When Ron and Don took a drive around South Lake Union recently, they hardly recognized the neighborhood Don used to call home. The area continues undergoing a massive transformation, fueled by Amazon’s rampant growth.
One look at all the new buildings and construction cranes dotting the skyline tells you the area is booming. And a new report just out this week is quantifying the Amazon effect.
Real estate information company CoStar Group says Amazon now has 3.4 million square feet of office space downtown, accounting for nearly 75 percent of commercial property absorption since 2011.
“Between projects underway, in planning, and leases yet to be finalized, Amazon’s downtown Seattle footprint could easily eclipse 8 million square feet by forecast’s end,” writes economist Joseph Sollazzo.
And he says Amazon’s expansion is having just as dramatic an impact on the apartment and retail markets.
It’s something Don started seeing over the last decade, and he credits Paul Allen and his Vulcan Development for methodically buying up property throughout the neighborhood, then slowly developing it as Amazon has continued to flourish.
“He doesn’t get in a rush about tearing that building down and building something there,” Don observes. “It’s weird, you see these beautiful buildings down there, and then you’ll see five old homes that used to be crack houses. And they’ll just let them sit there and they’re boarded up-and chances are they’re still crack houses- and they’ll just kind of wait until they’re ready to roll.”
Now, the rolling is in full force. The Amazon analysis says Seattle is undergoing an apartment building boom “unlike anything it has ever seen, with almost 23,000 units expected to be added to the Seattle submarket over the next five years.”
The report says Amazon alone could drive demand for 7,600 new apartments and generate $722 million worth of new buying power downtown – an increase of 21 percent.
“They love living there, they love living downtown, they love the vibe, they love what Vulcan has created,” Don observes about the thousands of Amazon employees moving to Seattle from all over the world.
But not everyone loves what the Amazon effect is doing to the city. Rents and home prices continue to skyrocket, and developers keep bulldozing old homes and buildings to make way for higher-density housing and retail that’s dramatically changing the face of many surrounding neighborhoods from Capitol Hill to Queen Anne.
“If you want one of the biggest companies in the world to pump in a billion dollars of spending almost, that’s what’s going to happen around you,” Ron observes. “I feel for folks here in our neighborhood where you bought a house with a view of the Space Needle, you bought a house where maybe you had a partial view of the lake.”
Don sees it up on Queen Anne, where developers have leveled classic old homes and replaced them with multi-unit developments that take up the entire lot
“I feel bad for the people on my block because they’ve gone in, they’ve fixed up these older homes but in the tradition of the neighborhood,” he says. “So you have a lot of these kids that go to SPU, God bless them, and they take their old junky cars that they drive to school everyday, and they park them out in front of these homes that people have invested, $500, 600, 700,000.”
Don also laments how rampant development has changed the face of Capitol Hill, where a new mixed-use development seems to be going in on every block, forcing many long-time businesses and residents out.
“It’s like ‘Wow what happened here?’ Because it was kind of cool to go up there and see boys holding hands with boys and girls holding hands with girls and people with riot boots on walking down the street with purple hair. I don’t see it as much…I like that aspect of Capitol Hill and we’re losing that.”
Change is inevitable and the Amazon effect isn’t about to slow. The report says the company now has an estimated 18,000 local workers, with the potential to add 22,000 more over the next five years. But Don worries about what that means for the future Seattle.
“It drives people that you want to live in the city out of the city,” he says of the ever-rising prices. “You want your favorite barista to drive in from Federal Way? That’s not going to happen, because your favorite barista used to live here in Seattle and now they have to commute. And then at some point, the dollars and cents just aren’t going to make sense.”