An empty sidewalk outside of Zillow Group headquarters at the Russell Investments Center building in downtown Seattle. (GeekWire Photos / John Cook)

It’s 8:20 a.m. at the corner of Second Avenue and Union Street in downtown Seattle. The buzz of the city is noticeably absent.

A few construction workers stand idly by, smoking cigarettes in front of the Russell Investments Center, the 42-story skyscraper that’s home to Zillow Group and its 2,700 Seattle employees.

For a 15-minute period on this Tuesday morning, just four people enter the building — three of whom are dressed in construction garb. The only other noticeable activity: A security guard who asks a GeekWire reporter to leave the premises for taking photos from the desolate sidewalk.

A sign on Chip and Drew’s Filling Station — a popular grab-and-go lunch spot once frequented by Zillow staff — says it all: “For the long term viability of our business we have temporarily suspended our operation.”

It’s a surreal scene — a post-apocalyptic ghost town of sorts. The once-bustling Starbucks inside Zillow’s building is closed, as is the Caffe Ladro around the corner. It’s not quite as easy to find a cup of coffee in caffeine-drenched Seattle these days.

As the coronavirus resurges and Seattle’s high-tech juggernauts extend work from home policies — Zillow just last week said 90% of its staff could work remotely indefinitely, at least part of the time — many are wondering what will happen to downtown.

Zillow is one of many anchor tenants in the heart of the urban core, with tech companies such as F5 Networks, Qualtrics and Avalara each fueling mini ecosystems around their respective office buildings. Those ecosystems are now severely at risk, with the Downtown Seattle Association estimating 47,000 fewer jobs in downtown Seattle at the end of June when compared to the start of the year.

Meanwhile, office rents are starting to dip as are new office leases, and the amount of vacant office space in downtown Seattle is expected to rise by about 2.6 million square feet by the end of 2020. A steady influx of sublease listings are now coming on the market in Seattle, notes commercial real estate company JLL.

With tens of thousands of tech workers sidelined at home — and no short-term expectation for them to return — hard questions linger:

  • Will workers come back?
  • What will a post-COVID city look like?
  • And how will the small businesses that thrived in the shadow of Seattle’s largest tech employers survive?

Crowds disappear

In many ways, Zillow’s headquarters is uniquely situated at the cross section of Seattle’s arts, tourist and financial centers. In fact, the building is attached to the Seattle Art Museum and a stone’s throw from Benaroya Hall, The Showbox and the historic Pike Place Market, which on this August morning seemed like a shell of its former self.

“How long can we hold on?” is the question Drew Gillespie of the nearby Pike Brewing Co is asking.

Drew Gillespie, president of Pike Brewing Co., plans to boost social media spending to attract locals to his brewery in absence of downtown workers and tourists.

Gillespie, who started as a 19-year-old line cook at the brewery and now serves as president 22 years later, just opened for business last week after an unexpected five-month shutdown due to the pandemic. Normally, the longtime brewery would be packed with cruise ship passengers and workers from nearby companies enjoying IPAs and burgers. But not this summer.

He’s not expecting much business from tourists or techies, including Zillow, which had a longstanding weekly happy hour for about two dozen folks at Pike Brewing’s upstairs restaurant, the Tankard & Tun.

“It doesn’t take rocket science to figure out if there’s nobody in the office buildings downtown, there will be less people to eat lunch and have happy hours,” Gillespie said.

Permanently altered way of working

Few people are venturing into downtown Seattle, which is King County Metro’s largest transit market. From July 27-31, the average weekday bus ridership stood at 144,000, compared to 395,000 for the same time in 2019 — a 63.4% drop­.

What’s most troubling is the lack of clarity on whether Zillow or other employers will come back at previous numbers, when office workers filled up the high-rise office buildings dotting Seattle’s skyline. Currently, no Zillow staff are regularly entering the Russell Investments Center, where the company’s more than 385,000 square feet across 16 floors represents 43% of the skyscraper’s office space.

In what could be seen as a chilling comment for small businesses operating in the shadow of tech giants, Zillow Chief People Officer Dan Spaulding noted that the company’s previous inclination for in-person communication and in-office collaboration was permanently altered.

