Seattle developer defaults on renovated downtown office towers
A MAJOR developer in downtown Seattle defaulted on a loan backed by two of its most prized office properties, including one that formerly housed a branch of the Federal Reserve Bank of San Francisco.
Firms tied to Martin Selig Real Estate are in default on a more than US$200 million loan, according to letters from lender Acore Capital dated Nov 15 that were filed in Washington’s King County. The buildings would change ownership 30 days after that notice if no other action is taken, according to the letters.
Martin Selig Real Estate is considering transferring ownership to Acore Capital “as part of a broader strategy to restructure our existing debt and divest select assets”, the company said.
A representative for Acore did not respond to messages seeking comment.
Seattle-based Martin Selig Real Estate, which at one time owned about a third of the city’s office space, had ambitious plans for both buildings, but the timing was terrible. The developer started renovating both buildings just before the Covid-19 pandemic delayed work and pressured demand for office space.
Across King County, the total assessed value of major office buildings dropped by 32 per cent in 2024 compared with a year earlier, according to the assessor’s office.
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Martin Selig added more storeys to the former Fed building at 1015 Second Ave while keeping some of its historic elements, including the original bank vaults. Current tenants include Deloitte and Corr Cronin. The county assessed the property to be worth nearly US$97 million in 2022. That assessment is now just over US$57 million.
The Firestone Tire building, at 400 Westlake Ave North, is billed by the developer as one of the greenest office properties of its size. Now, new office space rises out of the shell of the nearly century-old tyre plant built when the South Lake Union area was part of Seattle’s gritty industrial core – before it was transformed into an Amazon-anchored tech hub.
Building to the environmental standards required for Seattle’s Living Building Pilot programme added 10 per cent to the construction costs of the renovation but allowed it to exceed size restrictions, according to Jordan Selig, Martin Selig’s daughter and the company’s executive vice-president.
After the firm finished construction in 2023, the county’s assessment of the property was US$111 million. Now, that’s fallen to US$74 million.
This is not the first time the developer has had to consider letting prized buildings go. In the 1980s, Martin Selig sold the Columbia Center, Seattle’s tallest building, just four years after completing it, according to The Seattle Times, which called him the “Houdini of Seattle office recessions”.
“We remain committed to enhancing the strength of our portfolio by prioritising tenant support, maintaining exceptional property standards, fostering strong partnerships with our vendors, and promoting the well-being of our dedicated employees,” Martin Selig Real Estate said.
Office buildings in urban centres across the country have been struggling, with developers in downtown Los Angeles also defaulting on debt. In Seattle, roughly 25 per cent of downtown office space was vacant in the third quarter, according to data from brokerage CBRE Group. BLOOMBERG
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