(Bloomberg) -- High above Seattle’s skyline, a $1.7 million McLaren hangs suspended over the 48th floor of a luxurious new condo building. The supercar isn’t just a flashy penthouse perk — it’s a gamble on the city’s ability to reignite its pandemic-emptied core.

Below the mixed-use tower, known as First Light, a harsh reality unfolds on the streets. Shuttered storefronts line the sidewalks, a reminder of the city’s ongoing battle with a surging drug crisis. With daily worker foot traffic at half of pre-pandemic levels and office vacancy rates nearing 30%, Seattle hopes it can count on attracting more residents to fill the void left by a remote-work world.

“What we are all coming to understand is that bringing downtown back requires a residential makeup,” said Rico Quirindongo, director of Seattle’s Office of Planning and Community Development. “Not that it is just a financial center and a civic center and an economic center, but it’s also a neighborhood.”

First Light’s condos, built by real estate developer Westbank, range from less than $1 million for a compact studio to $5.1 million for the penthouse — which comes with the use of a custom-designed McLaren Elva. The price tag is steep for Seattle but a relative bargain compared with similar offerings in global cities like New York or Dubai. (The McLaren was hoisted to the rooftop for a one-day display last week.)

Seattle’s own millionaires and billionaires have traditionally gravitated toward mansions in affluent suburbs such as Mercer Island and Medina, which has been favored by billionaires like Bill Gates and Jeff Bezos before his recent Miami move.

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First Light’s address is on Third Avenue, a notorious street marred by boarded-up shops, including the vacancy left by the closure of a flagship Macy’s store that had stood there for 90 years. Open-air drug use has become common as the city grapples with a fentanyl crisis, and overdose deaths related to the synthetic opioid rose 47% last year in King County, which encompasses Seattle.

Yet, there’s plenty of signs of encouragement downtown. First Light is almost sold out. Down the street, a more than $800 million waterfront redevelopment project, partly funded by private philanthropy, is expected to become a major attraction for tourists and the community. Part of that includes the Aquarium Ocean Pavilion, a 350,000 gallon tank filled with sea creatures and a coral reef that is due to open this summer. 

Westbank is far from the only developer investing in Seattle. Last year, many of the city’s 10,200 new housing units were located downtown, reflecting a residential population that’s grown by 74% since 2010, reaching a record this year. 

Incoming permit applications have started declining, part of a nationwide trend due to higher interest rates, Quirindongo said. But years of steady population increases give Seattle an edge over other West Coast cities such as Los Angeles and San Francisco, which are seeing similar struggles in their cores. 

Just half of Seattle’s downtown space is dedicated to offices, compared with 70% in San Francisco, according to the Downtown Seattle Association. The business group describes the area’s varied development mix, which also includes stadiums, music venues and restaurants, as akin to having a “diverse stock portfolio.”

City officials believe attracting more residents, particularly those with significant means, will bolster the tax base and revitalize the area. A more populated downtown could also deter crime through increased activity on the streets.

But it’s expensive to build downtown. New residential construction can easily cost as much as $1,400 per square foot, said Matthew Gardner, a longtime Seattle resident and former chief economist for Windermere Real Estate. Converting empty commercial space is only feasible for some kinds of buildings and can be as expensive as starting from the ground up. 

The city is trying to help make conversions pencil out where they can. Mayor Bruce Harrell is pushing a plan to streamline permitting and exempt projects from some regulations. For vacant office space that isn’t suitable for residential, some officials have also suggested repurposing it for amenities that would entice residents, such as childcare centers or cultural institutions. 

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Still, Gardner, the Seattle-based economist, questions the depth of the local market for high-end downtown condos. Normally, a key allure of such living involved being close to work. In the Seattle area’s case, however, much of the tech industry’s growth from TikTok to Pokemon Co. has been just across Lake Washington in Bellevue over the past decade, not downtown. 

Amazon.com Inc., Seattle’s biggest employer, is giving up nearly 595,000 square-feet of space in the city by the end of summer, according to real estate firm Cushman & Wakefield. Microsoft Corp. is based to the east, in Redmond.

The population in Seattle is expanding, rising to nearly 750,000, even if the growth rate recently slowed, and city officials are focused on increasing density to tame some of the highest housing prices in the country. Redfin Chief Economist Daryl Fairweather argues that even luxury units like those in First Light can benefit the broader Seattle housing market by easing pressure at the top. 

The extent to which Westbank’s $216 million First Light project helps the downtown area and the wider housing market will partly depend on who buys the condos and how they use them. Luxury condo development almost 150 miles north, in Vancouver, has been fueled by foreign investors, exacerbating the Canadian city’s housing crisis for residents. 

Over 80% of First Light’s units have already been sold, primarily to US buyers, although there’s also been interest from prospective customers in Asia and Europe, according to Westbank.

Michael Braun, Westbank’s director of sales, said he’s bullish on Seattle, citing the concentration of tech workers and the waterfront project that’s nearing completion. He expects more residential construction will follow, solidifying downtown as a desirable place to live.

“I find the first group of people move down in the first set of buildings, they really like it and people follow,” Braun said. “You’re basically developing a livable downtown.”

--With assistance from Sam Hall.

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