“Our old preferences have been debunked during the pandemic,” Spaulding wrote in a blog post.

A lone bike commuter passes Zillow HQ on 2nd Avenue in Seattle this week.

In an interview with GeekWire, Zillow spokesperson Viet Shelton said the company is using the time to reconsider office desk configurations and more. Company surveys indicate that many employees will want a hybrid policy that permanently allows remote and in-office work options.

“Folks still want a space,” Shelton said. “We have space there and we plan on figuring out how to use it.”

The return of Zillow employees to 1301 Second Ave. certainly would be welcome news for Evergreens, a popular salad shop located just north of Zillow HQ.

Prior to COVID-19, the location was pumping out 400 to 500 salads per day, with Zillow employees easily representing the largest customer base. Now, Evergreens is lucky to make 100 salads during lunchtime, said General Manager Cassidy Calwaystein.

“Zillow was pretty much the main contributor of business at this specific location,” said Calwaystein, adding that they’ve reduced hours and boosted marketing efforts to other businesses in the area.

Evergreens General Manager Cassidy Calwaystein said Zillow was the largest customer at its 2nd Avenue location.

She saw the news last week that Zillow planned to allow employees to work from home indefinitely. In some ways, it was a gut punch.

“Businesses like Evergreens are going to have a harder time opening back up as many locations as we had before, and it’s going to change the culture of how people are supporting businesses and getting lunch,” Calwaystein said.

But it’s not all bad news. Evergreen’s Fremont location is going strong since it is located closer to a dense residential neighborhood where people can walk from their homes to grab lunch. That’s not the case in downtown Seattle.

“There aren’t as many people living here, so when businesses like Zillow are staying closed, that dramatically affects our business,” she said.

‘Where are my customers?’

In fact, downtown Seattle apartment vacancy rates are expected to rise from 5.3% at the end of 2019 to 8.1% at the end of the year, according to CoStar data compiled by the Downtown Seattle Association. By the end of June, there were 621 fewer downtown apartments occupied than at the start of the year — a dramatic drop.

About 88,000 people live in downtown Seattle, not enough to support the many small businesses which rely on office workers to buy lunch, drinks, clothes and a variety of other services.

“330,000 workers here Monday through Friday can’t be replaced by 88,000 residents,” said Jon Scholes, president of the Downtown Seattle Association. “The retail restaurants and personal services that have reopened in downtown Seattle are looking around and looking to us and saying: ‘Where are my customers?'”

Companies like Zillow will need to return in big numbers for downtown to rebuild. Right now, Scholes said downtown Seattle is a fragile Jenga-like structure, with big chunks from the base now removed.

And Scholes predicts that many small businesses — including those that are “the fabric of our downtown and the urban core of Seattle” — will close in the coming months, especially if federal aid stalls and work from home trends take root permanently.

Downtown Seattle can’t thrive without the tech companies and engineering centers, core building blocks which have driven much of the boom in the past decade.

“We’re in a really tough spot,” Scholes admitted.

The pandemic has quieted the bustle at the Pike Place Market.

Over at Don & Joe’s Meats — a 51-year-old meat shop located next to the world famous fish mongers in Seattle’s Pike Place Market — business is steady as steaks and sausages fly across the counter.

An easy 5-minute walk from Zillow’s headquarters, general manager Tommy Storslee describes his customer base as “strictly old-school locals.”

“A lot of the younger tech guys don’t come down here, not sure if it is all Amazon or what,” said Storslee. “A lot of people who shop here have been coming here since 1969.”

Even still, Storslee, who has worked for the meat shop for eight years, can feel the difference at the Market. “There are not a lot of T-shirts being sold,” he said. “There’s no one walking around.”

While he admits to not being “old school,” Shelton, the Zillow spokesperson, is a local resident and said he’s been shopping at Don & Joe’s since he moved downtown five years ago, including nearly every week during the pandemic.

Back at Pike Brewing, Gillespie seems stumped when asked about the future of downtown Seattle and how his business will fare.

“Good question,” he said. “Talk to me in a year.”

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