A blank canvas for city's future
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KAI RYSSDAL: There's been much wailing and gnashing of teeth lately over the continued misfortunes of the U.S. housing market. But, of course, it's not just one market in this country. Some places real estate's down. Some places it's up.
One of the up places is Seattle, where the population continues to boom and housing prices are firm. The Urban Land Institute calls Seattle a global gateway, in a league with cities like New York; Washington, D.C.; and San Francisco. Which might be why 12 measly acres near the Space Needle are getting so much attention.
Cathy Duchamp from KUOW has the story.
Cathy Duchamp: Right now you can walk from one end of downtown Seattle to the other in less than an hour. The sidewalks roll up at about 10. But Seattle will stay open all night if Al Clise gets his way. He's looking to sell a patch of land that's now mostly parking lots.
Al Clice: I see a complete, new neighborhood of high-rise, dense construction that will accommodate everything that a city oughta have. I don't see parking lots.
Clise is head of an old Seattle family that owns what many consider a missing link in the city's growth: 12 acres, in the shape of a triangle on the northern edge of downtown. It's land his grandfather started to acquire during the Depression. Today, it will accommodate up to 14 million square-feet of office and living space. That's comparable to what's now in downtown Baltimore. There's no list price, but observers say a developer would probably pay around $200 million.
CLISE: We are going to present this as a completely unique opportunity that doesn't exist perhaps anywhere in the world, in any other urban center that is poised like a city like Seattle is poised.
Poised. That's a word a lot of people are using to describe why Seattle is such a hot development market. Local real estate economist Mathew Gardner:
Mathew Gardner: From an economic basis, we're certainly more diversified than we used to be.
Seattle now has a deep bench of corporate giants: Amazon, Starbucks, Microsoft, Washington Mutual, Costco.
GARDNER: Rental rates have increased exponentially. We're seeing vacancy rates in Class A office space below 10 percent. All these things combined. When you look at these institutional investors and where they're looking to place money. They're looking at Seattle now, not as somewhere which is relatively proximate to Alaska but as somewhere that's become a first-tier market.
Seattle has also lifted the lid on how tall downtown buildings can be. High-rise office, condo and apartment buildings can soar up to 500 feet on the Clise property. The idea is to concentrate growth downtown, in order to combat sprawl. Who would be against that?
JOHN FOX: It's an unmanageable level of growth they want to accommodate in this tiny area of downtown.
John Fox is a low-income housing activist in Seattle. He says real estate developers exaggerate the amount of housing they'll build for the new office workers. Plus, he says, most workers won't want to live downtown, anyway.
FOX: It's a combination of things. They can't afford to or they make a lifestyle choice to live in the suburbs in a French-style chateau and live farther and farther out from the downtown to have the wide-open spaces. And they're willing to put up with enormously long commutes.
Many as long as an hour. The companies who bid on the Clise property probably won't care about that. Rumors are that the deal will get a lot of attention from deep-pocketed real estate investment firms, probably from overseas. After all, whoever buys it should be prepared to spend $7 billion to build the property out. A lot of money in a city that was in a major recession just a few years ago. Ask Greg Johnson, president of the Seattle chapter of the Urban Land Institute.
Greg JOHNSON: I moved here in 2001 from the Bay Area, shortly after an earthquake had hit this region. And I think the moving van was pulling into our driveway the same day they were announcing that Boeing was moving its headquarters to Chicago. The dot-com bubble was clearly bursting and things were not looking too good. And there were some discussions around the dinner table: "Have we made the right move, Greg?"
But Johnson says Seattle rides the down-cycles well. He says whoever can afford the Clise family jewel, will get a gem.
In Seattle, I'm Cathy Duchamp for Marketplace.