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Greater Downtown Keeps Going

Photo Credit Graphite Design Group
Photo Credit Graphite Design Group
Long ago it was clear that this greater Downtown Seattle boom was unlike any before. Six years after the first groundbreakings, the frenzy seems poised to keep going for a long while.

Big companies and institutions are much of the story. Expedia and Google are moving closer in. Seattle Children’s Research Institute, Swedish Hospital, the University of Washington, and Seattle University plan new buildings. Amazon keeps growing. Others such as F5 are known to be looking at big leases.

Public jobs will play a large role. The convention center, the ferry terminal, the waterfront rebuild, East Link, and the Children and Family Justice Center are all approaching.

That’s just what’s announced but not started yet!

How spoiled are we that Google’s 600,000 square feet with Vulcan sounds ordinary? In some cities that would be the story of the year. Here too, once.

The new reality is that much of the workforce wants to be in greater Downtown. In some key fields, companies are willing to pay a little more per square foot to draw the best talent, while also enjoying synergies with related industries and services. This is behind some of those big ones above, and the continuing growth and influx of other firms. This should continue to fuel developer-led projects. It’s also behind the growth of our whole region, as a lot of people want to live here even as the area gets more expensive.

At first blush, the biggest risk may be reliance on tech. We’re living on a combination of local firms and the Bay Area’s overflow. Any slowdown might happen on both fronts at once. However, more of these companies are profitable, and “tech” isn’t really a separate sector anymore. These firms are about retail, travel bookings, business services, entertainment, and data infrastructure. This means every company is at competitive risk as usual, but on average they’ll track their whole sectors, which should mean more stability. Our biggest risk might actually be global economic health.

Housing starts since 2010 just hit the 20,000-unit mark if you gerrymander up Dexter and Pike/Pine a bit – multiples of any past boom. On the apartment front, we always seem to be on the edge of slightly overbuilding, but the date keeps moving further out due to high demand. Meanwhile Amazon says 20% of their employees walk to work. As long as companies keep hiring, apartment demand seems poised to keep growing. Of course it’s not just techies or millennials. Bankers and shop owners are moving closer-in too. The real story is that while about 2% of the region lives in greater Downtown, a much larger percentage want to.

Condo are a small part of that with around 1,000 starts so far. It would be nice to deal with condo liability law, which would ease costs and give more people the chance to afford a home. But even at the necessary price points, more developers are taking a look. Apartments and condos tend to be countercyclical related to their economics, so a problem with one can be offset at least partially by the other. If condos are reviving somewhat, the overall multifamily market will be healthier.

Other influences are important. Rising construction costs, skyrocketing land costs, plummeting land availability (in most core districts), and potentially-rising interest rates would be headwinds. Seattle’s rise as a tourist destination and the influx of Canadian and Chinese developers and financiers point to continued activity.

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Infrastructure for a new Japan

Asaskusa Tourist Information Center in Tokyo, Japan, which was designed by Kengo Kuma & Associates and completed in 2012. Photo by Takeshi YAMAGISHI
Asaskusa Tourist Information Center in Tokyo, Japan, which was designed by Kengo Kuma & Associates and completed in 2012. Photo by Takeshi YAMAGISHI

The Mitsubishi Corporation is presenting a free symposium on “Sustaining Japan: Past, Present Future — Infrastructure for a New Japan” from 6 to 7:30 p.m. today and tomorrow (April 13 and 14) at Architecture Hall 147 at the University of Washington.
Kengo Kuma of Tokyo- and Paris-based architecture firm KKAA will lecture today on “Crafting Communities” and tomorrow on “Urban Regeneration.” Both lectures are at 6 p.m.
The symposium is sponsored by UW Japan Studies, Henry M. Jackson School of International Studies and College of Built Environments/Department of Architecture in collaboration with urban@uw.
Registration in not necessary.

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Report focuses on changing retail landscape

Photo courtesy of CallisonRTKL
Photo courtesy of CallisonRTKL

Design firm CallisonRTKL released a report on the Mall of the Future, a consolidation of ideas, trends and concepts that it said are set to change the retail landscape and the shopping center experience in the next 10-20 years.

