Nobody’s Home

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.