Renfrew Report… Dear Mayor Katie Wilson… Taxes DO NOT create demand!
An Open Letter to Katie Wilson:
A Vacancy Tax Won’t Fix Downtown Seattle — It Will Make It Worse
By Arron Renfrew | Asset Manager | Renfrew Team | AUM Real Estate
Mayor Wilson,
I’m writing this not as a political opponent—but as someone in the trenches of real estate every single day.
Downtown Seattle is not struggling because landlords are sitting on empty buildings by choice. It’s struggling because demand has collapsed.
Depending on the dataset you look at, downtown office vacancy is now exceeding 30% to 40%. That is not a normal market imbalance. That is a signal of something deeper—and more structural—going wrong.
This Is Not a Supply Problem. It’s a Demand Problem.
The narrative behind a vacancy tax assumes that empty space is being withheld from the market.
That’s simply not reality.
Landlords don’t benefit from vacancy.
We don’t get paid on empty units.
We don’t prefer dark storefronts.
What we are seeing instead is a politically and economically driven collapse in demand, fueled by:
Persistent public safety concerns
Ongoing challenges tied to homelessness
Reduced foot traffic and office utilization
A business climate that has become increasingly difficult to operate within
Until those issues are addressed, no tax policy will “force” tenants back into spaces they don’t want to occupy.
A Vacancy Tax Risks Triggering Financial Collapse—Not Recovery
Here’s where this proposal becomes dangerous.
Many commercial properties—especially in the downtown core—are financed with loans that require a Debt Service Coverage Ratio (DSCR) to be maintained.
That means:
If rental income drops too far
If concessions increase too much
Or if operating losses deepen
👉 The property can fall into technical default
At that point, the outcome is not theoretical:
Lenders step in
Properties are forced into restructuring
Or worse—foreclosure and distressed sale
Now layer a vacancy tax on top of already distressed assets:
You’re not encouraging occupancy
You’re increasing negative cash flow on already struggling buildings
That doesn’t stabilize the market.
It accelerates failure.
Forced Outcomes Don’t Create Healthy Markets
There’s a fundamental misunderstanding embedded in this policy:
You cannot tax your way into demand.
Lowering rents aggressively to avoid a vacancy tax may sound like a solution—but in practice, it can:
Push properties below DSCR thresholds
Reduce asset values further
Trigger loan defaults
And when distress hits at scale, ownership doesn’t magically diversify.
It consolidates.
Distressed assets are typically acquired by:
Large institutional investors
Private equity firms
Capital groups with the ability to absorb loss and reposition assets
That’s not revitalization. That’s transfer of ownership under pressure.
The Real Solution: Restore Safety, Stability, and Confidence
If we want businesses and residents to return downtown, the path is clear—and it’s not through additional taxation.
We need:
Consistent enforcement of existing laws
A visible, reliable public safety presence
Solutions that reduce street disorder and restore usability of public space
Policies that make it easier—not harder—to operate a business in Seattle
Demand follows confidence.
Right now, confidence is what’s missing.
Landlords Are Not the Enemy
I want to be very clear about this:
Landlords do not want vacancy any more than the city does.
Vacancy represents:
Lost income
Increased risk
Deteriorating asset value
We are already incentivized to fill space.
What we need is a city environment where tenants actually want to return.
A Path Forward
Mayor Wilson, I urge you to reconsider the vacancy tax approach.
If implemented in the current environment, it risks:
Deepening financial distress
Accelerating foreclosures
And delaying recovery in the very area we all want to see thrive again
Let’s focus on the fundamentals:
👉 Make downtown safe
👉 Make it functional
👉 Make it desirable
The rest will follow.
Arron Renfrew
Asset Manager | Renfrew Team
AUM Real Estate