The firm said in a press release that it initially worked with commercial developer Ivanhoe Cambridge to combine research, economic analysis and trends into a retail prediction report. CallisonRTKL said the Mall of the Future report is the result of that research and its decades of experience identifying which retail trends “will boost client revenue, appeal to consumers and stand the test of time.”

CallisonRTKL said today’s consumers are favoring a flexible food model over a traditional food court, with higher end restaurants mixed with mid-market options, creating a neighborhood feel. The future mall will provide an authentic “taste of place” rather than the standard retail chains found in every city, it said.

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How Grand is the Bargain?

It’s great that a “grand bargain” on housing affordability is being discussed via the Mayor’s Housing Affordability and Livability Agenda (HALA) action plan. People are talking to each other, and the result might be relatively balanced. But we could do so much more!

For starters, we need WAY more focus on holding back development costs. Designated-affordable housing is important, but most renters and new buyers depend on market rates. HALA seems to recognize cost control only in small ways, and only to offset additive costs. It largely skips the big stuff. We’re risking a sizeable reduction in development volume as the market reacts to higher costs, which will mean higher rents.

We’ve already cut way back on micro units, applied design review to more projects, piled on the height bonus fees, limited above-grade garages (not complaining on that one), and enabled a lengthy entitlements/permitting backlog. Sidewalk protections (a good idea in theory) will add more cost by substantially impacting site logistics. Electeds appear shaky on accessory units and other flexible zoning in single family neighborhoods. We’re discussing moderate upzones but those won’t keep up with demand, so land prices will probably keep rising. We’re discussing expansion of the multifamily tax exemption but only for affordable units. Permitting might be streamlined a little.

Cabrini First Hill Apartments is a six-story complex for very low-income seniors. Photo courtesy of LIHI.
Cabrini First Hill Apartments is a six-story complex for very low-income seniors sponsored by the international Missionary Sisters of the Sacred Heart (Cabrini Sisters). Photo courtesy of LIHI.

A lot of truths in this debate seem to be ignored, unknown, or mistrusted because the most knowledgeable people might benefit from lower costs (developers, contractors) or higher costs (landlords, homeowners). People are therefore acting against their own interests, their city’s, and their constituent demographics’. But here goes.

Land prices won’t come down due to linkage fees. Some councilmembers have actually said the huge fees would be offset by cheaper land. But what landowner would see values plummet and decide to sell? Values will recover as rents go up and few properties are on the market, so owners will just need to wait, and not long.

Land is already scarce in areas that allow density and have demand. Prices reflect this. Theoretically we have room for many more years of growth, but many “buildable” sites aren’t on the market. Broader upzones would help address this – some combination of height, accessory units, and moderate additions to areas that allow multifamily. More than the small upzones in the plan.

Bonuses have to be compelling to be used. City leaders like to decide what a benefit is worth (for example alley vacations or bonus FAR), then charge an equivalent in fees, amenities, etc. At the political level, this allows them to be seen sticking it to developers. But they might not grasp the cost/effort/risk of pursuing the benefit. So we get debacles like the Hedreen hotel, where the City threw away 150 units of affordable housing for political reasons and by overvaluing its alley. And we get woodframes in highrise zones unless the market is truly booming.

Development costs affect the volume of construction – it’s obvious to most DJC readers but apparently debatable to others! Some people believe that any added cost or hurdle will have no affect on the amount of housing built, because profits are huge they say. Let’s break that into subsections:

Profits aren’t necessarily huge, or profits. Some developers get rich, but some lose their whole investments too (yeah but 2010 was so long ago!). It takes a huge investment to even consider building something, let alone pull the trigger. Some people will always begrudge developers for making money (or for giving people a place to live?), but it’s understandable why they’d only build if the potential profit was enough to risk a loss.

Financing goes where the money is. Developers need equity and loan partners. This money goes where the fundamentals look best. You might want big corporations to accept lower profitability and higher risk of loss, but that’s not going to happen, even if you stomp your feet. A big chunk of development backing comes from cuddly sectors like like pension funds; can we agree that those should stay solvent?

