Seattle commercial real estate comeback kid is on the ropes again

The name Martin Selig is well known in Pacific Northwest high-rise building circles. Martin Selig Real Estate, founded in 1958, went on to become the largest independent developer in the region. In the 1980s, Selig built the Columbia Tower, still the tallest building in Washington state.

His company's office portfolio now lists around 31 buildings made up of nearly 5 million square feet. But Seattle's commercial real estate scene has been on a rough ride recently. Seattle Times business reporter Paul Roberts has written about Selig’s fortunes. He talked to KUOW’s Rob Woods.

This interview has been edited for clarity.

Rob Wood: You call Martin Selig the Houdini of downtown Seattle's real estate market. How did he earn that comparison?

Paul Roberts: Well, basically, by being able to sort of come back repeatedly after being written off. Whether it was a recession, a bankruptcy, a foreclosure, some other challenge, people would say, "This is it for Martin Selig,” and he would somehow come back. He would often do so with even more money and more office space than he started with. So, the word on the street with Martin Selig has always been, don't bet against him. You can dislike the guy. You can think he's too ambitious, but it's not worth betting against him.

Can you paint a picture of how far Selig has come as a developer? How did he get started, and how big did he get?

Back in the 50s he bought his first investment property. He built a shopping mall in the early 60s, and then steadily just built up one after another, buying properties, holding them, developing them. He was very skilled at leasing them up, making deals with prospective tenants to get them to come over to his buildings and forsake their current landlords. So, it's been this sort of steady rise that always appears to be, at least on the outside, on the edge of collapse. Yet somehow, he just keeps holding it together.

He's a consummate dealmaker; he networks, knows everyone, and just is willing to cut deals by offering these incredible discounts: free months rent, free parking, all sorts of perks to fill his buildings up at the expense of his rivals.

Back to Houdini, he famously didn't make it out of his last bind. You write that Selig is in a pretty deep financial hole. How bad is it?

Just by the numbers, he has over $800 million in loans that I'd call troubled. He's either in default or close to default, in discussions with lenders, trying to figure out how to get around the fact that he can't repay them. He's also dealing with issues that most office landlords are dealing with. That is to say, high vacancy rates due largely to remote work, and high interest rates, which makes it really, really hard, if not impossible, to refinance a lot of the loans that many of these landlords took out on these buildings.

So, it's a kind of a perfect storm, and it's unprecedented in a lot of respects. It's pushing even a survivor like Selig in ways that he hasn't had to deal with before.

One of the people you spoke to said he wouldn't bet against Selig, and you write that he still enjoys what you call “a perverse leverage over his lenders.” What kind of leverage does he have?

None of these lenders really want to take back an office property that's not performing well. Someone like Selig, who has been in the business for decades, if he's having trouble leasing up a building because of remote work and other factors, then why does a lender think they'll have any better luck in doing it?

Their strategy is to keep Selig and other landlords in their buildings as long as possible. They'll take steps to make that happen. They'll grant them more time to pay off the loan. They'll allow them to renegotiate. They'll do something to avoid a foreclosure, because the last thing they want to do is take back an underperforming asset at a time when pros like Selig can't get those buildings to perform.

Listen to the interview by clicking the play button above.