Thank You Sir, May I Have Another


[ 5th & Yesler ]

In case you hadn’t heard:

Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.

The next wave of the credit crisis is about to hit — a collapse in com mercial real estate and potential explosion of bank failures.

Commercial real estate is the “second shoe” to drop in hurting the economy…

More than 66% of 6.5 million square feet of newly constructed commercial space was still vacant at the end of the second quarter of 2009.

In Seattle, the office vacancy rate has hit 18.5 percent, and commercial real estate sales are at a 20-year low. Seattle recently shot up to number one on the list of U.S. cities with the highest rates of troubled real estate loans.

Right on cue, several large office projects are nearing completion or have recently come on line in Seattle:

Business cycles are us.  When the object of the game is to make the most money with the least amount of effort possible, speculation will always be irresistable.  And that would be just fine and dandy but for one pesky detail:  deep economic cycles seriously fuck with people’s lives. 


[ 2201 Westlake ]

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[ 7th & Madison ]

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[ 1918 8th Ave (under the crane) and 2001 8th Ave (just to right of crane) ]

27 Responses to “Thank You Sir, May I Have Another”

  1. Joshua Daniel Franklin

    I’m wondering how this will play out in the region… it seems like center city Seattle may end up with an even higher percentage of jobs. For example, Sharebuilder moved to Pioneer Square from Bellevue and PATH is moving into 2201/Enso from Ballard. Both cite the great prices right now. Amazon will of course be relocating Bacon Hill employees to SLU in the next few years (though I hear they have more at Union Station than PacMed), and there’s the shiny Russell Investments Center.

    If you ask me too much job concentration in the center city without a corresponding amount of housing is a negative. How’s that condo market going?

  2. Chris

    I’m not sure if this post was just meant to illustrate a problem or point to its cause.
    If the latter, I’m very skeptical that “speculation” was the problem, per se. – meaning that the animal instincts of capitalism/greed. The reason for the housing bubble and the real estate bubble are driven by policy made by the Federal Reserve to hold interests rate too long for too long following 9-11.

    With such a low cost of capital, people could not afford NOT to borrow, and there was a gross allocation of capital into real estate, namely because it about the most leveraged thing on can invest in. Can leverage 97% or even 100% in stocks, or business enterprises, but you could in real estate. On this note, I’d highly recommend Ron Paul’s book, “End the Fed,” which makes a strong case for why inflation is the most regressive tax ever, and why ending the Fed (or at least greatly limiting its authority), is a cause that both progressives and conservatives should support.

  3. Matt the Engineer

    I think this might help our shortage of jobs issue here quite a bit. Yes, it’s a terrible time to be a developer who’s just built a huge office building. But it’s not like these buildings will sit empty forever. Low rent office space will make it easier for struggling businesses to survive, and make it less expensive to hire new employees.

    Please note the irony of this comment coming from someone who designed HVAC systems for office buildings back while he had a job.

  4. JoshMahar

    I agree that this emptiness will likely be temporary. Its a perfect storm of the financial crisis (low demand) with recently finished buildings (high supply) that have made Seattle’s downtown rents low. But no doubt, its still a desirable place to locate and we could start seeing some very interesting businesses moving in (but perhaps thats a bit optimistic).

    Im interested in JDF’s comment about centralizing business in the city though. Business in the neighborhoods allows more moderate-income people to commute by walking or biking and helps support businesses throughout the day instead of just in the evenings. Hopefully employment and residential centers don’t get too segregated.

    I’m also very interested to know what will happen to the PacMed building. Its a wonderful BH icon but its security fence and immense surface parking lot keep it from integrating well into the surrounding Greenbelts. I hope that can be changed with some new tenants. The spectacular view and a nice walk across the Rizal Bridge from the future streetcar might even attract some retail opportunities.

  5. eldan

    On the other hand, a concentration of businesses in the centre allows the public transport system to serve many more peoples’ commutes efficiently, and allows many more workplace-workplace journeys to be made on foot. The “jobs in neighbourhoods” argument only really works if people consistently either restrict their search to their own neighbourhood (thereby losing much of the benefit of being in a big city in the first place) or move when they move job. Not to mention how much harder scattering of jobs around multiple districts makes it for a couple to find jobs that require neither of them to drive….

  6. Wells

    Central city office employment typically attracts more employees from suburbs than inner-city. The development imbalance between city centers and surrounding suburbia will not be stabilized with more skyscrapers. Continued building of office towers increases commuting no matter how many condo towers rise alongside.

