Seattle Bubble

News & discussion about real estate & the housing bubble in the Seattle area.

Seattle Bubble - News & discussion about real estate & the housing bubble in the Seattle area.

Entries Tagged as 'office space'

Two Recent KUOW Pieces of Note

By The Tim on June 22nd, 2009 at 1:02 PM · 32 Comments

Thanks to everyone who responded to the call earlier this month from KUOW for help on their story about the soft market.

Here’s the resulting piece: It’s a Tenants Market for Downtown Seattle Office Space

There may be signs of recovery in the region’s housing market, but not so for the region’s office market. A recent survey from Price Waterhouse Coopers says commercial property values in Seattle are expected to decline up to 15 percent this year, that’s more than the national average. The survey predicts the market will remain in recession for two more years.
…
[Large downtown Seattle landlord UNICO's Chief Financial Officer John] Lamb says it’s going to be a while before the market begins to stabilize. He says vacancy rates will continue to rise, and don’t be surprised if some commercial office buildings in Seattle end up facing foreclosure.

Also, last Friday’s “weekday” discussed the residential market, with : Short Sales, Foreclosures and First Time Home Buyers

Friday’s program had the same guests that were on the program in early May that we mentioned here: real estate agent / appraiser Richard Hagar, Urban League housing director Linda Taylor, as well as new guest certified financial counselor Andrea Misiano.

They discuss foreclosure / refinancing rescue scams, including some good advice for first-time buyers—take the emotion out of the home-buying process. I haven’t been able to listen to the entire program, but apparently there was also some questionable advice mixed in this time, including the claim that (according to a Seattle Bubble reader) “it’s better to get the low interest rate than the “one-time” lower house price.” In any case it’s overall worth a listen when you can make the time.

Kudos to KUOW for continuing to give the local real estate market some decent, thoughtful coverage that goes beyond the usual “ra-ra” pro-industry pieces that have been all-too-common in most news sources.

→ 32 CommentsCategories: News
Tags: , , , , , , ,

More Signs of Shrinkage at Microsoft?

By The Tim on January 8th, 2009 at 2:42 PM · 26 Comments

A couple more notes on Microsoft before we get to our big year-in-review / 2009 forecast post tomorrow.

First off, for those that didn’t catch it, this is worth mentioning: Microsoft forgoes South Lake Union lease

Microsoft Corp. has put on hold any interest in further expanding its operations in Seattle because of the deteriorating economy, a spokesman said Tuesday.

For months, the company had been considered to be in the market for additional real estate in the city, and Microsoft had been in negotiations to lease all 300,000 square feet of office space at 2201 Westlake, a mixed-use development under construction at the southwest corner of Westlake Avenue North and Denny Way.

But spokesman Lou Gellos said in a statement that the company “decided not to continue negotiations because of the (national) economic situation and the changing market conditions.”

The loss for now of Microsoft as a potential tenant will put additional downward pressure on office rental rates in Seattle, according to Kip Spencer, the co-founder of OfficeSpace.com and an executive at JE Dunn Construction Co.

2009 looks to be a great year to get a steal on downtown and South Lake Union office rents, if your company is looking to move or expand. Tons of supply with rapidly shrinking demand = great deals, just like residential real estate. Go figure.

Also, revisiting the whole layoffs rumor, I thought I would share this tip from an anonymous Microsoft insider:

…there will indeed be some layoffs at Microsoft, but not nearly to the degree of the rumors we’re heard so far. It will be more along the lines of the standard “repurposing” of jobs they do periodically, and some much needed belt tightening. … Personally, I wouldn’t be surprised if MSN, Windows Mobile, or Internet Explorer got some deep cuts, but that’s just my opinion – nothing was specifically said about them from my manager.

That sounds pretty much along the lines of the less sensationalist reports we’ve been reading elsewhere, and sounds more believable. Also, for what it’s worth, I know that some departments at MS are actually still hiring, because a friend of mine has an interview with the Xbox group this week.

→ 26 CommentsCategories: News
Tags: , ,

“Out here in Seattle, we were living in a bubble.”

By The Tim on October 21st, 2008 at 5:00 PM · 13 Comments

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)

→ 13 CommentsCategories: News
Tags: , , , , , ,