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Seattle’s Luxury Homes Get a Tech Boom Boost

The city’s high-end real-estate market is on the rise, as executives relocate from pricier locales like Silicon Valley

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The technology boom is pushing its way north up the Pacific Coast, boosting real-estate prices, sparking neighborhood squabbles and creating new demand for luxury homes asking $1.5 million or more. Real-estate agents say Seattle, the longtime home of software giant Microsoft and online-retailing behemoth Amazon, is attracting more technology firms because it offers a combination of local talent and lower housing prices than the tech centers of California. In the past year, Best Buy, Alibaba and HBO have announced or opened IT-related operations in the city, according to the Seattle Metropolitan Chamber of Commerce. Amazon will add to its Seattle footprint with two new buildings, while Google, Facebook, Twitter and Hulu have all expanded their Seattle offices in the past few years. While the overall market is steady, real-estate prices for luxury properties close to downtown are up. For homes priced above $1.5 million, the average price a square foot was $494 in May, up 10% from the previous May. In 2013, Seattle’s population swelled to 652,405, up from 608,662 in 2010, according to census data. After several years in Montecito, Calif., Jim Melillo, 65, moved back to Seattle in 2014. He isn’t alone—more Californians are looking to leave areas like Silicon Valley and its sky-high housing prices. The number of San Francisco Bay Area users of Redfin searching for homes in Seattle quadrupled to 5.1% in 2015 from 1.2% in 2011, according to a recent analysis by Redfin, an online real-estate firm. More: Mansion Global's Seattle Listings In 2014, Mr. Melillo paid $1.4 million for a 26th floor, 2,300-square-foot, two-bedroom condo at Escala, a 31-story tower built in downtown Seattle. The founder of an executive-consulting business says he has befriended other new transplants, attending monthly barbecues and wine club meet-ups. And often there are impromptu dinner parties thanks to a shared downstairs commercial kitchen. The building’s common areas also include a formal dining room, where he sometimes holds meetings and a wine cave, where he has a storage locker. “I’d lost touch with a lot of people, but there’s a community here,” says Mr. Melillo, who uses the building’s mobile app to take part in events and talk to residents.

Seattle neighborhoods with an easy commute to downtown—like Queen Anne, Madison Park, Washington Park and Capitol Hill—are especially popular, say real-estate agents. As these central neighborhoods have lower-density zoning requirements, most luxury properties are single-family homes, restricting supply for top-tier buyers looking for a short commute, says Peter Orser, acting director of the Runstad Center for Real Estate Studies at the University of Washington. Supply has been additionally restricted by a shortage of condo development that has its origins in the recession. In these areas, there are few available lots on which to build, notes Ken Woolcott, a 56-year-old former biotech executive and former part owner of the Seattle SuperSonics who is developing a smartphone app. So in 2004 he spent $2.3 million on a property in the leafy Queen Anne neighborhood and tore down its Frank Lloyd Wright-influenced home. The teardown was opposed by many locals, including Jeffrey Ochsner, a professor at the department of architecture at the University of Washington. “As a result of [Seattle’s] growth there has been significant loss of historic properties” in high-density neighborhoods, Mr. Ochsner says. Mr. Woolcott says the house, which had been on the market nearly a year, was in bad shape and would have been too expensive to restore. Mr. Woolcott and his son Spencer, 11, moved into their new home this year. The 5,800-square-foot Northwest Art Deco-style home includes granite floors, a state-of-the-art security system and a downstairs “car turner” room with a rotating platform to show off Mr. Woolcott’s collection of four classic cars, including a 1966 Ford Mustang GT convertible. The view includes the Space Needle and Elliott Bay. “This was my signature dream, to live overlooking Seattle,” says Mr. Woolcott, who declines to say how much construction cost but estimates that his home would now sell for more than $5 million. He also built two townhouses on the property to sell for investment purposes. More: Luxury Condo Market Heats Up in Houston Searching for a home can be difficult. Software engineer Dave Vowels says he spent a year looking in Fremont, a popular neighborhood that is 2 miles from Amazon’s headquarters in South Lake Union. After months, he got a tip from his real-estate agent about a house not yet on the market. He and his partner eventually managed to snag it in 2013 for $1.25 million. Mr. Vowels says he likes the quirky touches of his modern home, which includes a front gate that once was part of a cell of a now-demolished prison. Mr. Vowels spent another $385,000 to redevelop the sloping backyard by adding a hot tub, fire pit and a Plexiglas mosaic fence. To make offers more competitive, many buyers are adding escalation clauses to their bids, which allow real-estate agents to automatically renegotiate a higher price on their behalf if the bidding escalates, says Carrie DeBuys, a broker with Realogics Sotheby’s International Realty. With a shortage of multifamily dwellings such as townhomes and row homes, some developers, including Tiffany Bowie, who relocated from New York, are building smaller properties with modern luxury touches. Ms. Bowie who is also an architect and works with her husband Joe Malboeuf, hopes to fulfill a niche for newcomers who are looking for luxury dwellings but willing to sacrifice some space. In 2013, the couple, who also designed Mr. Vowels’s backyard, built three townhomes on a single lot in Central District with high-end amenities, such as herringbone marble backsplashes and rooftop terraces. The couple live in one unit and sold the 1,300- and 1,500-square-foot units within two weeks for $580,000 and $650,000, respectively. Now the two are working on a four-unit project. “We’re appealing to younger professionals,” Ms. Bowie says. This article was originally published on The Wall Street Journal

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