    Most commuting cannot be handled via mass transit that operates inefficiently between crush loads during rush hours and quarter full other hours. Downtown Seattle transit is also inefficiently arranged with more buses than necessary and not enough at the same time. Efficient trolleybuses neglected. What percentage of downtown dwellers resort to driving, adding to traffic congestion?

    It’s as if car dealers consort with developers and concur skyscrapers are an integral component with suburban sprawl that creates a system of car dependency. Highway planning on the rise. Suburban sprawl waiting for more land to rape and people to harness, er, belt in.

  7. Matt the Engineer

    “Continued building of office towers increases commuting no matter how many condo towers rise alongside.”

    This is simply wrong. The only way this is correct is comparing it to nothing – say, 5,000 new jobs with 5,000 new people that wouldn’t have worked in this area if that building didn’t exist.

    In reality, we have choices between several scenarios using the same set of facts. Let’s take a look at these scenarios.

    1. New 5,000 employee office building downtown. Yes, many people will commute from the suburbs. Many people will also commute from the city. In either case, most of those workers will take public transportation to work.

    2. 5 new 1,000 employee office buildings in Seattle areas outside downtown. Parking is cheaper, and public transportation is worse (generally requiring at least two trips – to downtown and away). Many people will commute from the suburbs. Many people will commute from the city. Far fewer workers will take public transportation to work.

    3. 10 new 500 employee office buildings in the suburbs. Parking is free (to the employee). Public transportation is often not an option at all. Many people will commute from the suburbs. Many people will commute from the city. Almost no workers will take public transportation.

    Please tell me what magical scenario I’m missing where fewer people commute in cars than option 1.

  8. Wells

    No Matt, you’re wrong. Suburban development patterns have too little economic structure to reduce most commuting, both ‘traditional’ commuting to city centers and ‘cross-county’ commuting to opportune job sites. Suburban development is the far more critical problem to address, obviously for that reason and for its rapacious scraping of landscape and fouling of ecosystems.

    Growth must occur in the suburbs to correct the economic imbalance there as well as the imbalance between suburbs and city center. Your example suggests suburbs continue to grow in their current form. But leaving them in that form, by funnelling development into city centers, solves nothing and even exacerbates the problems of commuting and inner-city traffic.

    If PSRC were to actually follow their principles, a few dozen regional hubs of various sizes would imminently emerge as job and activity centers by which nearby residents could conduct more of their daily routine and reduce long-distance commuting and general travel. These hubs also form centers whereby transit between them can be more practically arranged and modernized. Market theory suggests the larger the market, (the more there is of any commodity) the lower the cost, all costs of living, including transportation. Seattle is such a dump. More skyscrapers won’t improve its pedestrian environment.

    New Urbanist theory suggests focussing development downtown is best if it complentary mix of uses (including generous pedestrian elements). But the complementary balance must include the suburbs. Some people prefer to neglect the suburbs, but that’s just not a good idea.

  9. Matt the Engineer

    “Your example suggests suburbs continue to grow in their current form.”

    Fine. Throw a 5,000 employee skyscraper in Issaquah. My point is still valid. Parking is still cheap, people still commute from all over, and public transportation is all but unavailable (just try getting there from, say, Bothell on a bus). The result will be more sprawl (commuting from North Bend becomes attractive), more cars on the road, and less use of public transportation.

    Please tell me how you think I’m wrong, rather than just telling me I’m wrong. What would your option look like?

  10. JoshMahar

    Ok, so lets say we put 5,000 more jobs in Seattle’s CBD. Chances are we will in fact get more people commuting by transit then if we put those jobs in Issaquah. But as far as a transit system goes, this is very inefficient. We would have full buses and trains coming in to the CBD but empty trains/buses going out. Now, instead of putting those 5,000 jobs in Issaquah, spead them out across the Link line. Say, in Columbia City, Central Beacon Hill, and SODO. Now the trains become much more efficient because they are filling up to all locations.

    When the jobs are all downtown, living downtown also becomes prohibitively expensive.Walking and biking to work becomes nearly impossible for those who need it most, namely, those in the service industry and lower income jobs that inevitably go along with a CBD.

  11. Matt the Engineer

    I think that isn’t a terrible option, mostly because of the frequency of Link making a 2+ seat ride not much longer than the 1+ seat ride. However, people will still be much more apt to drive since parking is cheap outside of downtown.

    Regarding the cost of living downtown – that’s what Columbia City is for! Seriously – build tall residential buildings near (but not in) downtown, good transit connections between the two, good retail nearby the residential areas, and you’re done.

