Washington House Bill 2049: What It Means for Schools and Local Communities

Washington House Bill 2049: What It Means for Schools and Local Communities

Washington House Bill 2049 (HB 2049), passed during the 2025 legislative session, brings major changes to K–12 education funding across the state. Here's what you need to know about this significant legislation and how it may affect your school district and property taxes.

Purpose of HB 2049

HB 2049 is designed to enhance public school funding while offering additional support to communities with lower property tax bases. It aims to address both equity and inflation in the state's school funding model.

Key Provisions of the Bill

1. Revised Enrichment Levy Limits
   School districts can now levy up to $2.50 per $1,000 of assessed property value for enrichment purposes.

2. Inflation Adjustments
   The bill includes a new “inflation enhancement,” starting with an additional $500 in 2026 and increasing adjustments through 2030.

3. Per-Pupil Funding Tiers
   Per-student funding caps will rise annually, reaching $5,035 per pupil by 2031, with tiers based on district size.

4. Updated Local Effort Assistance (LEA)
   LEA calculations have been modified to provide more support to districts with low property values and tax bases.

5. New K–12 Funding Equity Work Group
   A legislative work group will study funding formula changes and explore equity-based solutions, reporting annually through 2027.

Legislative Journey

• Introduced: March 24, 2025

• Passed House: April 22, 2025 (50–48 vote)

• Passed Senate: April 26, 2025 (28–20 vote)

• Delivered to Governor: April 27, 2025

What Was Removed

Earlier versions of HB 2049 included a property tax cap increase from 1% to 3% for local governments. However, this provision was dropped after facing political and public pushback.

Weitz Take: Enjoy your tax hikes. I think charter schools should be strongly explored. 

Moody's is a rag...public service announcement.

 Moody’s Just Downgraded the U.S. Credit Outlook.

But Let’s Not Forget...

Back in the mid-2000s, Moody’s and other major credit rating agencies gave AAA ratings to mortgage-backed securities that were anything but safe...that were the catalyst of the late 2000s market crash.

If you want to make the argument the US will lose our reserve currency status, that's a relevant conversation, but as of today, the US still has a Federal Reserve system that will 'fund' whatever US Treasuries or debt needed to fund government operations...bottom line, for better or worse, we have a fiat currency and have zero risk of default.

Just a little reminder as the world freaks out about this US Credit downgrade.... don't forget the messenger.

Commercial Real Estate Loan Maturities Create Growing Pressure on Borrowers and Lenders

 

2025 Commercial Real Estate Loan Maturities Create Growing Pressure on Borrowers and Lenders

The commercial real estate market is facing a critical juncture as a significant volume of loans come due in 2025, potentially triggering a wave of financial strain for borrowers holding distressed properties.

According to a February survey by the Mortgage Bankers Association, roughly 20% of the $4.8 trillion in outstanding commercial mortgages—about $957 billion—is scheduled to mature this year. This marks an increase from the $929 billion that matured in 2024. The rise in maturing debt is largely attributed to the numerous short-term extensions granted during the Covid-19 pandemic and the period of rapidly rising interest rates that followed.

Compounding the issue is the growing share of loans that are delinquent or at risk of delinquency. Moody's Ratings reports that its CMBS Conduit/Fusion Delinquency Tracker climbed to 7.87% in March, nearing the pandemic peak of 7.95% seen in June 2020. In March alone, $2.76 billion in loans became delinquent, with office properties representing nearly 29% of that figure, followed by retail at 26.7% and hotel loans at 9.6%.

Borrowers are facing tough negotiations, especially those with legacy loans carrying interest rates of around 3%, now confronting potential refinancing rates closer to 7%. This challenge is compounded by declining property values—particularly in the U.S. office market, where values have dropped by more than 20% in some segments.

Interest rates remain a key variable. Despite three rate cuts by the Federal Reserve in 2024, the Fed has so far held rates steady in 2025. Chairman Jerome Powell recently noted that the Fed is closely watching developments in tariff negotiations with key trading partners. The Mortgage Bankers Association highlighted that many commercial property owners hoping to benefit from lower rates after last year’s Fed cuts were disappointed, as longer-term rates simultaneously rose by an equivalent margin. This has resulted in further loan extensions into 2025. The association forecasts that long-term rates will stay rangebound for now, making the refinancing landscape even more challenging.

"I suspect that this time around, despite the looming maturity wall, lenders will continue to work with borrowers as best they can to slow play through this situation," Krawitz said. "Everyone benefits immensely by not unnecessarily forcing someone’s hand."

WEITZ- This has been an ongoing issue for the last few years and the market keeps 'kicking the can down the road'. None of this surprises us, but the depth and degree of the distress is staggering. As we have said for months (if not years), the intermediate term future of the market will certainly be interesting....especially if we start to see some bank failures/ distress....which frankly we expect. 

