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Industry Professionals Mock Downtown Inventory

July 10, 2008 by  
Filed under Downtown (MLS Area 701)

Pie in the Sky

The Building Bust Could Kill Some of Seattle's Most Ambitious Towers ...more

The Stranger interviewed me regarding the recent hold on the new construction of high-rise developments in the city. Here’s a look at what was reported by myself and other industry professionals regarding the future demand for downtown condos.

Alan Justad: Spokesman for Department of Planning and Development

“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: Land-use economist and principal of real-estate analysis firm.

“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.”

Me

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.”

Alec Carlin: Heron and Pagoda Towers developer.

“Timing is everything,”

Dean Jones: President of Realogics

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.”

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