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SEATTLE-Despite a robust economy and an ultra-tight office market in the Puget Sound region, the Federal Deposit Insurance Company has placed Seattle on its watch list of cities in danger of overbuilding.

In a report released yesterday, the FDIC cited layoffs at Boeing, slowing employment growth and stock market volatility as cause for concern in Seattle, one of 13 it believes are at risk for overbuilding. Other cities on the list include Portland, Salt Lake City, Phoenix, Sacramento, Denver and Las Vegas.

The FDIC’s primary concern is that banks could take a financial bath should overbuilding, high vacancy rates and low rental rates force developers to default on real estate loans. “Office adsorption rates, which are closely tied to business expansion, could decrease if companies become constrained by labor shortages or choose to slow their growth in the face of more volatile capital markets,” the report states.

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