Rice picked it up for a song because the damn thing was empty. Key Bank was in there for about five minutes too, as I recall.

Rice also pretty much gave away the City Light Building, the Dexter Horton Building, and the Arctic Club. Gotta keep your buds happy, after all....

Posted by It's all a game on January 8, 2009 at 4:04 PM

@14 & 19

I second the motion.

Posted by Sad Comment on January 8, 2009 at 4:10 PM

This is good news. Lots of fortresses from which to wait out the zombies.

Posted by Superfrankenstein on January 8, 2009 at 4:14 PM

@22,

Actually, I'm pretty sure Nickels gave away the Arctic building, and the Dexter Horton giveaway may happened during Schell's term. But Rice did indeed give the City Light building away.

Evidently, giving away public assets is about the only thing our last three mayors were good at (even if Schell wasn't the mayor who gave Dexter Horton away, the PacMed giveaway was on his watch).

Posted by Mr. X on January 8, 2009 at 4:31 PM

Two Union Square was originally a see-through, too.

Posted by Toe Tag on January 8, 2009 at 4:45 PM

SQUAT THEM!

Posted by do it! on January 8, 2009 at 4:59 PM