M
artin Selig Real Estate, a prominent downtown Seattle office developer, is navigating treacherous financial waters. The company has been forced to lay off 86 employees as it grapples with weak office demand and mounting debt. A $239 million loan tied to seven of its properties was transferred to a special servicer last April, sparking concerns about imminent maturity default.

    The layoffs are the latest blow to Selig's struggling business, which once claimed ownership of one-third of downtown Seattle's office space. The company's portfolio still includes 31 buildings, but its financial stress shows no signs of abating. Industry estimates suggest that Selig had fewer than 200 employees before the layoffs, and it remains unclear whether those let go will be rehired or receive severance packages.

    Selig's woes are a microcosm of the broader office market, which has been slow to recover from the pandemic-induced downturn. As of December, about 32% of downtown Seattle's office space was either vacant or on the sublease market, leaving many landlords struggling to pay off or refinance loans. Higher interest rates have only exacerbated the problem.

    The company's troubles are compounded by its aging portfolio, with many buildings dating back decades and struggling to attract tenants in a competitive market. Selig's newer projects, including the Federal Reserve building and 400 Westlake, were completed just before or during the pandemic, making them vulnerable to declining revenues and high overhead costs.

    While some industry observers believe that the downtown office market is showing signs of recovery, driven by return-to-office policies from major employers like Amazon, it may be too little, too late for Selig. The company's financial stress has been building for years, and its ability to recover remains uncertain.