  12. David in Burien

    Matt @11 and Josh both seem to have it right AFAIC. Regardless of the transit deficiencies Wells mentions, in something like LINK you have the seed route for appropriately dense residential and service commerical development around certain nodes made sensibly permanent by construction of light rail. New jobs in the CBD that fill all that new office space do not induce sprawl if a TOD springs up around those nodes. And the approach becomes even more effective if that seed route lead development of an authentic system through the right, close in, but non-suburban neighborhoods.

  13. Joshua Daniel Franklin

    I like the PSRC multicenter approach and would like to point out that most of the jobs centers actually have pretty decent transit options today (U-Distrcit, downtown Tacoma, downtown Bellevue, etc.) and several will be connected to Link (Capitol Hill, U-District, Northgate, Bellevue). Unless something changes, what we’ll missing in a decade is not the job centers but the TOD housing and possibly retail. (Shameless plug: TOD design should be for everyone including families with children).

    The balanced jobs/housing centers approach has been successful in Arlington, VA, for over 30 years. Check out the latest stuff from the Arlington DOT: Auto traffic counts in the Pentagon City area are level today compared with counts from 1975 . . . urban-format TOD housing generates fewer auto trips per day than a single suburban-format McDonalds.

  14. Sivalinga

    “The Federal Reserve is neither”

  15. jeff

    I’m glad to hear of collapsing banks. Maybe now people can earn their money instead of getting a loan to wipe their arses. These large office buildings are sucky work environments anyways, they should all be torn down. Americans, and apparantly YOU, seem to be overly obsessed with large tall buildings.

  16. Wells

    Matt, Light rail should not be designed solely to serve commuters. Look at BART – overloaded 10-car trainsets during rush hours, underutilized 4-car trainsets off rush hours, Bay Area traffic still unbearable on the freeways and inner-city. What is wrong with this picture?

    The current Link line, even as far as the airport, is still a central city commute system. Seatac is NOT a major regional destination. It’s a place people go when they’re going somewhere else.

    Link must extend further south in order to develop ridership in the reverse-commute direction, and as I’ve tried to explain, guide regional growth whereby development may improve station area economy, create jobs, reduce the need to commute, reduce commute overload on Link, generate ridership in the reverse-commute direction especially off-rush hours, etc etc.

    Oh no, Sound Transit wants to serve UW first, then Northgate, then Lynnwood, inner-city and close-in districts already served with transit.

    Look at existing suburban development and imagine ‘infill’ instead of new corporate campus’s installed in isolationist fashion much as they are today. Neglecting the suburbs, neglects the core problem.

    There is no lack of skyscrapers downtown, no lack of jobs, no lack of housing, no lack of transit that ‘can’ be improved. More towers downtown do not complement its existing development pattern – it makes it more homogenous, less economically diversifed and more like the suburbs. It removes space that should be devoted to outdoor amenities and dedicates road space to more traffic generated in the suburbs. This is engineering you should know better. It’s part of the logical reasoning why PWC and Mike McGinn support the surface boulevard replacement for the AWV SR-99. It’s New School. New Urbanism. WsDOT and SDOT are mired in Old School failure.

  17. Matt the Engineer

    [Wells], do you really think adding long-distance commuting options is a solution to sprawl? City-based transit is far more friendly to density.

    You use a lot of absolute language about how Seattle “should” be. Why? Because it’s new? Building up the suburbs leads to sprawl. Your way is not McGinn’s way, and this discussion doesn’t involve the viaduct.

    I’ve noticed your continued lack of an option that will reduce sprawl, instead of increase it. I’m not terribly interested in more tangential discussion – please provide this option.

  18. eldan

    Have any of the “boo, transit can’t handle the unevenness of a rush-hour pattern” commenters actually considered how poorly car commuting handles it?

  19. Wells

    Matt, sprawl is already in place and generating more long-distance travel than roads and transit can handle. I’m saying suburban development patterns must change, diversify, infill, no way around it. When light rail is brought to the suburbs, this changes station area economics and brings jobs, thus reducing the need for long-distance commuting. Light rail also improves station area economics by making travel there attractive during off-rush hours, thus balancing transit rider demand around the clock.

    You’re saying do not consider the suburbs. Your idea is no different than planning that brought most cities to their current traffic overload. Your engineering theory is Old School.

