Seattle Bubble

Here’s another tidbit about commercial real estate in the Seattle area. Quite appropriately, the headline uses the word “gambling” to describe what’s going on with office buildings in Bellevue:

Spec development, as in constructing an office building without pre-lease commitments on the gamble that it will attract tenants upon completion, is the new buzzword among real estate developers in downtown Bellevue.

Developers of at least four different office tower projects proposed for the city’s central business district are scrambling to be next in line after Lincoln Square developer Kemper Freeman Jr. to begin construction.
…
It’s a gambit that can cost a developer dearly if the expected tenant demand for office space turns out to be less than anticipated by the time the building is completed.

In past office development cycles, some developers have wound up losing their buildings to foreclosure. In at least one case, a prominent Seattle developer lost his home when the local office market went bust in the late 1980s.

Good thing there’s no chance of that happening again. Heh. How soon we forget.

(Clayton Park, King County Journal, 01.08.2006)