On First Hill, a massive sign obscured by layers of graffiti
ballyhoos the Boylston, featuring 43 luxury condominiums with
slab-granite countertops, workout facilities, and valet parking. But the website on the sign no longer exists. On Ninth
Avenue and Pine Street, a lot sits vacant. Records for the site show
that since May of last year, the site’s developer hasn’t pursued a
permit for a 37-story tower. Near Green Lake, promises made in 2004 to
redevelop the Vitamilk dairy into hundreds of residential units have
produced only an excavated maw.
Seattle’s building boom has busted, despite cranes on the skyline
for developments that broke ground before the economy took a dive last
summer. Some projects, specifically three- and four-story apartment
buildings, seem to be keeping pace, but the more ambitious towers are
on hold—perhaps indefinitely.
“In terms of intake, the number of permits [is] down by about 8
percent,” says Alan Justad, spokesman for the city’s Department of
Planning and Development (DPD). “But the value of those permits… is
down about 40 percent,” indicating that fewer ambitious projects are
being planned. Indeed, records from DPD indicate that 35 major projects
have stalled in the design-review process since this time last year.
Several more whose developers have filed permit applications or
submitted updated designs are in doubt.
Matthew Gardner, a land-use economist and principal of real-estate
analysis firm Gardner Johnson, says, “I do not expect any new
residential [towers] to break ground this year.” While Seattle’s
economy is faring better than parts of the country that have a glut of
condos and few buyers (like Miami), the strained national market is
forcing developers to prove they can presell many of the units before
they get financing. Buyers, meanwhile, have a hard time getting loans
to buy the presale units. Gardner adds: “Unless you are digging a hole,
I’m not quite sure it’s going to happen.”
Even a hole in the ground is no guarantee. Last August, construction
halted at Second Avenue and Pine Street, the site of the extravagant 1
Hotel & Residences. And last week, developer Paul Brenneke sold his
share of the 1 Hotel project, leaving Starwood Capital Group literally
and figuratively in the hole. Also last week, plans for a 37-story
luxury condominium tower on Eighth Avenue and Pine Street were shelved
until at least next year.
But next year may not look much better for condo developers, says
downtown realtor James Stroupe. “Right now, if you don’t see a crane
for new [condo] construction, it’s not getting built until 2011,” he
says. Stroupe says developers will probably build the project on Second
Avenue—eventually—but not others. “Just look at the ones
that look ridiculous,” he says. “They probably won’t get built.”
Perhaps the most ambitious project in town is the Heron and Pagoda
Towers, two 550-foot skyscrapers containing condos, a hotel, and a
shopping mall. Although developer Alec Carlin says a master use permit
application was filed this month, he’s not sure it can break ground in
this economy. “Timing is everything,” Carlin says.
Carlin was one of the few developers who even returned calls.
Nitze-Stagen, which is planning a 38-story office building, and
Schnitzer West, planning a 40-story office tower, both on Fifth Avenue,
didn’t return calls about their projects. Realtors cite the potential
implosion of Washington Mutual (its stock dropped from $45 to $5 in the
last year), which is estimated to hold about a million square feet of
downtown office space. If WaMu were to abandon its two downtown towers,
demand for new office space would plummet.
The paradox in the doom-and-gloom forecast, however, is that demand
is expected to resume at roughly the same moment supply disappears.
“For year-to-date, we’re effectively balanced for total condo sales as
the past years,” says Dean Jones, president of Realogics, one of
Seattle’s preeminent development consultants. But, he says, “We’ll have
a real dearth of condos by 2010.” 