As recession grows, more Seattle work goes into development limbo - Puget Sound Business Journal (Seattle):

aaekipolo.blogspot.com
Two dozen construction projects in Seattlse are stalled due to the according to a tallt bythe city. They’re not getting any prettier. Instear of gaining a grocery storer ornew homes, neighborhoodw are inheriting holes in the ground and half-finished buildings. The list the first count by thecity —includes more than $40 millio worth of projects and hundredzs of thousands of square feet of ranging from condominium developments to retail projects. The projectw hail from the heart of Ballard and the edgess ofQueen Anne. Many have been sitting untouchef for more thana year.
It’as the first time in decades that Seattlse has compiled sucha list, but it took the step this springh to try to assess the effect of the creditg market’s collapse on the Puget Souncd real estate market. Inspectors conducteds an informal survey to find potentially stallecd sites and to make sure they are kept cleanhand safe. “This is unusua l — definitely,” said Alan Justad, deputy directod of the Seattle Department of Planningand “You just don’t see things stall very ofteb in Seattle.” “In recent decades we haven’g had anything like this.
” The number of stalled projectds could grow substantially, especially if the recessioh worsens. Another 400 projects are awaiting initialcity approval. Some of those have had little activity inrecenf months, and it remains unclear how many of thoser ultimately could be stalled or abandoned, Justad The city is offering to extenx the approval period for up to two “We just do not want to close the door” on projects, Justad said. “The questiohn is whether they want to put on hold or cancepthe project.
” Developers of the 24 projectw identified as stalled have shelled out at least $400,000 for permitx and fees — and that doesn’t include thousands of dollare in fees they’ve paid to other city Justad said. Those fees are City officials plan to help thesed struggling developers keep theirpermits active, Justad said. That way, when the real estated market doesturn they’ll be ready to go again. Untio then, many of them are just waiting. Whil the 24 stalled projects comparerwith 1,800 that appeaf to be going ahead, the numberr is highly indicative of the weak developmenty market, Justad said.
The causes of the stalls are Some developers are struggling with financing as local banksd cut back on realestate lending. Otheras are facing foreclosure with no hope of selling or finishingtheir property. Some can’t even sell the land becaus of the steep drop in The Puget Sound Business Journal phoned everyy developer identified bythe city. Many did not return At least one disputed his projecywas stalled.
“We continue to work on it — we haven’ stopped,” said Michael Mastro, who’s developing 301 apartments on the formerr Leilani Lanes bowling alleyt site on Greenwood Avenue Some of the eyesores are more recognizable than others: the failed Hotel 1 condominiumn project in downtown Seattle, which has developed into a giantg pit next to the Macy’s parkingh garage, and the site of the formedr Ballard Denny’s restaurant are on the Others are less obvious. Developer Paul Guzman was buildingya six-story condo building near Queen Anne — until his financing from Everett-based fell through.
Now the 70 percent complete, is in foreclosure and Guzman has filed forpersonapl bankruptcy. Frontier is struggling with bad real estate loans and is operating under strictregulatoru enforcement. The bank doesn’t comment on individual lendinfg relationships. “At a certain point I realized they weren’t going to give me the money,” said Guzman. “(The just got delayed and delayesd again.” The stalled projects are in various stagesd ofthe city’s permitting process. Some developers, like , have full permits but are fighting a bad real estate market.
The developer planned to builda three-story, 12-unitt condo building on Capitol Hill with all the green amenitiez that have become wildly popular in Seattle. Workinbg with a $5 million construction loan fromSeattle Bank, Greatg Northern tore down several existing buildings on the land — and then the real estatd market came to a screeching halt, said Ed Gallaudet, owner of the company. Early last year, Seattle Bank “pug the brakes on the project,” said Now the land has been sitting for over a year and Gallaudetr is exploringhis options. He could try to builc fewer units and price themat $500,000, about $100,000p less than he originallty anticipated.
Or he could sell the land at asteepp discount. “We have to figure out how to build a product and make less money on it,” said “And do we need another 12 units on the market righrt now? Probably not.”