We’re piling on those costs. Linkage fees, height fees, parking below grade, 18 months of process and holding costs, sales tax, energy code upgrades, and so on, all well meaning but math is math.

We’re going to affect the ENTIRE rental market, not just the new stuff. When demand outpaces supply, even that non-updated 1965 masterpiece will be expensive. Keep supply going and it should be much cheaper.

There’s no simple answer, a point we all seem to agree upon. But speaking generally, let’s do things that hold pricing back on market rate while also increasing production of subsidized units.

Let’s expand the subsidized elements, but do so without adding to the costs of market rate housing. A larger housing levy is a great start, and spreads cost to all of us rather than disincentivizing new housing. So does the multifamily tax exemption. But let’s also pay attention to market rates. We can add capacity for free by upzoning and not attaching penalties, reducing land cost per unit. We can let micros do their magic. Accessory units can help both the new residents and the landlords. Yes, even if some of that doesn’t look enough like “sticking it to developers!”

Posted in Government, Planning, Politics, Zoning | 1 Comment

The other civic disorder

Crossing Second Avenue at Stewart with 10 seconds left, with left turners coming from directly behind. Photo by Matt Hays
Crossing Second Avenue at Stewart with 10 seconds left, with left turners coming from directly behind. Photo by Matt Hays

Finally, some movement on civic disorder and public safety in Downtown Seattle!

No, not the improved Westlake Park and Third Avenue…traffic disorder. Blocked crosswalks, bike lanes, and cross-traffic. Red light runners, whether cars or bikes. Speeding. Free right turns without looking both ways. Cars not stopping for pedestrians at crosswalks, marked or unmarked. Cars edging into crosswalks against the light, drivers texting away. Collectively this is big safety issue, a serious problem for mobility when routes are blocked, and a constant nuisance.

Ok, we’re not dealing with all of that yet. Just “blocking the box,” i.e. blocked cross-streets and crosswalks. But what a breath of fresh air. Per the Seattle Times, “mass citations will begin in October, following a publicity campaign and sign postings in August and September” and tickets are $136.

Watch any street heading toward I-5 at rush hour. It seems like every cycle at every intersection has someone blocking it. A recent Council Transportation Committee briefing by SDOT and SPD notes key intersections with more than one infraction per minute. Sometimes pedestrians have to walk dangerously in traffic lanes. Bicyclists risk serious injury, for example when using the often-blocked Second Avenue bike lane. When a car is even partially in the crosswalk, pedestrians have to worry about getting run over by that car in addition to the other directions, particularly when the car is pointing downhill and one driver stepping off the brake pedal might mean getting hit.

An occasional misjudgment is understandable, but constantly? Is there a possible reason that doesn’t involve name calling? All I can think of is idiots and jerks.

This is a traffic flow problem as well, like streets crossing Mercer, Denny, or Spring eastbound after work, or any southbound avenue before a night game. Cars and buses both get stuck.

Sometimes there’s no traffic jam at all, but cars still creep into crosswalks. Maybe they’re turning right and not looking both ways. Often they’re not turning at all, and simply don’t care about others. Or they decided to drive uphill without the skill to do it safely.

I say throw the book at them. And do the same for red light runners and texters.

Posted in Government, Planning, transportation, Uncategorized | 5 Comments

D.C. project that houses homeless wins AIA award

Affordable housing has gotten a lot of press lately in Seattle, so it’s interesting to see how other cities are addressing the issue.
LEO A DALY and and its design partner Studio Twenty Seven Architecture were honored recently for a Washington, D.C. project called La Casa, which provides permanent supportive housing for homeless people.

Photos by Anice Hoachlander
Photos by Anice Hoachlander

The American Institute of Architects gave the firms a 2015 Housing Award for the project in the specialized housing category, which recognizes outstanding design of housing that meets unique needs — in this case, those of the chronically homeless, the architecture firms said in a press release.
The seven-story, 34,946-square-foot building provides permanent housing and supportive services for 40 men. Rather than functioning as a temporary shelter, where residents are housed at night and asked to leave during the day, each unit is a single-person efficiency that supports stability and predictability as tenants transition out of homelessness, the firms said.

