alt Hacker NewsSeattle here, and a real estate nerd.
This is almost entirely an artifact of the financial instruments used to pay for these buildings, regardless of any Seattle policy changes. The Seattle Times has always been a conservative rag, and their editorial board hates the new mayor, so they hit the "Seattle is dying" story as often as possible. They've got a long history of this whenever there's leadership they don't like, ask me about it!
In Bellevue, office vacancies are low because most have long term tenants - even if the spaces aren't full of workers, the companies paying for them can continue to do so.
In Seattle, most office space is leased by smaller companies. We have diversity in availability, which is great, we have tiny office leases available as well as big ones. I believe those smaller spaces also often had shorter leases.
There are some spaces in Seattle where an anchor tenant (Indeed with 11 floors in the 2+U building at 1201 2nd Ave is a good example) shrank the footprint they use, and quickly sublet floors they aren't using. Those sublets can be priced appropriately for the market, and the main tenant keeps paying the original lease price.
However, when a space loses a tenant, the bank can't just drop the price for the owner, the same as you can't just pay less on your mortgage if you get a lower paying job. That has to go through a long, painful process, and usually the building will end up sold before pricing can change.
This is lag. It's easy to correlate it with a choice by Amazon or with new taxes, but there's quite a bit of demand for office space in Seattle, just not at the prices the owners are forced to ask with their financing instruments.
We just saw another building turn over, US Bank Center. The new owner bought it at a price where they'll be able to lease it competitively, and it won't sit empty. We'll see that continue to happen.
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What are the financial "instruments" ?
The main claims from the article seem worrysome, IN particular, the 37% vacancy rate, as well as multiple buildings underwater[3], etc.
Now, lets dissect the claims that this is part of some cycle, and not the result of new city hall management. The reality is that with Jumpstart, and with the vacancy rate, enterprises are not renting. But, the owner is stuck with the asset in what is now a hostile jurisdiction. So, even if owner may not be able to change terms on their mortgage, they certainly can charge less for rent. Empty units do not contribute to cash flows to pay the building mortage. I understand there may be consequences to lowering rents, but those consequences are coming home anyway: The building will need to be sold, at a loss, by the bank to a new owner. And as you said, that process takes time. And the jurisdiction seems hellbent to make it harder.
Now, as buildings sell, this in turn lowers the appraised value, which is key to the Seattle tax base.
So, the downtown core is going to produce far less in property taxes in the foreseeable future, with fewer tenants paying (at least in short term) occupancy taxes, etc. This is going to play out in a decade.
According to this, commercial property taxes are about 26 %[1] of the Seattle budget
Let's assume appraisals go down 50% for those impaired offices. This is not crazy, there's precendent for it[2]. That means the Seattle budget must be cut by 13%. This is not even factoring other losses from job loss, sales tax lost, etc. Maybe that's not "Seattle is dying" , but sound pretty bad ?
[1] https://www.seattle.gov/documents/departments/financedepartm...
[2] Seattle/downtown office properties lost ~$10–15+ billion in assessed value since 2020 (46–48% drop) . https://cdn.downtownseattle.org/app/uploads/2026/06/New-Repo...
[3] https://www.king5.com/article/money/business/downtown-seattl...
And you have to wonder, what kind of boom in innovation could lots of reasonably priced office space support? What gov policy cold push landlords and banks to accept reality? Vacancy tax? Change to bank regulations?
This tracks with what I’ve heard around as well. What changed in the financial instruments?
My understanding is a lot of the loans have gone PIK or otherwise essentially aren’t serviceable at current prices. Do you think that’s resolvable somehow or just lagging implosion?
Is there any more to this story than "extend and pretend" that's been going on for 6 years?
> The Seattle Times has always been a conservative rag
The Seattle Times is Left-Center with a high credibility rating. [1]
Such a deliberate distortion of the facts renders the rest of your screed null and void.
I'm not sure the bank has that much to do with it.
Commercial real estate valuation is based entirely on its ability to produce income. Lower the rent, lower the value. And that's a problem because most commercial leases are long (5-20+ years) so you're locking in an asset writedown for a long period of time. So it can be better to leave it vacant and pretend the value hasn't changed.
You can still run into problems with this (eg servicing the loan). So I don't think it's quite the issue that banks have to approve lowering the rent so much as the owner might lower their asset value and have problems with the LTV and DSCR so the bank may then require you to refinance or add capital.
By the way, we've gone through this before. Up until the 1990s, law firms were by far the largest tenants of office space because they had very large law libraries. Then that went online and they downsized. This was an acpolaypse in the 2000s combined with the dot-com bust.
I think the lag you're talking about is on banks essentially foreclosing on a building and selling it off, allowing the new owners to charge less because they paid less.
> This is almost entirely an artifact of the financial instruments used to pay for these buildings, regardless of any Seattle policy changes.
Why would this be different in Seattle than in other cities? Many downtown office towers are bought or built using a lot of debt throughout the U.S. What do you think makes Seattle special?
> We just saw another building turn over, US Bank Center. The new owner bought it at a price where they'll be able to lease it competitively, and it won't sit empty. We'll see that continue to happen.
The news story mentions the U.S. Bank Center example. What it says that you're leaving out is just HOW big that discount is:
> The new owner of the U.S. Bank Center, having paid just $280 million, or less than half of what the building went for in 2019, presumably can afford to lower rents enough to fill the place, which is now 45% vacant, according to CoStar.
A discount of more than 50% is a bubble bursting. It's great that the new owner can offer fire-sale rent, but where does that leave the old owner, if they were truly as leveraged as you suggest they were likely to be?
> The Seattle Times has always been a conservative rag, and their editorial board hates the new mayor, so they hit the "Seattle is dying" story as often as possible. They've got a long history of this whenever there's leadership they don't like, ask me about it!
OK, I'll ask you about it. This "Seattle Times = Blethen family propaganda" line has been tiring for the 25 years I've been hearing it. What exactly are they not covering about Seattle's downtown today that you think they should be? Why do you think that their opinion staff influence the news coverage so much? In short, if the Seattle Times has a conservative bias in its news coverage, why does the Wall Street Journal famously have a liberal-biased newsroom?
In Bellevue, office vacancies are low because most have long term tenants…
Your argument is that it's simply because of dropping prices. Maybe that does explain the bulk of it. But the article seems to suggest it's the WFH transition. How much of the vacancy rate would be explained by that?