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Under new regulations, “zombie” office buildings in downtown Seattle can gain a second life as apartments

By meerna Jun18,2024
Under new regulations, “zombie” office buildings in downtown Seattle can gain a second life as apartments

There are many empty offices in downtown Seattle. CoStar’s latest report shows the vacancy rate in the central business district is nearly 30%.

Mayor Bruce Harrell and the City Council want to make it easier and cheaper to convert these buildings into apartments.

The question is how much they are willing to sacrifice to encourage developers to join.

Modern office buildings continue to attract commercial tenants who pay high rents. Older, historic buildings don’t do this.

Thus, some remain empty, becoming “zombie buildings” that do nothing to help the downtown rebirth. Others are demolished.

But if they are converted into apartments, they can gain a second life. City officials explained at a recent city council zoning committee meeting that this should be done for several reasons:

  • People like old buildings.
  • Demolishing buildings and starting from scratch wastes resources and takes a lot of time.
  • It takes a long time to design, permit and construct a new building; conversions can theoretically happen much faster.
  • Bringing new apartment residents downtown could help “activate” downtown streets and fill them with people who shop and eat at restaurants, which in turn could help attract office workers back.

There is no housing redevelopment taking place in downtown Seattle at this time. This is because finances are not drawn in pencil.

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They do it in Tacoma, where land is cheaper. But ask a developer why it wouldn’t work in Seattle and you’ll get a list of all the costs that would have to go away to make redeveloping an office building like Smith Tower worthwhile.

In part for this reason, Mayor Harrell has included in his downtown activation plan an attempt to relax rules that prevent many office-to-residential conversions. Additionally, a new state law requires Washington cities to relax these regulations by 2025.

The current rules that would disappear regulate, among others: the size and shape of residential buildings and the number of parking spaces they must include.

Safety rules and energy regulations will remain. No one is suggesting putting residents in leaky, old office buildings that cost too much to heat or would collapse in an earthquake.

But at a recent public hearing, some councilors expressed concern about one relaxed rule, requiring developers to pay fees into the city’s Mandatory Housing Affordability fund, which pays for new affordable housing buildings.

“Who will be able to afford to live in these buildings?” asked City Councilor Cathy Moore. “I think it’s going to be high-wage earners, and that’s not really the population that we so desperately need to focus our grants and city resources on.”

Moore isn’t so worried that he doesn’t want to see more affluent residents downtown. This is because when the city encourages the preservation of an older building, it prevents a new apartment building from being built on the same site. New residential buildings pay contributions to the compulsory housing affordability fund.

Councilor Dan Strauss emphasized that the most urgent need is to revitalize downtown.

“We need people downtown, whether they are rich or poor,” he said.

There are two main reasons why city authorities suggested easing the requirements for the Mandatory Housing Affordability Fund.

First, it requires developers to pay a fee, but it also gives them a “density bonus,” the right to build a larger building. The Mandatory Housing Affordability Fund has survived legal challenges in part because, in theory, it gives as much as it takes. For a historic building, there is no practical way to provide significant density bonuses.

The second reason for easing this rule is that if such a fee is required, projects will simply not be implemented.

Others, however, are on the opposite side, suggesting that the regulatory changes will not be relaxed enough to encourage office-to-residential conversion projects.

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It is important to consider that the buildings most likely to be rebuilt are those built before the 1940s, when office buildings began to expand significantly due to advances in fluorescent lighting and central heating and cooling. These technological changes meant that offices no longer needed to be located near a working window to stay cool and comfortable in the summer or for lighting reasons.

Currently, these buildings are very difficult to rent as offices. For example, most technology companies need “Class A” office space with all the latest amenities.

That’s one reason city officials say Pioneer Square, Seattle’s best-known historic district, could become a prime site for converting offices into apartments. Council member Tanya Woo said there are also buildings in Chinatown’s International District that would fit this model.

Ryan DiRaimo, principal of the architecture firm Sustainability for Graphite Design Group, told council members he encourages them to continue changing the regulations. He explained that existing regulations that require a formal review process before redeveloping landmark historic buildings could still put an end to a potential redevelopment project, which could instead lead to the demolition of those buildings.

“We are talking about saving buildings, and this is protection,” he said. “These older buildings are the most likely candidates for redevelopment.”

During the discussion, skeptical council members like Moore seemed open to changes that would address their concerns without discouraging conversion projects. For example, there are tax credit programs, such as the Multifamily Tax Exemption Program, that require participating buildings to contain some affordable housing units.

City authorities estimate that such relaxation of the rules could create from 1,000 to 2,000 new apartments in several buildings within seven years.

Ultimately, whether any of these apartments will be built at all depends on whether the city sweetens the cake enough for developers to decide to implement it.

By meerna

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