In the Seattle area and elsewhere, the tumult of merging and downsizing companies — WaMu, Wachovia, Merrill Lynch, AIG, etc. — will likely redraw real-estate vacancy maps, so brokers are preparing.

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The folks whose motto is “Location, location, location” now look at the nation’s financial sector and see … dislocation.

Here and elsewhere, the tumult of merging and downsizing companies — WaMu, Wachovia, Merrill Lynch, AIG, etc. — will likely redraw real-estate vacancy maps, so brokers are preparing.

One real-estate expert in New York City is tracking what he calls the “drunken-sailor leases” that WaMu inked earlier this decade as it pushed aggressively into the crowded Manhattan market. Another broker, in Seattle, has tallied up the space controlled by big financial firms that recently hit the wall.

Washington Mutual occupies more downtown Seattle office space than any other company: more than 1.6 million square feet. Not surprisingly, the thrift’s downfall last month sent a chill through the local commercial real-estate community.

Brokers forecast higher vacancy rates and lower rents here if JPMorgan Chase, WaMu’s new corporate overlord, puts a big chunk of that space back on the market.

Their concern doesn’t end with WaMu, however. Dan Dahl, a senior vice president with Colliers International, did a little research and came up with these preliminary numbers for other big financial firms that have been bailed out or bought out recently:

Merrill Lynch: 95,000 square feet.

Wachovia: 47,000.

AIG: 15,000.

Lehman Brothers: 2,500.

Those holdings amount to only a drop in the bucket compared with WaMu’s local presence. And the companies haven’t put any space up for sublease yet.

But if they do, it could make a potentially bad situation worse. “Those are the tenants that we all have our eyes on,” Dahl says.

Meanwhile, in Manhattan, a Cushman & Wakefield map shows 43 WaMu branches as blue dots closely interspersed among more than 110 Chase locations.

As The New York Times noted, “At the intersection of 56th Street and the Avenue of the Americas, there is a Chase on the southeast corner and a WaMu on the southwest corner. And the list goes on.”

Brad Mendelson, executive director of Cushman & Wakefield’s retail-services group in the city, says sorting out how to deal with the overlapping locations will be a challenge for Chase, which already has the biggest branch network in Manhattan.

WaMu’s ambitious drive into New York City means its branches “are all recent leases — they are all what we call ‘drunken-sailor leases’ ” with high rates and long terms, says Mendelson.

“They’re going to have a problem closing them, because I don’t know if many landlords are going to let them close.”

And subleasing those sites in an increasingly grim retail market means “most likely they will take a loss.”

Of course, he notes, it’s not just the WaMu locations that are at risk; Chase could close older branches of its own.

“Where they can take advantage of the new capital improvements that have been made into a branch, I think they will.”

— Eric Pryne

Insurer abandons

dormant IPO plan

This just in from our No Kidding Department:

Symetra Financial on Friday withdrew the registration documents it first filed 15 months ago for a stock sale, citing “market conditions unfavorable for the registrant to conduct its initial public offering.”

The Bellevue-based life and health insurer’s filing came the same day that The New York Times business section led with the headline “Insurance industry joins banking giants on the hot seat.”

The S&P Insurance Index of major companies is down from 401 to 134 over the past 12 months (along with Seattle-based Safeco, recently acquired by Liberty Mutual, it held such time bombs as American International Group, down more than 95 percent).

Symetra spokesman Colin Johnson says it remains a “financially strong and growing company,” in part because it didn’t leap into some of the volatile financial instruments that felled former powerhouses like AIG.

“Our investment portfolio was about $17 billion (at June 30), and within that we had less than $1 million in subprime assets,” Johnson says. “We’ve never done these credit default swaps, we have no collateralized debt obligations.”

He says Symetra’s decision to formally drop the IPO, nearly a year after it suspended the effort, will have no impact on its financial condition or its policyholders.

Comments? Send them to Rami Grunbaum: rgrunbaum@- or 206-464-8541