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City staff present downtown vacancy study showing 14.6% vacancy in pedestrian core; council considers vacancy tax, registry and business advocate
Summary
City planning staff said a downtown occupancy study found a 10% overall vacancy and a 14.6% pedestrian-core vacancy; council members discussed stalled assets, prioritized permitting, vacancy registry/tax options and a proposed business advocate position to help match tenants to spaces.
City planning staff presented the findings of a downtown occupancy study to the Community and Economic Development Committee and outlined an implementation strategy that includes pilot programs and policy options to lower street-level vacancy.
"We did see that vacancies were higher at 14.6% in the pedestrian core," Tara Sundine, the city's community and economic development manager, said. City staff said the study covered 61 downtown blocks (about 204 acres and roughly 2 million square feet of ground-floor space) and set a goal to reduce pedestrian-core vacancy under 10%.
Council members focused on long-term, "stalled" assets and tools the city could use. Planning staff described options under consideration: public-private partnerships and streetscape improvements (e.g., window wraps) to improve appearance, a local vacancy registry tied to action, and ongoing advocacy for state rules that would allow a vacancy tax.
Staff also proposed services to help convert spaces: prioritized permitting in core areas, a pre-inspection program that brings building and fire officials into a space early, and a reinstated business advocate position (previously shared with the Downtown Bellingham Partnership) to do on-the-ground matchmaking and help businesses navigate financing and approvals.
Council members noted financing gaps for tenant improvements and raised historic-tax-credit promotion, low-interest loans and targeted city investments (examples cited: Oakland Block, Mount Baker Apartments) as tools the city could deploy to catalyze private renovation.
Staff said they would continue research on the vacancy registry/tax (including administrative costs vs. benefits) and consider whether to include the business advocate in the 2027 implementation budget; no formal action was taken at the meeting.
Next steps: staff will continue exploring policy levers, prioritized permitting pilots, and outreach strategies to target market-ready and large-footprint spaces while maintaining a case-by-case approach for the harder stalled assets.