    As for absolute language, you do that more than me. You’re the one setting limits on transit design. Downtown Seattle occupies roughly 1/20 the acreage of the metropolitan area within which many small cities, townships, neighorhoods and commercial centers have far more need for transit options than inner-city Seattle. The suburbs also have a more complex travel demand that involves ‘cross-county’ travel. Suburbanites have no choice. The only way to reduce their need for long-distance travel is to guide growth according to planning theories that PSRC pays lip service to. There’s a hell of a lot of surburban parking lot that should be scraped off and rededicated to land-uses that complement and better serve surrounding neighborhoods. It’s the definition of local economies. Maybe you’ve heard of local economies? I’m a lot more like McGinn that you realize. He’d make a good mayor, that’s for sure.

  20. Matt the Engineer

    “When light rail is brought to the suburbs, this changes station area economics and brings jobs, thus reducing the need for long-distance commuting.” Sadly, adding jobs to the suburbs increases the need for long-distance commuting. There is no strong incentive to force people to move close to their jobs when there’s cheap parking and fat highways. And there is no way to efficiently connect suburbs by transit. Sure, some will live in the city and commute by rail out to the suburbs, but far more will live in other suburbs.

    “planning that brought most cities to their current traffic overload” Ugh. Cars are not the answer. You can’t build enough freeways to ever reduce traffic – you’ll just encourage people to move further away. The more roads you remove (causing “traffic overload”), the more you encourage people to live close to work. If you really wanted your built-up suburb idea to work you’d need to remove almost all of the highways in and out of that suburb.

    “small cities, townships, neighorhoods and commercial centers have far more need for transit options than inner-city Seattle” Public transit is inefficient with low housing densities. Our region has embraced suburban busing despite it’s high cost, and we’ve reached cost limits. However, if you’re talking about
    dense towns and cities with local transit, then I can agree with that. But you would have to be talking about city-level density.

  21. Joshua Daniel Franklin

    Wells, if you’re advocating better planning in the suburbs, we have at least one master planned redevopment on the way:
    http://hugeasscity.com/2008/09/24/bel-red-corridor-tod-planning/
    Also, FTA grants are for routes such as University Link with demonstrated ridership potential, not what might attract better land use in the future. I’d be happy to support county or state money going to promote inner-ring suburban infill, though.

  22. Wells

    Matt, you are not an Engineer. You are a Wannabee Engineer. Good luck with your lessons. Maybe someday you’ll earn the moniker.

    Joshua Daniel Franklin, are you one person or three? Why not simplify with Josh Dan Frank or any ‘one’ of those names? Going after federal grant money does not necessarily produce good engineering. Admit that U-link ridership is based on converting bus riders to rail riders. How does the cost-benefit analysis justify the expense? You’re not earning your way toward a responsible position in gainful employment by dismissing pertinent information. Want to see the Bel-Red TOD development proceed? Divise a way to cut Link LRT costs through Bellevue and a reliable source of funding. I’ve been working on that, but you seem to be sitting on the sideline harping about light rail being good. Thanks a lot. Boy, are you ever helpful. Wow.

  23. Joshua Daniel Franklin

    I’m a holy trinity. (By the way, Dan Bertolet has politely requested posters use their real names… I’m usually joshuadf elsewhere.)

    Yes, U-Link converts bus riders to rail riders. I’m not sure why this is a problem. A train carries more people for less energy, and doesn’t get stuck in traffic either. The money for those buses will be used for transit along different routes. If more funding was available I’d love to see a much larger system including Tacoma and Everett (not to mention West Seattle and Ballard), but since funds are limited doesn’t it make sense to take advantage of FTA grants for high ridership corridors? I’d love to help on the funding, but I’m not actually billionaire.

  24. dave

    Addressing the Wells/Matt debate and building on JDF’s article post—If you want to see successful edge city conditions, arlington VA, crystal city, Bethesda, MD are shing examples. These once “suburbs” are now cities with density that rivals the most “urban conditions” found on the west coast. They are examples of what Wells is advocating, diverse local economies outside the urban core. But are they “sustainable” communities? Having grown up and lived there for 20 years it’s hard to consider Arlington/Ballston, Bethesda, etc. as “sustainable”. People still drive everywhere, the fat highways are jam packed at the same time Metro is jam packed at rush hour, suburban spawl is consisent for a 20 mile radius and continues to consume farm land and countryside at alarming rates. Without the densification of these “close in” suburbs I can only think it would be worse. However looking at it on paper when considering density, access to mass transit, mixed-use development, walkability, etc. these areas are light years ahead of anything in Seattle.

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