If you are interested in joining our newsletter, please email me at Scott@WeitzCommercial.com, or if you are looking to invest or divest in Snohomish County Commercial Real, contact me below. 

Weitz Commercial

Scott Weitz

Scott@WeitzCommercial.com

T: 206.306.4034 (text first please). 

Martin Selig Challenges Seattle

 

Martin Selig Real Estate Faces Unprecedented Financial Challenges in Seattle

Martin Selig Real Estate (MSRE), once a dominant and iconic player in Seattle's commercial property landscape, is currently facing its most significant financial crisis to date. The firm, long recognized for shaping the city's skyline, has defaulted on more than $800 million in loans tied to 18 office buildings.

 This crisis has been driven largely by the steep downturn in the office market, which continues to suffer from persistently high vacancy rates and a post-pandemic shift in office demand.

In April 2025, MSRE made the difficult decision to relinquish ownership of two major properties—400 Westlake, a recently completed, eco-friendly office building, and the historic Federal Reserve Building. Both buildings were handed over to the lender, Acore Capital, following defaults on a $240 million loan. These properties were particularly hard hit, with reported vacancy rates of 94 percent and 82 percent, respectively.

The financial strain has also led to court-ordered receiverships involving seven additional properties, which together account for approximately 1.1 million square feet of office space in Seattle. In conjunction with these developments, the company initiated significant workforce reductions, laying off 86 employees as it attempts to stabilize its operations.

Further compounding its financial woes, MSRE also defaulted on another $135 million in debt secured by a cluster of buildings located near the iconic Space Needle. These latest defaults further underscore the depth of the firm's financial distress as the Seattle office market continues to deteriorate.

These developments are emblematic of the broader struggles facing Seattle's commercial real estate sector. The city’s central business district has seen vacancy rates soar to unprecedented levels, reaching an estimated 30 percent as of early 2025. The ripple effects of this market disruption have placed immense pressure on even the most established landlords.

While Martin Selig Real Estate has weathered past downturns, including the Great Recession, the scale and severity of the current crisis raise serious questions about the company’s future. The firm’s challenges reflect both the seismic shifts in the office leasing market and the broader uncertainty surrounding urban commercial real estate in a post-pandemic world.

Weitz Take: 

If you read this blog, this is no surprise at all. I expect more of this type of pain. Unwinding of real estate debt is simply never a slow process. Sincere thanks to Mr. Selig for all he has done for the Seattle market. It's a sham to see it ending in such a fashion.  Despite what you may know, debt isn't always the best way to grow. 

For more information on Puget Sound Commercial Real Estate, shoot me a call or text today. Info below. 

Weitz Commercial

Scott Weitz, Attorney and President

Scott@Weitzcommercial.com

Washington enacts statewide rent cap on residential rentals

 

Washington Enacts Statewide Rent Cap on Residential Rentals

Washington state has officially implemented a statewide rent control law with the passage of House Bill 1217, signed by Governor Bob Ferguson on May 7, 2025. This landmark legislation introduces rent stabilization measures aimed at providing stronger housing security for tenants across the state.

Below is a summary of the laws. Frankly, while there is a lot of talk on this, I don't think the caps are absurd. 

Under the new law, annual rent increases for most residential properties are capped at the lesser of 7 percent plus inflation or a hard cap of 10 percent. 

Manufactured and mobile home rents are subject to a lower annual cap of 5 percent, with this provision having no expiration date. The statewide rent cap takes effect immediately and is scheduled to remain in place for 15 years.

Additionally, the law prohibits landlords from raising rents during the first 12 months of a new tenancy. 

EXEMPTIONS: 

Certain property types are exempt from the new law, including 

a. newly constructed properties for the first 12 years after completion, 

b. owner-occupied duplexes, triplexes, and fourplexes, as well as 

c. public housing authorities and designated low-income housing developments.

and more importantly, COMMERCIAL REAL ESTATE. 

NEW NOTICE REQUIREMENTS

The law also tightens notice requirements, mandating landlords provide at least 90 days' written notice before any rent increase, an increase from the prior 60-day rule.

TENANT RIGHTS UPON DEFAULT

If a landlord imposes an unlawful rent increase beyond the allowed cap and the property does not qualify for an exemption, tenants have the right to provide notice of the violation. 

They may also terminate the lease with 20 days' written notice without penalty and may pursue legal action, including damages of up to $7,500 per violation recoverable by the Attorney General.

Supporters of the legislation argue that these measures are necessary to prevent excessive rent hikes and protect tenants from housing instability, especially amid ongoing affordability challenges. Critics, however, contend that the rent cap could discourage new housing development and may reduce investment in property maintenance.

Washington now joins Oregon and California as one of only three U.S. states with statewide rent control measures, signaling a growing legislative trend to address housing affordability concerns.

