Along Northwest Market Street, the bustling commercial strip that runs through Ballard, about a dozen buildings stand out. They are new, they rise several stories above the old auto shops and fishermen's bars of Old Ballard, and they contain hundreds of empty apartments and condos. Signs in their ground-floor windows offer leases for the empty storefronts. On nearby blocks, more apartments are under construction, and several big buildings are on the drawing board.
Ballard's building boom started when the economy was roaring. But now that the buildings are ready, the buyers and renters aren't.
"I think that there was some overanticipated demand that was probably not real," says Matthew Gardner, a land-use economist and principal of real-estate analysis firm Gardner Johnson. He notes that, given the current economic climate, banks are reluctant to lend to homebuyers, slowing the residential market to a crawl.
On a recent Sunday afternoon, despite the buzz of pedestrian activity on the street, I startled sales representative Tamara Hahn at the Hjärta, a condo that began preselling units in December 2005, by opening the door to the quiet showroom. She extolled the building's virtues—eight stories of steel construction and high energy-efficiency ratings. "Buyers have to have confidence in such a fear-based economy," she said, noting that the building's qualities make it exceptional. "They have to feel good about it."
But it appears few feel that "good" about the Hjärta. Despite Hahn's claim that the building is 40 percent occupied, online tax records from King County show that only 21 of the 79 units have sold. That is, almost three-quarters of the building sits empty a year after opening its doors. (Follow-up calls to the Hjärta sales office have gone unreturned.)
A similar story is taking place in new buildings all over the city. "In good times, I think at least three-quarters of a building would be occupied a year after it opened," says Wendy Leung, editor of the Seattle Condo Review blog and a local real-estate agent. Now she is "seeing more like 30 to 40 percent" of condo units sold a year after opening.
According to New Home Trends, a firm that tracks condo construction and vacancies around Seattle, 3,878 condos in Seattle (including new condos and condo conversions) remained unsold in 2008. That's actually fewer vacant condos than in the two previous years; however, real-estate agents and market analysts agree that more people were buying condos then and that empty condos stayed on the market for a shorter periods.
A few blocks away from the Hjärta, a two-phase megadevelopment consumes almost an entire block. Canal Station II began selling in September 2006, but of the 109 units, King County records show that 43 are still unsold.
Even among condos that have sold, many are vacant. "There are a million condos [around Ballard] available to rent," says Collin Page, an insurance marketer who rents a condo at Canal Station I. His wife, Kyla Page, notes, "On Craigslist, you'll see many ads for [rentals in] the same condo building."
Indeed, on March 16, six ads on Craigslist promoted rentals in Canal Station alone. An ad for a one-bedroom apartment in one of the two buildings noted: "Never occupied. Available immediately."
"People with buyer's remorse bought condos and now they just want to find a renter," says Dawn Adams, office manager of Affordable Rentals Northwest, which lists 3,200 rentals in Western Washington.
Apartment buildings are also in long supply. As of last fall, 3.8 percent of all apartments in Seattle were vacant. Mike Scott, a partner of Dupre + Scott Apartment Advisors, expects the company's spring audit will show "an increase in [apartment] vacancies."
The gargantuan two-building Leva—wrapped in a pastiche of avocado green, orange, burgundy, and slatted wood—is the largest apartment building in Ballard, with 260 units. It opened in January and is 95 percent vacant. Leasing reps are eager to get people to sign contracts, offering up to a month and a half free rent and six months of free parking.
"It's just crazy right now," says Adams. "People list a two-bedroom apartment at $1,100; it sits there for two months, and then they just rent it for $900."
And more apartments will be ready in Ballard later this year. Apartments on the Park, a building under construction two blocks off Market Street, will contain 268 units. It has at least one guaranteed tenant: QFC on the ground floor. But across the street, in the 90-unit NoMa, a massive retail space has been vacant since the building opened in 2007.