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Condo Conversions and Increasing Density

There have been a few mildly-interesting articles in the last couple days on the subject of condo conversion projects and Seattle’s increasing density. Here are a few highlights.

Aubrey Cohen updates us on the status of the proposal to condo-ify the Smith Tower:

Owners of the Smith Tower have one of two key city approvals needed to convert the Pioneer Square landmark from offices into condominiums.

Walton Street Capital, a private real estate investment company based in Chicago, filed an application with the city in February to build 150 homes in Seattle’s first skyscraper, which was completed at 506 Second Ave. in 1914. On Monday, city planner Lisa Rutzick approved the plan with several conditions, including that it get a required approval from the Pioneer Square Preservation Board.

The developers still haven’t decided, [Walton Street operating partner Michael Allmon] said Wednesday. “We’re probably two months away from making a decision. But nothing’s happened at this point to keep us from looking.”

Pioneer Square’s neighborhood plan, which was last updated in 2003, calls for more housing, particularly private development for middle-income residents, to help revitalize the area.

I’m as starry-eyed as anyone when I think of how cool it would be to live in a building with that much character, but somehow I doubt that the condos they’re planning will fit the bill of “development for middle-income residents.” Also, while the building itself has desirable character, the same cannot be said of the surrounding neighborhood. I’ve spent some time on the streets around there at night, giving out jackets and coffee to homeless people, and even though we stayed in groups of at least half a dozen, it still felt pretty dangerous. There are some real freaky people that wander the streets of Pioneer Square at night.

Also on the subject of condo conversions was a story from Amy Rolph about one man’s quest to prevent an old church building from going condo:

Sure, it would be great to live in a converted turn-of-the-century church. But it would be even better if that historic building could be enjoyed by music-lovers across the Puget Sound region, right?

For months, Dan Fievez has been posing that question to anyone who might lend a sympathetic ear or, more important, a sympathetic check made out to the tune of $100,000.

Fievez wants to turn the First Church of Christ Scientist on Capitol Hill into a performing arts center that small opera companies, chamber groups and orchestras around the Seattle area could call home. With its cathedral-inspired sanctuary and seating capacity of 1,300, the 101-year-old building at 1519 E. Denny Way fits the profile of what a community music center should ideally be, Fievez said.

But there are a few things standing in the way of his vision: The church, which its dwindling congregation vacated last year and then sold, is being converted into townhomes. The new owners are willing to sell for less than half of what the returns on the homes could be, but the asking price would still tally up to about $4 million — $100,000 of which would be required upfront in earnest money.

How generous of the developer. I’m sure their willingness to consider other options has nothing to do with the inevitable explosion of condo inventory in Seattle over the next few years. Nah.

Lastly, Joni Balter rambles about Seattle’s “growth” in a column that leaves me asking, “what’s your point?”

As part of the neighborhood-planning effort, certain neighborhoods agreed to accept higher density in exchange for urban amenities, such as traffic circles, parks and libraries. Seattle is bracing for another 100,000 residents over the next 15 to 20 years.

In a good news/bad news conundrum, Seattle’s real-estate market is still humming while sales in other parts of the country are slowing.

That means a host of developers and would-be homeowners are still willing to pay $800,000 or more for a teardown. There is a cost to a neighborhood if the teardown’s replacement overwhelms all the other more modestly sized homes with noise, construction dust and view-blocking megahomes.

There it is again: that knotting, clenching, uncomfortable feeling. Will our city feel as livable after all the real-estate money sloshes around and maxes out so many comfortably sized lots in neighborhoods where scale and taste used to mean something?

New laws will help. But some things can’t be fixed. More people means traffic keeps getting worse all the time. Home prices are soaring into the stratosphere. Quality of life here remains quite good but you can feel some of our world-famous livability ebbing. Our angst is palpable.

So, we need more laws to help us get comfortable with McMansions? Sorry Joni, I don’t follow. What do McMansions have to do with growth and density, anyway? It seems to me that they’re counter-productive on the density front. I can understand the logic behind filling Seattle with townhomes, but 2,000+ square foot homes on city lots seem to have more to do with builder profit than with increasing density. But maybe that’s just me.

(Aubrey Cohen, Seattle P-I, 07.18.2007)
(Amy Rolph, Seattle P-I, 07.18.2007)
(Joni Balter, Seattle Times, 07.19.2007)

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

19 comments:

  1. 1
    The Tim says:

    Behold, comment preview is now live!

