Seattle Bubble

Photo by The Tim

The official layoff count for WaMu was made public today. According to various news sources, JPMorgan Chase will be cutting 3,400 jobs in Seattle.

JPMorgan Chase is laying off 3,400 Washington Mutual employees in Seattle, according to spokesman Tom Kelly. That’s more than 80 percent of the 4,300 people it employs in the city.

Most branch workers will keep their jobs, however.

WaMu’s former headquarters city is taking the brunt of the 9,200 WaMu layoffs that JPMorgan is making nationwide.

This is even more than the estimates we heard just a few weeks ago, when anonymous WaMu executives were cited in a Times report that said “as many as 3,000 of WaMu’s 4,200 workers in Seattle could lose their jobs.”

Fortunately it sounds like those that are losing their jobs are at least being given pretty nice severance packages, and many will have lots of time to find new jobs. It still hurts to lose a job though, and I sincerely hope that those affected by the massive bank failure are able to keep on their feet through these difficult economic times.

(Melissa Allison, Seattle Times, 12.01.2008)

Photo by Flickr user S x 2

According to today’s Seattle Times, JPMorgan Chase plans to cut around 70% of WaMu’s Seattle-area employees.

JPMorgan is handing out layoff notices now and is expected to finish making decisions about all of WaMu’s 43,200 employees nationwide by Dec. 1.

As many as 3,000 of WaMu’s 4,200 workers in Seattle could lose their jobs, according to current and recently departed WaMu executives who spoke on condition of anonymity.

“It’s pretty dire for Seattle,” said one former high-ranking executive.

The layoffs will leave gaping holes in downtown Seattle’s commercial real-estate market, where WaMu occupies more office space than any other company.

With no other major banks headquartered here in Seattle, I wonder where all these newly jobless banking professionals will be able to find work.

I’d like to extend my condolences to those that are affected by these cuts, which are likely to include some of my friends. Sure, we were right about the housing bubble, but nobody likes to see people lose their jobs.

Best of luck to the soon to be former WaMulians.

(Melissa Allison & Eric Pryne, Seattle Times, 11.19.2008)

These articles are a bit off-topic from the usual news about residential real estate, but I thought they were at least worth a brief mention.

New York Times: In Seattle, Office Vacancy Rate Is Rising Fast

Not long ago, Seattle looked invincible, even as an economic downturn was starting to plague the rest of the country.

High-profile Seattle-area companies like Microsoft and Amazon were adding thousands of jobs, trade with Asia was strong and Boeing was selling thousands of commercial jets. Deemed the best office market in the country in some nationwide reports, the city was attracting real estate investors hungry to buy office buildings and build new projects. It seemed as if nothing could go wrong.

“Out here in Seattle, we were living in a bubble, immune from the rest of the country,” said Bruce Blume, founder of a real estate development firm, the Blume Company.

It was like they thought there was some kind of Seattle… Bubble or something.

The vacancy rate for office space in the central business district reached 10 percent in the third quarter, according to Cushman & Wakefield, still below the nationwide average, but up from 8.4 percent a year ago.

With five new buildings, encompassing about two million square feet, opening next year, the vacancy rate is expected to hit 15 percent. Most of the new space has not been leased.
…
Sales of office buildings reached $11.47 billion in 2007, some seven times what they were in 2004, according to Real Capital Analytics. Deals so far this year have totaled only $375 million.

Although building prices have tumbled in 2008, it hasn’t been enough to keep investors interested. Since last year, the price to acquire office space has shrunk 32 percent, to an average of $227 a square foot, according to Real Capital Analytics.

From the sounds of it, the commercial real estate market around here is actually getting hit harder and faster than the residential market.

Then again, maybe not? Here’s a competing headline from today’s Seattle Times: Seattle’s commercial real-estate market is No. 1 for 2009

Seattle is the No. 1 commercial real-estate investment market in the country for 2009 — even though it’s in worse shape than a year ago, a new forecast concludes.

It rose to the top spot only because other markets are expected to suffer more from the economic downturn, the report’s authors said.

The forecast, “Emerging Trends in Real Estate 2009,” was released today by the Urban Land Institute and PriceWaterhouseCoopers. It bases its assessment of the overall commercial real-estate situation and individual markets on surveys and interviews with about 700 developers, investors, lenders, brokers and other professionals.

Hmm. I wonder if the data for this report was collected before or after WaMu was bought out and Microsoft announced they were “re-evaluating [their] current hiring plans.”

(Kristina Shevory, New York Times, 10.21.2008)
(Eric Pryne, Seattle Times, 10.21.2008)

There were a couple of stories in the Seattle Times over the weekend pertaining to the health of the local economy.  The first was an article on the commercial real estate market, highlighting a forecast for falling rents.

Commercial real-estate brokers James Keating and Sean Barnes have one word of advice for their clients looking to lease big chunks of office space in or near downtown Seattle:

Wait.

“By the end of 2009, or the first quarter of 2010, the market’s going to turn,” says Barnes, a vice president in the Seattle office of Jones Lang LaSalle.

Vacancy rates will rise, they predict. Lease rates will drop. Tenants will smile.

The article goes into pretty good depth as to the amount of space coming on line both in terms of new construction and space coming available from existing tenants.

The second story was about Olympic Boat Centers filing for bankruptcy protection.  For those who don’t know it, Olympic Boat Center is a Redmond-based “seller of boats and yachts including Bayliner, Maxum, Meridian and Trophy”.  Boats purchases are highly subject to discretionary income - and are typically hit hard in an economic downturn, so this news isn’t all that surprising.  When I saw the article - I figured that it must be exposure to the California market that was dragging them down.  This could be the case, but when I dug deeper, I noted that they have 8 locations in California as compared to 11 in Washington/BC - so they are not completely weighted to the California economy.  A few months ago, I noted that they had closed their location on Bel-Red Road.   At the time,  I figured they must be moving to newer and fancier digs.  It seems I was mistaken.