Virgin on Business: The (Un)real Estate Boom

It’s coming, because this time is always the same as last time. Right?
| FROM THE PRINT EDITION |
 
 
 
The term “see-through building” described not an architectural design style but the leasing status of downtown Seattle office buildings in the early 1990s, the result of a surge of speculative construction spurred by all the demand for space that was expected to arrive — and didn’t. 
 
It’s been a while since anyone used that figure of speech or fretted about what it said about the underlying economy’s health.   Maybe it’s time we should. The sight of construction cranes filling the skyline, the near daily announcements of proposed projects and companies on the hunt for tens of thousands of square feet to accommodate expansion and downtown Seattle office-space vacancy rates at half their recessionary levels make this, counterintuitively, an excellent time to consider what’s ahead for the commercial real estate industry and, by extension, the economy.
 
Which means we need to talk about the tech industry.
 
Every time this region has a boom in commercial real estate, an even more ominous phrase than “see-through buildings” emerges. That would be “this time, it’s different.” Every time this region has a commercial real estate bust — and it has had some doozies — the reassurances spring forth that “OK, sure, that time wasn’t different than the time before, but we’ve learned our lessons and next time, really, will be different.”
 
So, is this time different?
 
Reasons it’s different:
• Much of the current office-space demand in Seattle (and downtown Bellevue) is driven by tech. In the early 1990s, commercial real estate’s woes were related to a national recession and a Boeing slump; tech was something happening off in suburban low-rise office parks in the hinterlands of the Eastside.
 
• The buildup to the plunge in the early 2000s was, like now, tech driven, but it was a different kind of tech, featuring dot-com startups trying to grab footholds in e-commerce, or companies marketing to those startups. When most of the dot-coms went away, so did the demand for the space. 
 
• The current building and leasing boom is driven by established companies — Amazon, Microsoft, Google, Facebook and Expedia, et al — with real business plans and revenues. Tech-space demand is being fueled not so much by the always-precarious retailing subsector as it is by cloud services, which has the potential to be more stable and enduring.
 
 
Observant readers will notice we’ve skipped over the most recent recession. That’s for two reasons. Tech not only wasn’t a driver of the downturn, it was barely a participant. And while commercial real estate took its lumps, it was residential real estate that generated the most headaches for developers and lenders.
 
Reasons it’s not:
• No one has repealed the law of the business cycle, not for commercial real estate, not for tech, not for anyone. The gaps between peak and trough may vary, the heights and depths may not be the same, the causes won’t always match up, but in the end, cycles gotta cycle.
 
• Tech, in particular, having enjoyed an extended run of success, is overdue for contraction, retrenchment or consolidation. It may come from a general recession that causes business and consumers to stop spending on new tech. Or it might be the result of the collapse of the advertising model so many ventures are still banking on, a development I've been predicting for years.
 
• Or it might be that tech companies decide they want to drop out of the bidding wars — a prediction we’re going to stick with in the belief that reality will eventually catch up.
 
So be vigilant for warning indicators of changing conditions and trend shifts, and know what to look for. Spotting a see-through building isn’t an indicator of what’s coming. It’s a sign of what’s already here.  
   
Monthly columnist Bill Virgin is the founder and owner of Northwest Newsletter Group, which publishes Washington Manufacturing Alert and Pacific Northwest Rail News.

Final Analysis: Would You Go to Work for Donald Trump?

Final Analysis: Would You Go to Work for Donald Trump?

Or would you rather end up on his enemies list?
 
 

Imagine getting a call inviting you to work for your country.

Now imagine your new boss is Donald J. Trump.

Would you move to Washington, D.C., to work for the president of the United States? For this president of the United States?

From what we know through simple observation, Donald Trump suffers from chronic narcissism, he doesn’t read much, he rarely smiles, he has a vindictive streak, he treats women badly, he has the argumentative skills of a bruised tangerine, he fears foreigners almost as much as he fears the truth and he spends his waking hours attached to marionette strings being manipulated by Steve “I Shave on Alternate Thursdays” Bannon.

Sure, you’ve probably suffered under bad bosses. But this guy takes the plagiarized inauguration cake. He thinks it’s OK to assault women. He made fun of a journalist’s disability. He said a judge couldn’t be impartial because of his ethnic heritage. He doesn’t pay people who have done work for him. He has been a plaintiff in nearly 2,000 lawsuits.

We have to assume that Sally Yates, the acting attorney general who got herself fired in January for standing up to President Trump’s ban on accepting immigrants from predominantly Muslim countries, has probably updated her résumé by now. No doubt she proudly included a mention that she torched the president whose approval rating after one week in office had dropped faster than it had for anchovy-swirl ice cream.

If I worked for Trump, it would most likely be a challenging assignment. I try to be gracious and diplomatic with supervisors and coworkers, but I draw the line with people who lie to me. Or lie to others and put me in an awkward position. With them, I’m not so gracious, and I don’t hold my tongue. Which would probably get me early induction into the Sally Yates Hall of Flame.

Or maybe on the president’s enemies list. None other than Trump’s reality-TV pal, Omarosa Manigault, has revealed that the president possesses a long memory — longer, even, than his neckties — and that his people are “keeping a list” of those who don’t like him.

I know I should give my president the benefit of the doubt, but I’m happy to make an exception in this case. I don’t like Donald Trump. And I would be honored to be on his enemies list. Not since I played pickup baseball in grade school have I had such an urge to scream, “Pick me! Pick me!” Being added to a Presidential Enemies List would be such a treat, a career topper, really. Better than submitting to a colonoscopy without anesthesia. Or watching reruns of Celebrity Apprentice. Without anesthesia.

If selected, I would pledge to save my best words for the president and I would only use them in the bigliest way.

Of course, making the enemies list means I might never get the call to join the new administration. I might never get to engage in locker-room banter with POTUS. I might never get to untangle the marionette strings. I might never get to buy razors for Steve Bannon.

It is a sobering realization. But we must serve where we are best suited.

John Levesque is the managing editor of Seattle Business magazine. Reach him at john.levesque@tigeroak.com.