La Casa employs the “housing first” service model, which offers permanent housing immediately rather than treating sobriety as a prerequisite, and provides supportive services that reduce the risk of participants returning to homelessness.
“This is an important milestone for the District of Columbia in its continued efforts to redefine the concept of transitional housing,” said Stephen Wright, managing principal of LEO A DALY Washington, D.C. “Most housing for the homeless focuses on meeting a temporary emergency. La Casa is different. Both its service model and the facility design embrace the individual, and serve his needs for rehabilitation and growth.”

The firms said their joint-venture team was challenged by the DC Department of Human Services to create a home rather than an institution, and to meet or exceed the quality of the adjacent market-rate apartments.
The project is situated among the high-density, high-rent apartment buildings of Columbia Heights. The architects said La Casa’s design defies the homeless shelter archetype with ample natural light, airy rooms and striking design.

The ground floor of La Casa includes a lobby, support offices, and a mail area. A community room on the second floor opens onto an outdoor terrace. The typical floor has seven dwelling units, including one ADA-accessible unit. A green roof contributes to the design’s LEED-gold certification. Security is provided by security officers, remotely monitored cameras, and secured door access.
The jury for the 2015 Housing Awards includes: Stephen Schreiber, chair, University of Massachusetts, Amherst; Jon Dick of Archaeo Architects; Kathy Dixon of K. Dixon Architecture; Jody Mcguire of SALA Architects; and Clair Enlow, who writes the “Design Perspectives” column for the Seattle Daily Journal of Commerce.

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Seattle might keep going

The duration and intensity of the Downtown Seattle development boom is getting a little surprising, beyond even my optimistic guesses from a few years ago. This isn’t just another Seattle-type boom. But here’s the kicker: things seem poised to keep going.

That’s saying something. Between offices, housing, and transportation, this is clearly the busiest we’ve ever been. And we’re four years into it, vs. the typical hard stop far short of that.

The current wave is over 7,000,000 square feet of office and 15,000 housing units by my napkin count, if you gerrymander things up Dexter and Pike/Pine a little, including projects that are at least in active site prep. For offices I believe it’s a record for greater Downtown. For housing it’s a modern-day record by a factor of two.

So why the optimism?

First is tech. Amazon is obvious. But there’s also a pretty stunning wave of national or global tech companies setting up or expanding tech offices in greater Downtown. These companies need talent, and the word is out about Seattle. Even if one of our giants stumbles, is there any doubt that other firms would swoop in to hire waves of their people? This is giving developers the confidence to pursue additional projects at a high rate.

Second is a continued inflow of other companies into Downtown from around the region, for example Weyerhauser and MulvannyG2, as well as Expedia though it’s more distant. Companies value Seattle locations for stated reasons like recruitment, business synergies, public transit, and lunch options. Other local nodes are doing a good job of developing downtown-type amenities and synergies, but greater Downtown Seattle has a strong pull right now. (Bellevue will be fine of course; Downtown Tacoma, Downtown Everett, Kirkland, and others are doing a lot of great things too.)

There will be headwinds, like traffic. As the workforce grows, it’s clear that driving can’t grow much with it because there’s no space. Transit will need to improve a lot. Thankfully every new apartment helps reduce the number of inbound commuters.

On that note, housing will keep booming. New office buildings mean a lot more potential Downtown residents, both directly and indirectly. As more office workers compete for the same street, freeway, and transit space, the idea of a six-block walk to work becomes more attractive for longtime workers too, all the more so as district after district adds more residential mass and related services. Some point out that 25-year-old urbanites often become 30-year-olds with kids that want houses, but good news…today’s 20-year-olds will replace them. And how about baby boomers becoming empty-nesters?

Now about condos. Apartment pessimists often point out that renters might start buying in large numbers, sometimes implying that they’ll start picking houses. But many love urban living, roads aren’t getting any easier, and houses and house-ready properties aren’t cheap. If people start buying, many will choose condos. The old presale-based financing method isn’t viable yet, but equity-rich developers can still get loans, so condos are already coming back. We’re at the very beginning of what could be another wave, minus some of the feeding frenzy or zero-down formats that contributed to the bubble and bust.

