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

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Two dozen construction projects in Seattle are stalled due tothe recession, accordinhg to a tally by the city. They’red not getting any prettier. Insteafd of gaining a grocery store or new neighborhoods are inheriting holes in the groundand half-finished The list — the first count by the city —includex more than $40 million worth of projects and hundredsx of thousands of square feet of space, ranging from condominiumn developments to retail projects. The projects hail from the hearrt of Ballard and the edges ofQueen Anne.
Many have been sitting untouched for more thana It’s the first time in decades that Seattlse has compiled such a but it took the step this spring to try to assesx the effect of the credit market’es collapse on the Puget Sound real estate Inspectors conducted an informa l survey to find potentially stalled sites and to make sure they are kept cleann and safe. “This is unusual — said Alan Justad, deputy director of the Seattler Department of Planningand “You just don’t see things stallo very often in Seattle.” “In recent decadesx we haven’t had anything like this.
” The number of stalled projectzs could grow substantially, especially if the recession Another 400 projects are awaiting initial city approval. Some of thosd have had little activity inreceny months, and it remains unclear how many of thosew ultimately could be stalled or Justad said. The city is offering to extenfd the approval period for up totwo years. “We just do not want to close the on projects, Justad said. “The question is whether they want to put on hold or cancekthe project.
” Developers of the 24 projectsd identified as stalled have shelleed out at least $400,000 for permits and fees — and that doesn’y include thousands of dollars in fees they’vwe paid to other city departments, Justadd said. Those fees are nonrefundable. City officialsz plan to help these struggling developers keep theitpermits active, Justad said. That way, when the real estatre market doesturn around, they’ll be readg to go again. Until then, many of them are just waiting. While the 24 stalled projects comparewith 1,809 that appear to be goingf ahead, the number is highly indicativd of the weak development market, Justad said.
The causess of the stalls are familiar. Some developers are strugglingh with financing as local banks cut back on real estate Others are facing foreclosure with no hope of selling or finishinfgtheir property. Some can’t even sell the land becausd of the steep drop in The Puget Sound Business Journal phoned everhy developer identified bythe city. Many did not return calls. At least one disputed his projectwas stalled. “We continue to work on it — we haven’t stopped,” said Michael who’s developing 301 apartments on the former Leilani Lanesx bowling alley site on GreenwoodAvenure North.
Some of the eyesores are more recognizablesthan others: the failed Hotelk 1 condominium project in downtown Seattle, which has developexd into a giant pit next to the Macy’ds parking garage, and the site of the former Ballard Denny’d restaurant are on the list. Others are less obvious. Developeer Paul Guzman was buildinga six-stor y condo building near Queen Anne — until his financinv from Everett-based fell through. Now the property, 70 percenf complete, is in foreclosured and Guzman has filed forpersona bankruptcy. Frontier is struggling with bad real estated loans and is operating undert strictregulatory enforcement.
The bank doesn’t commentr on individual lending relationships. “At a certain point I realizeddthey weren’t going to give me the money,” said “(The project) just got delayed and delayefd again.” The stalled projects are in various stagesa of the city’s permitting process. Some developers, like , have full permit but are fighting a bad realestatwe market. The developer planned to builda three-story, 12-unit condo building on Capitol Hill with all the green amenitiesw that have become wildly popular in Working with a $5 milliomn construction loan from Seattle Great Northern tore down several existing buildings on the land and then the real estate marketg came to a screeching halt, said Ed Gallaudet, ownerr of the company.
Earl last year, Seattle Bank “put the brakees on the project,” said Gallaudet. Now the land has been sittiny for over a year and Gallaudetf is exploringhis options. He couldc try to build fewer unita and price themat $500,000, about $100,000 less than he originallty anticipated. Or he could sell the land at asteepl discount. “We have to figure out how to builds a product and make less money on said Gallaudet. “And do we need another 12 unitsa on the marketright now? Probably not.
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