Seattle City Council Advances Commercial Vacancy Tax to Incentivize Downtown Residential Conversions

SEATTLE, WA — The Seattle City Council Select Committee on Downtown Recovery advanced a legislative framework on Sunday morning to establish an annual commercial vacancy fee on long-term unoccupied downtown office properties.

Policy Architecture and Conversion Incentives

Under the proposed ordinance, commercial building owners with office vacancies exceeding 40% for more than 18 consecutive months will be assessed a quarterly fee of $1.50 per square foot of vacant floorplate. However, property owners who submit formal architectural plans to convert office floors into multi-family residential apartments will receive a 100% fee waiver and an expedited 60-day permitting process through the Seattle Department of Construction and Inspections (SDCI).

Revenues collected from the vacancy fee will be directed to the Seattle Housing Levy to finance deeply affordable rental housing in the Pioneer Square and Belltown neighborhoods.

"Downtown Seattle needs people living, shopping, and building community in our urban core," Council President Sara Nelson stated. "This policy provides a clear choice: repurpose vacant office towers into needed housing or contribute to our municipal affordable housing fund."

Real Estate and Urban Planning Perspectives

Downtown Seattle Association leaders expressed support for the regulatory conversion waivers while cautioning that structural column spacing and plumbing risers in older high-rises can present complex engineering challenges for residential retrofits.

Urban planning organizations supported the initiative, noting that converting four downtown commercial high-rises could add over 1,400 residential units near light rail stations.

Full Council Vote

The full Seattle City Council will vote on the final commercial vacancy ordinance on September 15, 2026.