It is lolfukt.

We've opened negotiations on a space in Bellevue. We'd like to know the going rate. The city has a population of 140k and in a week of asking, my real estate guy couldn't find a single comp. In other words, not a single lease has been written in the entire city in six months.

I have a friend whose business is, coincidentally, in Bellevue. Their current shop is going to be a train station in approximately 18 months so they need to move. They have put an offer in on an abandoned warehouse in the middle of prostitution central that has been vacant (except for squatters) since 2016. The county has written the structure down to $1000, which is government-speak for "this is a teardown, you will never receive an occupancy permit." In kinder times the bank would say "there's no way we're going to finance this you idiots, this isn't a building it's a money pit." In the land of double-digit interest rates? By the time they realize they'll never be in that building the bank has made their money back. Except of course if it's a regional bank, which do something like 40% of the real estate lending in America, they're probably dead.

Of the office workers who went remote in 2020, slightly less than half have come back. If you've got a 5-year lease with 5-year extensions you're statistically closer to not renewing than you are to making the best of all the space you've got. I'm discussing office, medical and warehouse space that's surrounded by (A) Microsoft (B) Facebook (C) Google (D) Adobe (E) AmGen and ain't nobody buying or leasing shit.

If you look at the national charts, manufacturing is making a comeback... but manufacturing is different zoning than office in most municipalities and it requires different permits. And if you're looking to ruralize you're dealing with a whole new set of challenges. There's a community we'd like to expand to. First problem is there's a 50-year-old viaduct that pretty much dominates all commuting in and out, and there are no plans on the books to augment it or replace it despite the fact that it has been the impediment to commuting for fifteen years or more. Second problem is I can buy an 8ksqft three story medical dental building downtown (with underground parking!) for about a third as much as I can buy a Chipotle out there. There's all sorts of batshit stuff happening in "opportunity zones" because there are lots of unsophisticated investors who have never seen what creeping blight looks like.

Who are borrowing money.

At ruinous rates.

From regional banks.

While contracting rates are at an all time high.

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Thanks for the soapbox