BOTTOM LINE: This will be interesting to see if it effects development. I don't think a 10% max increase is that absurd (especially with all these ADUs coming into play that will increase inventory). 

I'd say there will be some sort term hit on overall demand for multi-family, but in the long term, I don't see this as that big of an issue. If you told LLs now that they could buy a place and increase rents 10% a year, most would be thrilled. 

For more information on Washington Commercial Real Estate Investing, considering contacting a Snohomish County Commercial Real Estate Broker or contact me at information below. 

Scott Weitz

Weitz Commercial

Scott@weitzcommercial.com

Text: 206-306-4034

April 2025 National Commercial Real Estate Market Update

As of April 2025, the U.S. commercial real estate (CRE) market continues to show a mixed performance across property sectors, with some areas stabilizing while others remain under pressure. Our comments within. 

Office Sector: Challenges Continue

The national office vacancy rate climbed to 19.9% in March 2025, up 170 basis points from the previous year. Tech-heavy markets such as San Francisco (28.6%), Seattle (27.5%), and Austin (28.5%) are experiencing heightened vacancies due to sustained remote and hybrid work trends. Distressed sales continue to play a role, with 10.8% of 2024 office transactions involving distressed assets. However, demand for premium office space remains in select cases, such as Deloitte’s recent 800,000-square-foot lease at 70 Hudson Yards in Manhattan.

Weitz - Not surprising at all. I don't see this changing soon. We still have leases turning over that were set before COVID and the 

Industrial Sector: Slowing Momentum

The industrial sector has cooled after a pandemic-driven boom. Net absorption dropped 42% year-over-year to 114 million square feet. Rising supply has driven vacancy rates to 7.0%, while rent growth slowed to 2.0%. Logistics facilities remain the top performer in absorption, but flex spaces are now seeing more vacancies than gains.

Weitz - this is a curious one as every assumed industrial would be the "Belle of the Ball", but I'm not shocked. I see most sectors struggling in the coming years. 

Retail Sector: Stability Holds

Retail remains the most stable commercial property type. General retail vacancy rates remain low at 2.6%, despite a 77% drop in net absorption year-over-year. Rents continue to rise modestly, with a 1.9% increase, while vacancy rates inched up by just 0.1 percentage points.

Weitz- People still need goods and services; this doesn't shock me. 

Multifamily Sector: Signs of Recovery

The multifamily sector showed strong performance, with net absorption rising 46% to nearly 551,000 units. Vacancy rates held steady at 8%, and rent growth was modest at 1.1%, indicating a balanced environment between supply and demand.

Weitz - Love multi-family especially in the outskirts. People need homes, can't afford to buy in many instances, and can work further from work typically. 

Investment Trends: Capital Eyes Distress

Investor interest in distressed assets continues to grow. Brookfield Asset Management raised nearly $6 billion in Q1 2025 to invest in undervalued commercial properties. Meanwhile, the Green Street Commercial Property Price Index dipped slightly by 0.5% in April but is up 4.3% over the past 12 months, showing long-term optimism.

Weitz - Not surprised at all. We are doing the same (on a much smaller scale albeit). 

Conclusion

Overall, April 2025 paints a cautiously optimistic picture. While office markets continue to lag, other sectors—particularly multifamily and retail—show signs of resilience. Investors are increasingly positioning themselves to capitalize on distress, suggesting potential opportunities in the months ahead.

For more help with Snohomish Commercial Real Estate, please feel free to reach out to me below. We can help with purchasing, leasing and/or investment. 

Sincerely, 

Scott Weitz

Scott@WeitzCommercial.com

The Benefits of Investing in an Opportunity Zone – Everett, Washington

The Benefits of Investing in an Opportunity Zone – Everett, Washington

Investing in Opportunity Zones (OZs) offers a compelling path for investors seeking both tax advantages and the ability to contribute to the economic revitalization of underserved communities. In Everett, Washington, designated OZs provide unique opportunities for strategic real estate and business investments.

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What Are Opportunity Zones?

Opportunity Zones are low-income census tracts nominated by state governors and certified by the U.S. Department of the Treasury. Created under the 2017 Tax Cuts and Jobs Act, the program encourages long-term private investments in economically distressed areas by offering federal tax incentives.

Where are they in Everett? Glad you asked...see link below!

Everett Opportunity Zones

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Everett's Opportunity Zones: A Strategic Location

Several areas in Everett have been designated as Opportunity Zones, including parts of Downtown Everett and neighborhoods near Paine Field. These locations are well-suited for:

• Urban revitalization projects

• Workforce and affordable housing

• Mixed-use and commercial real estate

• Startup and small business growth

Everett’s focus on infrastructure investment, economic development, and population growth makes it a strong candidate for OZ investment.