    Just start typing your comment, and the live preview appears below the comment box.

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  2. 2
    Finance says:

    Tim – You are right on that Joni’s article is like a bunch of random thoughts thrown together…much like most of her weird articles.

    Danny Westneat often has the same problem with logically twisted articles.

    Rate this comment: Thumb up 0

  3. 3
    Finance says:

    Danny Westneat – Rent wars: Casualty list grows

    At least this article stays on one topic and is an extreme example of increasing rental rates, lol

    Wow this new preview option is really cool Tim, its like looking in the mirror & making funny faces [:

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  4. 4

    GREETINGS SEATTLE BUBBLE BLOGGERS

    I agree this news article is somewhat subjective with hypothetical growth assumptions thrown in the mix.

    I see in last Seattle Bubble that March 07 Snohomish County had open office space in 20% area, and I’d add from the “For Lease” or “For Rent” signs plastered all over Seattle; King County probably isn’t doing much better….but there’s growth predicted.

    I don’t care if its politically incorrect for a “real Seattle environmental liberal” like me to point out that outsourcing, guest workers and miscellaneous/general wage deterioration of the Middle Class in Seattle is likely caused by lower wage growth or migrant overpopulation; but just converting the $500K Seattle condos to $1200/mo apartments to house the migrants is financial ruin for the guy that originally paid $500K.

    But I’m just a pig headed real liberal that far right globalist conservative elites mislabel “conservative” against overpopulation in Seattle. What do I know?

    Its not the Middle Class pouring in from California to escape the state’s overpopulation and crime, we eliminated that reason on a recent post days ago.

    Since this news article appears miscellaneous, on the topic of 2000 SF McMansions….imagine heating those Hummers in the winter 10 years from now when gas/electricity doubles in price (assumes 6% increase per year compounded). High priced gasoline got me buying 4 cylinders a long time ago; the savings paid for the car in several years. The utility bills on smaller houses may be likley paying the mortgage payments vs. McMansions in coming years too, especially with a possible oil spike in 2012. If there is any oil period by then.

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  5. 5
    rose-colored-coolaid says:

    If our energy infrastructure begins to fall behind, we may move toward tiered pricing. When essential resources become scarce, price tiers are sometimes used to keep an open market while discourage excessive use. This happens on some of our local islands with regards to water, because everyone needs water, but not everyone needs 200,000 gallons of it a month.

    So what happens if a 800 sq ft house can be heated for $20 a month, and a 3500 sq ft house costs $600 a month?

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  6. 6
    deejayoh says:

    a) Softwareengineer – I like it!
    b) I live near that church referred to in the article. Every time I walk by it, I wonder how they are going to make it townhomes. It has no windows, except a few very ornate stained glass pieces I assume they’d want to leave. The rest of it is stonework that I don’t think you could poke holes in. I am not sure what is going on there, I think the developers know they have a tough nut to crack.

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  7. 7
    uptown says:

    Something tells me that church will be on the market for a lot less than $4mil within the year.
    The market around me on QA’s south slope has definately slowed for “luxury” units. I expect developers are going to have trouble getting the loans they need to start new projects.

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  8. 8
    SeattleHotty says:

    From Redfin’s daily email:
    Orange cranes have become as much a staple of the Seattle skyline as the Space Needle. Recently we’ve witnessed a luxury condo building craze and I’m wondering if the demand is really there to sustain all the new supply. I did a search on Redfin for condos over one million in the downtown area and came up with tons of units for sale. So how many condos over a mil have sold in the last three months? I only found three condos, that’s only one per month. At that rate, it’ll take quite a while to sell off all the listed inventory. Granted these large development projects often pre-sell many of their units via their office so those properties don’t necessary make it onto the MLS. I would still expect to see more sales given that so many are listed. The three properties that did sell are all right around the one million mark but many of the condos on the market are much more expensive, with units in the new Four Seasons building topping the list. I wonder how long it will take for these luxury condo buildings reach full occupancy?

    This doesn’t catch new sales, for example I know Escala has sold several units recently over a million, but still disturbing news. One a month? Ouch.

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  9. 9
    B says:

    The condo conversion mania is enough to make you gag.

    It will be beautiful to laugh at these zero-appreciation suckers stuck horizontally on the ‘equity-rocket-ship’ in 2008-2013.

