[rewrite of this piece, after a database crash]
These local newspaper stories…
“’Dystopian nightmare’ state of downtown scares off investors,” went the headline about the lowball sale in the local business press, quoting a real estate broker.
“This is another example of how some investors and developers continue to place money in the city despite its anti-business reputation and the encampments of homeless people lining some streets,” the Puget Sound Business Journal noted.
What would it take for the local business press to walk that back? Maybe this?
[T]his past week Amazon said it is hiring 12,500 people in Seattle, the most of any city, in a fall jobs blitz.
“Amazon’s hiring spree is concentrated in Seattle,” this newspaper reported, adding that this is a “degree of rebuke” to the idea the company is jilting us over the payroll tax.
After all that scene setting, we’re told that a property in downtown Seattle, right by Amazon HQ, sold for a lot less than expected…it was listed at $9 million and sold for around $6 million. That’s $6 million for a small parcel with a $1000 building — a 1937 built teardown. No one bought it for the oil change facilities. About 1/6 of an acre, but if we apply we same metric as on the Mercer Megablock, we could value that at $1 million a year per acre…so about $150,000 a year in ground rent. If it were up to me, I assess it with an eye to how close it is to Pike Place Market and the waterfront, the light rail, all that downtown goodness, and write it up to $250,000/year. If they don’t want to pay it, someone else will. Ideally, the ground is all that changes hands for a pure land deal, in which case this would likely be a lot higher while the “purchase” wouldn’t really be a thing.
By way of comparison, the current assessed value of $6,804,000 means the property tax (on the all-but-vacant lot) is $64,454.26/annually. We know that land is worth far more than that and that its value doesn’t come from the Jiffy Lube but from all the other development around it. That’s how land values have always worked.
After all, “a 45-story tower, with 32 stories of “co-living,” nine stories of hotel and three stories of common amenity space” should make some money for the developer/investor, enough to cover the rent. And nothing pleases me more than seeing landlords having to make rent through their own sweat instead of making money in their sleep.
We see stories all the time about land sales (often described as sales of a business but the land is the play in Seattle or anywhere else) but the business press never considers how a set of map coordinates could command such a high price. That lot size — 6480 sq ft — is what a single family home in the northern reaches of Seattle comes with. So why is 1/6 of acre in downtown Seattle worth $6 million when the same size parcel in Maple Leaf might be $600,000? Could it be…location, otherwise known as proximity?