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The lease was one of the largest in Seattle's history – enough space to accommodate at least 3,500 employees and perhaps 5,000.
Amazon abandons a major office project in downtown Seattle 10 months after threatening to do so if the city imposed a new business tax.
While the Seattle City Council had finally overturned on the so-called entry fee, Amazon confirmed Wednesday that it would not occupy the 722,000 square feet of leased space in the Rainier Square tower.
"We are still evaluating our space requirements and plan to sublet Rainier Square based on current projects," Amazon said in a statement, adding that the company had more than 9,000 vacancies in Seattle and that she "would continue to evaluate future growth."
Amazon managers who perform these evaluations leave February with much more to consider than when they entered the month.
Change plan
On Valentine's Day, Amazon abandoned plans to create a large campus in New York, which would have welcomed up to 25,000 employees because of its construction over several years. (More than 2,000 people work in the city, including advertising, fashion and publishing.)
The company said it would divide these jobs on several other technology hubs in North America where it would have offices, but did not plan to accelerate growth in Seattle because from his false start in New York. He also did not indicate that he was going to relaunch his search process at Seat 2, the draw that he launched in 2017 and which culminated in November in a split decision on New York and Northern Virginia, who are looking for huge new offices.
Now, in addition to seating for 25,000 potential employees in New York, Amazon – if its growth trajectory continues – would need to find room for thousands of others that would have worked in downtown Seattle.
With an area of 722,000 square feet, the Rainier Square lease is one of the largest in the history of Seattle. It allowed at least 3,500 employees and maybe even 5,000.
Amazon had previously secured two large spaces in downtown Bellevue, his hometown of origin, accommodating 4,500 people. The Puget Sound Business Journal announced earlier this month that the company was looking to expand further in Bellevue, although Amazon has not yet commented on its Eastside projects.
Seattle Real Estate Impact
The project of the Rainier Square tower, which is scheduled to open next year, in the amount of $ 570 million, will be the second tallest building in the Pacific Northwest, with 58 floors. It will also include luxury apartments and a hotel, as well as a communal PCC market on the ground floor.
Even by Amazon's standards, the commitment of the offices was huge: only a few companies – Starbucks, Google and Facebook – had more offices in Seattle than Amazon had planned to occupy at Rainier Square.
In addition to its size, Rainier Square was a bit of a departure for Amazon, which has about 40 buildings and 45,000 employees at South Lake Union and the Denny Triangle, to venture south to the city center.
The impact that the withdrawal will have on the local office market is mixed: on the one hand, it is a ton of space to fill and probably Too big for a business to take. On the other hand, the office market – in contrast to the cooling housing market – is overheated by business demand.
Colliers International released a report Wednesday indicating that the vacancy rate in downtown Seattle was 7.1% – only Manhattan and the Bay Area had smaller markets, among the major metropolitan areas. Rents from downtown offices, such as Rainier Square, have also increased, as companies such as Google, Facebook and WeWork continue to gain space.
Seattle's economic base is much larger than it was in 2007, the last time such a large number of leading spaces came onto the market unexpectedly. When Washington Mutual – then Seattle's largest office tenant – sold and released 1.2 million square feet into the city, it "has somehow imploded our market," said David Gurry, senior vice president of Necklaces in downtown Seattle.
"I estimate that 720,000 square feet of space will really have an insignificant impact on the market," said Gurry. "The demand from Seattle City businesses and people coming from places like Silicon Valley is such that I think it will be swallowed up quickly."
The stakes for Amazon to sublet this space are significant, even for a company that made a profit of $ 11.2 billion last year. The company does not publish its lease terms, but leases of new buildings in Seattle typically last 10 to 15 years. When Amazon signed its Rainier Square lease in the fall of 2017, rents in downtown rose to about $ 42 a square foot a year. On this basis, his total rent bill for the building would be around $ 30 million a year, or $ 300 million on a typical 10-year lease.
Gurry said a sublet could even be marginally profitable for Amazon and Wright Runstad & Co., the builder and owner of the tower. Office rents have increased by about $ 5 per square foot in a year and a half since Amazon's initial lease. It could therefore generate a profit – probably split equally between Amazon and Wright Runstad – if it is able to sublet all the space.
Relationship with the town hall
There were questions around Amazon's presence in Seattle even before the battle over the head tax and the announcement of the public parade of other cities for a so-called "headquarters".
Rightly or wrongly, the 25-year-old technology and commerce giant has been blamed for the worsening of traffic, affordability, and homelessness, whose excessive growth made them an easy target. .
The decision made by Amazon in 2007 to consolidate its presence in Seattle on an urban business campus in the South Lake Union neighborhood ushered in a decade of rapid change and the creation of tens of thousands high paying jobs in the fields of technology and related fields. Other major tech companies, such as Facebook and Google, have followed Amazon into a neighborhood of old warehouses and commercial laundries that have been mass redeveloped by the late Paul Allen's Vulcan Real Estate.
The technology boom coincided with a marked increase in homelessness, declared an emergency in 2015 in the city. The entry tax, which has deepened divisions over how the city and region should respond to the crisis, would have cost businesses $ 20 million or more. More annual income in Seattle is $ 275 per full-time employee, accounting for about $ 47 million for affordable housing and homelessness services.
The city council that reversed the head tax for the month of September will be very different after this fall's election. Four board members decided not to run again.
Spokeswoman for Seattle Mayor Jenny Durkan and Council did not respond to Amazon's Rainier Square announcement Wednesday at noon.
A spokeswoman for Amazon said two weeks ago that its buildings under construction in Seattle would bring the total to 14 million square feet, which "will be the completion of our Seattle campus." The spokesman then announced and issued a statement in which he said the company "will continue to assess future growth" in Seattle – the position reaffirmed Wednesday – and declined to comment further.
The company has recorded a steady number of jobs in the city – about 9,800 on Wednesday, although it is not known how many of them are intended for extensions of the city rather than regular recruitments. Amazon said since last autumn that it employs 45,000 people in the city, up from 40,000 in March.
Amazon's statement on Wednesday follows the publication of a previously published advertising pamphlet by the GeekWire technology information site, showing that the Rainier Square space was on the market.
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