    Blast off to planet MSM! You’ll all be land-barons soon!

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  10. 10
    deejayoh says:

    Downtown Seattle has 66 condos priced at +$1mm. The city as a whole has 114. I guess that’s about 5.5 year supply based on the Redfin email.

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  11. 11
    Kenneth says:

    From

    http://blog.seattlepi.nwsource.com/microsoft/archives/118356.asp?source=rss

    Microsoft hiring slows from last year’s record pace
    Microsoft today reported employment growth for its recently completed fiscal year that falls short of the record numbers it added the year before. But that earlier growth — a net annual addition of more than 10,000 employees worldwide, or 16 percent — would have been difficult to maintain. And because of that, Washington state’s chief economist said this afternoon that he had already been assuming a slowdown for purposes of his economic modeling.

    Microsoft’s worldwide headcount grew by about 10 percent in fiscal 2007, according to the written material accompanying the company’s fourth-quarter and year-end financial results. (See earlier post.) It would put Microsoft’s worldwide employment around 78,000 as of June 30. However, the company hasn’t yet disclosed the specific global number or the rate of hiring in the Seattle region.

    Chris Liddell, Microsoft’s chief financial officer, addressed the issue in response to an analyst’s question on the company’s quarterly conference call this afternoon — making it clear that he felt it was important to get the hiring growth under control.

    Here’s what he said:

    “From my point of view, the good trend that we’re seeing

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  12. 12
    Peckhammer says:

    This just in from a John L. Scott Realtor:

    “If you’ve been thinking about buying a condominium at one of our new South Lake Union projects, please note that the initial sales process will be coming to an end on July 31, and the second phase will be kicking off on August 1. What does this mean for you? Most importantly, we anticipate raising prices on homes that are purchased after July 31. Additionally, during the second phase of sales we will be narrowing the selection of homes available for purchase and taking some homes off the market until a later date. Currently, all of the remaining units at Veer Lofts, Rollin Street and Enso are still available for purchase. So if you’re considering South Lake Union as your new address, now is the time to lock in the best unit and pricing! “

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  13. 13
    MisterBubble says:

    Hahahahahaha! That’s hilarious, Peckhammer.

    I guess “second phase” is RealtorSpeak(tm) for “lean on the suckers.”

    Do you think they’ll even try to hide the blatant manipulation of the MLS?

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  14. 14
    Alan says:

    That sales technique is called “The takeaway.” If a sales person employes the takeaway on me I have a strong bias to not do business with them.

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  15. 15
    Buceri says:

    Isn’t this the way they sell cars? “Act now or you’ll be sorry!!”

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  16. 16
    wreckingbull says:

    Not to worry, there will be a time in the not so distant future when buyers will be able to employ the ‘takeaway’ technique.

    “I’ll give you 75% of your asking price, but offer only valid for 72 hours. Next month it will be 70%. You better lock in!”

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  17. 17
    Ravenor says:

    Last time I visited Pioneer Square, there were guys sleeping in doorways in broad daylight. Maybe that’s part of the “charm” some people are looking for.

    Next, an increase in population of 100,000 over 20 years amounts to 5,000 people per year, which is trivial in proportion to Seattle’s 2006 Census population of 582,000 people. Hardly a population explosion. The verb “bracing” used in the article makes it sound like Seattle wil be overwhelmed by monstrous mobs jamming the streets.

    Basically, the point of the Balter article seems to be “Seattle is our place, nobody else come here”…the sentence about “certain neighborhoods agreed to accept higher density in exchange for urban amenities” implies that Seattle residents really don’t want higher density, but they’ll take it if the city and builders give them some goodies in exchange for their consent.

    I quit writing now as my blood boils over the idiocies contained in the three articles quoted…

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  18. 18
    Ravenor says:

    If Microsoft’s CEO thinks the company should be hiring less, that means he thinks that the people they are hiring aren’t going to be producing any salable product in the near future. Of course, in C-level meetings nobody listens to the CFO; the other execs just tell the CFO “You don’t understand our plans”….more employees in your department means a bigger empire and therefore a bigger salary.

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  19. 19
    Demersus says:

    Hmm, I was seeing example ads like this from other areas of the country just about a year ago…

    http://seattle.craigslist.org/see/apa/377277567.html

    My guess; bleeding cash due to excessive leverage on the mortgage and can not even cover PITI with rent revenue.

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