The current wave of Asian (often Chinese) residents and investors will help our construction volume substantially, as Seattle becomes more of a global destination. Our prices are half of those in Vancouver or San Francisco, and should remain far lower because we can add supply relatively easily. Further, this is helping our status as a business and tourism center across the board, for example by bringing in more tech workers.

Hotels are also just starting. So far the new inventory only deals with 2014’s overly-high occupancy rate, not future growth. Seattle is becoming a bigger tourist destination, including stunning growth in overseas airline traffic last year and so far this year. We plan to build a second convention center (aka the “addition”). Our growing office base brings visitors as well as relocations and interns who live in hotels for weeks or months. Who knows where our hotel demand will go from here, but “up significantly” seems like a good guess.

Biotechs are talking about a lack of space again, particularly with the old Amgen campus off the table. Hospitals have slowed their construction programs after the last wave, but new significant construction is anticipated again at Virginia Mason, Swedish, and Harborview, including medical offices.

The convention center, a new ferry terminal, and post-viaduct streets and public space projects are all a couple years out. Imagine having those to soften any downturn.

Here’s another reason: we might not have a national crisis or massive overbuilding. People love to quote 1982, 1990, 2001, and 2008 like we’re automatically headed for their equivalent. The first dramatically overbuilt hotels and condos, the second did the same for offices in part because of the CAP initiative that curtailed further development, the third involved both a tech bubble and 9/11, and the fourth involved the mortgage crisis and a narrowly-averted depression. We could have another crisis, like Amazon or the global economy crumbling, but nothing looks imminent. As some point we’ll overbuild in key subsectors, but we have a good chance of avoiding the “brick wall.”

Of course all of that is independent of potential problems like the big fees the City might implement, a lack of construction workers, cost escalation if it exceeds market rents, higher interest rates, and so on. Challenges can happen on many fronts.

So caution, always. But so far so good.

Posted in Architecture, Neighborhoods, Planning, Politics, Seattle lifestyle, transportation, Zoning | 2 Comments

Dan Stubbergaard of COBE Architects to lecture

Dan Stubbergaard, the founder and creative director of COBE Architects in Copenhagen, will give a free lecture at 6 p.m. Wednesday (April 22) at Architecture Hall 147 at the University of Washington.
The UW said COBE is an international architecture and design office whose mission is to contribute to the creation of more decent, equitable, beautiful and sustainable cities. The company seeks to develop specific, innovative solutions that encompass architecture, strategic urban planning, landscape design and research.

COBE Architects designed the Tampere Travel and Service Center for the city of Tampere in Finland.

It has won a number of international competitions since its inception in 2005. Its projects include Nordhavnen, the largest metropolitan redevelopment project in Scandinavia, Norreport Train Station in the center of Copenhagen and The ROCKmagnet, Denmark’s museum of rock music in Roskilde.
COBE Architects designed the Tampere Travel and Service Center (in the pictured rendering) for the city of Tampere in Finland.
In addition to his architectural practice, Stubbergaard has taught at the Royal Danish Academy of Fine Arts in Copenhagen and lectures internationally. He is leading a master studio in the UW Department of Architecture in his role as the Scan|Design Foundation 2015 Distinguished Visiting Professor.
His lecture is sponsored by the Scan|Design Foundation and is part of the UW Department of Architecture Spring 2015 Lecture Series.

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Paolo Desideri to speak at UW

Paolo Desideri, a professor of architecture and urban design at the “Roma Tre” campus of the University of Rome, will give a free lecture titled “Form as a Resource” at 6 p.m. Wednesday at the University of Washington Architecture Hall 147.
Desideri directs the Ph.D. program on Landscapes of Contemporary Cities. He is also a principal and partner of ABDR Architetti Associati, which he founded in 1982 along with Maria Laura Arlotti, Michele Beccu and Filippo Raimondo. The UW said the work of his internationally recognized practice focuses on large scale infrastructural and cultural projects in the public and private sectors as well as high density housing complexes. The firm designed the new opera house in Florence, Italy, which is shown in the photo (above) by Luigi Filetici.
The talk is part of the UW Department of Architecture Centennial 2015 Spring Lecture Series. For more information, see http://arch.be.washington.edu/.

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