Big sucking sound as WaMu white collars get the axe in Seattle

All is not well in Seattle for executives at Washington Mutual. The Seattle Times has reported that some 3,400 WaMu employees, mostly from the company's headquarters, are to be let go by JPMorgan Chase & Co. (NYSE: JPM). The good news for workers is, it appears that employees at WaMu's branch operations will, for the most part, be spared the ax.

These types of staff dismissals should come as no surprise in an era when companies are quickly consolidating just to survive. I suppose that it's fairly standard practice for an acquiring company to thin out the executive herd of any distressed company which it has recently purchased. In regard to this particular instance, The Seattle Times quotes JPMorgan CEO Jamie Dimon as stating: "We are going to build a great company for the long run. Unfortunately, that entails tough decisions in the short run." Tough decisions always tend to ooze downward.

To the credit of JP Morgan & Chase, the executives who are to receive their walking papers at WaMu, will apparently be sent off with moderate severance packages. However, this does little to lessen the pain of good jobs lost. Additionally, The Seattle Times article opens a discussion about the ramifications of this deep payroll cut and operations consolidation upon the local commercial lease space market in a city with an impending surplus of commercial office space.

Preliminary indications are that JPMorgan's consolidation of WaMu in to the 42-story WaMu Center will put approximately 500,000 square feet of commercial lease space back into the hands of Seattle landlords. At least one commercial real estate broker in Seattle indicated that WaMu's withdrawal from commercial space there could lead to slight downward pressure on rents. However, citing a rental office inventory of approximately 37 million square feet, Oscar Oliveira, a senior vice president with brokerage Colliers International, is quoted by The Seattle Times as stating: "It adds a couple percentage points to the vacancy rate... The bank's moves alone won't push lease rates down..."