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Top Tax Benefits for Investors

1. Capital Gains Deferral
   Reinvest capital gains into a Qualified Opportunity Fund (QOF) and defer federal taxes until the earlier of:

   • The date you sell the QOF investment

   • December 31, 2026

2. Basis Step-Up for Long-Term Holding

   • Hold for 5 years: receive a 10% exclusion of the deferred gain

   • Hold for 7 years: receive an additional 5% exclusion (15% total)
     (Note: Due to the timing, the 7-year benefit expired after 2019, but the 5-year benefit may still apply.)

3. Tax-Free Gains on QOF Investment

   • If the QOF is held for 10+ years, investors can exclude any additional gains from the QOF from taxation altogether.

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What Types of Projects Work Well in Everett?

• Multi-Family Housing: Take advantage of rising demand and local rezoning efforts.

• Retail & Industrial Redevelopment: Revitalize underused commercial corridors.

• Office to Residential Conversions: Tap into zoning changes and adaptive reuse incentives.

• Local Business Expansion: Partner with or invest in businesses that create local jobs and qualify under OZ guidelines.

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Tips for Investing in Everett’s Opportunity Zones

• Work with a Local Broker: A commercial real estate professional with Everett experience can help identify viable properties and off-market deals.

• Join or Create a Qualified Opportunity Fund (QOF): This is the legal entity through which OZ investments must be made to access tax benefits.

• Consult a Tax Professional: OZ investments have specific rules—proper legal and tax advice is critical.

• Review City Incentives: Everett and Snohomish County may offer additional local grants, permitting fast-tracks, or tax abatements.

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Final Thoughts

Everett’s Opportunity Zones represent a chance to grow your wealth tax-efficiently while making a positive impact on the community. Whether you're looking to build, redevelop, or invest in a business, the combination of strong fundamentals and OZ tax incentives makes Everett a compelling place to invest. I WILL POST A LARGE PICTURE IN MY NEXT POST OF AVAILABLE OPPORTUNITY ZONE LOCATIONS. 

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Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice. Consult with your CPA, attorney, or investment advisor before acting on any investment opportunity.

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For more information Snohomish County Commercial Real Estate, reach out anytime. 

Scott Weitz

Weitz Commercial

T: 206-306-4034 (please text on initial communication). 

Scott@Weitzcommercial.com 

Snohomish County Q1 Market Update

 

Snohomish County Commercial Real Estate Market Update – Q1 2025

Published by Weitz Commercial | May 2025

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📈 Market Overview

Snohomish County’s commercial real estate (CRE) market continued to navigate a shifting landscape in Q1 2025. Despite challenges like high interest rates and cautious lending, both the multi-family and office sectors remained active, especially in high-demand suburban areas such as Everett, Lynnwood, and Bothell.

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🏘️ Multi-Family Snapshot

• Vacancy Rate: ~4.8%

• Rent Growth: +1.2% quarter-over-quarter

• New Starts: 312 units (↓40% vs. Q1 2024)

• Investor Focus: Value-add Class B/C deals near transit lines

💡 Everett’s waterfront and walkable urban core are drawing increasing institutional interest.

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🏢 Office Sector Update

• Vacancy: 18.6%

• Leasing Activity: Modest rebound, led by medical and professional services

• Conversions: Aging suburban offices are being eyed for residential or mixed-use redevelopment

📍 Bothell and Lynnwood are gaining traction from smaller tenants needing flexibility outside of Seattle.

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💼 Investment & Sales Trends

• Transaction Volume: Low, with selective private and 1031 exchange buyers dominating

• Cap Rates: ~6.1% (multi-family), ~7.3% (office)

• Buyer Sentiment: Conservative but opportunistic, especially near transit expansion areas

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🏗️ Development Drivers

• Lynnwood Link Extension (Sound Transit) is boosting TOD interest

• Zoning changes in Lake Stevens and Everett are enabling denser multi-family development

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🔑 Notable Q1 Transactions

Property	Submarket	Type	Price	Buyer
The Willows Apartments	Everett	Multi-Family	$18.2M	Private Equity
Pacific Office Plaza	Lynnwood	Office	$12.5M	1031 Buyer
Lakeview Medical Complex	Bothell	Medical Office	$7.1M	Owner-User

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📣 Broker Insight – Weitz Commercial

“Snohomish County is increasingly attractive to yield-focused investors. We're seeing strong interest in properties with stable tenancy and redevelopment potential near transit.”

🔮 What’s Ahead in Q2 2025

• Potential Fed rate shift and lending impacts

• More lease restructuring in older office parks

• Watch for state-level rent control discussions

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📞 Let’s Talk

Looking to buy, sell, or reposition a commercial asset in Snohomish County?

Scott@Weitzcommercial.com

T: 206-306-4034