Downtown Seattle’s troubles go beyond the pandemic

A New York Times headline this week said, “As Big Tech Grows in the Pandemic, Seattle Grows With It.” Yet the story mostly refers to the Eastside, while Seattle’s downtown remains in trouble.

That’s partly because Amazon, which employs 50,000 in the central core, announced this week it would allow many corporate and tech employees to work from home indefinitely.

Amazon swings enough of a bat as downtown’s biggest holder of office space, the city’s largest private-sector employer and a big local taxpayer. But it also carries influence with companies that aren’t even associated with Amazon, potentially driving their decisions to continue remote work and downsize their office leases.

According to a recovery tracker compiled by the Downtown Seattle Association, 24% of workers were back in their offices as of late September compared with the same period of 2019. That’s little changed from early July, when the delta variant kicked in as a highly contagious element of COVID-19. Working from the office downtown cratered to 17% at the end of March 2020.

To be sure, office buildings are rarely 100% occupied. Nationally the occupancy rate was 60% before the pandemic.

Good news is available: Downtown’s domestic visitors had recovered to 84% of their 2019 levels in late September. It was 16% of the previous year’s visitors in late March 2020.

Similarly, hotel demand had recovered to 63% of its 2019 total. In spring 2020 it collapsed into single digits. Tourists are coming back.

Also, more than 1.3 million square feet of office space was completed downtown this year and another 1.2 million was under construction. (Offices account for 83 million square feet there, the highest concentration in the region.) But many of these projects were planned before the full effect of COVID-19 was felt.

To be sure, much will depend on how many Amazon teams will be allowed to work remotely. Even now, I’ve noticed buses picking up employees at the headquarters.

But if it becomes a near-permanent phenomenon, it would have a profound effect on downtown, including on transit.

Although the 1918 influenza pandemic killed many more people proportionately than COVID-19, things went quickly back to normal after it faded. But that era didn’t have the technology to allow so many workers to operate remotely (of course many workers don’t have that luxury now — only 1 in 4 expected to work from home this year).

Many other central business districts aren’t being hit so hard. Austin has half of its office workers back, followed by Dallas at 45%.

Cushman & Wakefield, the real estate services firm, released a study in late September predicting the majority of the workforce will return early next year.

“Most businesses are hoping to get back as soon as possible,” said David Smith, Global Head of Occupier Insights and co-author of the study. “This isn’t a conversation about never going back, it’s a conversation about when can we safely get back to the office because almost all employees and employers have indicated they want to go back — more flexibility, yes, but they want to go back.”

We also don’t have to visit Texas to see the trend.

The New York Times story reported that U.S. office leasing fell 36% in 2020 from the previous year. But the Seattle area became the top location for tech firms leasing large office space, propelled by companies growing during the pandemic. At the time, these companies obviously expected workers back at the office.

The trouble for downtown Seattle is that most of the new action is on the Eastside, especially in Bellevue. Amazon alone intends to add 25,000 workers there, while Microsoft is expanding by 17 buildings and 8,000 employees in Redmond.

This isn’t surprising considering Seattle made itself less competitive in the region by passing a business tax that would apply to higher salaries on about 800 companies (although sold as the “Amazon tax”).

At the same time, crime is increasing, and increasingly tolerated by City Hall. So is homelessness, which has gotten worse despite hundreds of millions spent to supposedly address it. These are citywide problems but ones most felt downtown.

Surprisingly — at least compared with most cities I’m familiar with — crime is not an election issue.

Earlier this month, Weyerhaeuser said it would delay returning employees to its Pioneer Square headquarters without “significant and sustained improvements in neighborhood safety.”

They’re hardly alone. The downtown Kress IGA and Bergman Luggage were among those that closed because employees were afraid of downtown. The stretch of Third Avenue from Pine past Benaroya Hall is a zombie-movie-come-true of people using drugs, tent dwellers and verbal threats.

My colleague Paul Roberts wrote, “Some Pioneer Square businesses welcomed news of Weyerhaeuser’s delay, saying it might be a wake-up call for city officials who some merchants say haven’t given enough attention or resources to the iconic neighborhood.”

Darcy Hanson, whose Merchants Cafe and Saloon is across Yesler Way from a tent encampment, told him, “I’m glad they said it, because you know what? They’ll pay attention to Weyerhaeuser.”

I wonder. The far-left majority of the City Council views big business as a class enemy. Mayoral candidate M. Lorena González spurned the Downtown Seattle Association’s candidate questionnaire.

She implies that downtown is no different than any other part of the city even though it generates the majority of the city’s business taxes and, pre-COVID, was home to 328,000 jobs. It’s the region’s cultural and sports venue home. And more than 84,000 Seattleites live there.

Meanwhile, Nicole Thomas-Kennedy, candidate for City Attorney, is running as an “abolitionist” who would essentially stop prosecuting many categories of crime which she blames on poverty or disability. Victorious, she would offer no protection to companies or employees hoping to return to the office here.

The difference with the Eastside couldn’t be more stark or work more potently against Seattle.

It’s impossible to know when the pandemic will come under control. But if Seattle’s central business district is fatally wounded, it won’t be because of COVID-19.