- Kidder Mathews

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- Kidder Mathews
Weekly Real Estate Review
Week Ending
5/15/11
A Weekly News Distribution of Local, National and
International Real Estate News & Trends
The Sound Review
Provided By
Philip & Giovanni: CoStar Power Brokers
Daily Journal of Commerce
Philip Assouad
Vice President
206.398.2279
[email protected]
Download vCard | View Bio
Giovanni Napoli
Vice President
206.398.2278
[email protected]
Download vCard | View Bio
About Kidder Mathews
kiddermathews.com
CoStar released this year’s Power Broker list, based on sales and lease transactions it has
tallied. Seattle’s top leasing firms are Broderick Group, C&W Commerce, CB Richard Ellis,
Colliers International, First Western Properties, Grubb & Ellis, Jones Lang LaSalle, Kidder
Mathews, NAI Puget Sound Properties, Neil Walter Co., Pacific Real Estate Partners, The
Andover Co., CAC Group, Wallace Properties and Washington Partners. Top sales firms
are CBRE, Colliers, Grubb, Hendricks & Partners, JLJ, KM, Marcus & Millichap, Neil Walter,
PREP and Washington Real Estate Advisors.
• Top office leasing brokers are Clay Nielsen, Doug Hanafin and Ed Curtis of Washington
Partners; Dwight Newell, Jesse Ottele and Tim O’Keefe of CBRE; Greg Inglin, JJ Shephard, Mark Flippo and Stuart Williams of PREP; Jason Furr, Paul Sweeney and Tony Ulacia
of Broderick; and John Hansen and Shawn Hardy of CAC.
• Top retail leasing brokers are Carol Pugh, Sandy Pody and Tiffini Connell of West Coast
Commercial Realty; Connie D. Boyle of Andover and formerly with Colliers; Constance
Wilde of CBRE; Don Whittles, Jeremiah Durr and Tim Weber of First Western Properties; James Reed of AGM; Jay Bergevin, Louis Wenger and Monica A. Wallace of Wallace
Properties; Nicholas Gill of Westlake Associates; Steve Olsen of JSH Properties; and Susie
Detmer of C&W Commerce.
• Top industrial leasing brokers are Andrew Harnish, formerly with JLJ and now with Orion
Commercial Partners; Chris Hughes and Mark Flippo of PREP; Chris Spofford of JLJ; Doug
Klein and Matt Wood of KM; John Bauer, John Gilliland, John Sullivan, Matt O’Brien and
Ric Brandt of CBRE; John Hanson, Kristina Madayag and Todd Meldahl of C&W Commerce; Matt McGregor of Grubb and formerly with Cushman & Wakefield; and Scott Alan
of Colliers.
• Top sales brokers are Armand Tiberio, Robert Sheppard and Spencer Hurst of Marcus &
Millichap; Dave Schumacher and David Mortensen of Colliers; Frank Bosl, Jon Hallgrimson
and Tom Pehl of CBRE; Giovanni Napoli and Philip Assouad of KM; and Kenny Dudunakis
of Hendricks & Partners.
Renters finding landlords have upper hand in this market
By Elizabeth M. Economou, Seattle Times
Angi Ramos and her former college roommate Laura Waltner have been looking for months
for a place to call “home.”
They’ve been trawling websites and have inspected a half-dozen units.
Continued, page 2
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They’d prefer a newer building in Capitol Hill or Queen Anne — vibrant neighborhoods with lots of young people, restaurants and
nightlife. Their search so far for a two-bedroom apartment under $1,500 a month has yielded only slim pickings.
“One unit had a great common area,” says Ramos, “but the washing machine was in the kitchen and the dryer was in one of the
bedrooms.”
New, attractive buildings, such as the Illumina Lake Union Apartments, are full and expensive, says Ramos. Still, she says, the landlord suggests they check back every month to see when there might be an opening.
Similarly, when Hoa Do set out to find an apartment earlier this year, she says she did not expect to pay as much as $850 per month
to rent a vintage studio near Seattle University. What’s more, the college senior regrets that her landlord would not relent on a ninemonth lease.
“As a student, I prefer to pay month-to-month, because I never know if I will be studying abroad, or going home to visit family,” says
Do, who is from Vietnam.
It’s a story being repeated all over Seattle. As vacancy rates dip below 5 percent, landlords are raising rents and offering fewer concessions or perks.
According to Apartment Insights, a web-based information service, the vacancy rate in the Seattle metro area hasn’t been this low
since the latter part of 2007, and rental incentives are drying up in downtown Seattle, Capitol Hill and downtown Bellevue.
“The rental market is changing quickly from a renter’s market to a landlord’s market,” says Cassie Walker Johnson of Windermere
Property Management, Lori Gill & Associates. Vacancy rates in highly desirable neighborhoods, such as Capitol Hill, Queen Anne and
Fremont, are about 3 percent, the lowest in Seattle, she notes.
In contrast, rental markets with vacancy rates above 6 percent include SeaTac, Federal Way and Kirkland, according to Apartment
Insights.
Landlord Christopher T. Benis, who is also a partner in the law firm Harrsion, Benis & Spence and represents tenants and landlords
alike, calls the market “balanced.”
“We are raising rents now that we can, but all we are doing is trying to get them [rents] back to 2007 levels,” says Benis, who owns
rental properties in Seattle.
Tenants ought to shift their attitudes to reflect the changes, he says. “If they [tenants] think they can look at 20 properties and then
come back to the ‘best one,’ that best one will probably be long gone.”
Little in the way of new development and declining home values contribute to a tight rental market.
Tom Cain, president of Apartment Insights, says fewer than 1,870 units are scheduled for completion this year, about 60 percent of
last year’s level, and less than one-third of the 6,349 units built in 2009.
Walker Johnson, who specializes in leasing single-family dwellings, condos and small apartment buildings, says population growth is
also driving down vacancy rates.
“About 75 percent of my new tenants are moving here from all over the nation to work at larger corporations who are hiring in our
area,” she says.
Telltale signs of just how far the pendulum has swung include tenants plunking down more than the list price on rental homes and
signing longer leases to qualify for a desired property.
“We are starting to see multiple applications in some situations,” says Walker Johnson, who expects to see hikes of up to 10 percent
for rental homes from May through September.
For a Queen Anne family, the possibility of a rent increase on a four-bedroom Craftsman, where they’ve been living for nearly a year,
weighs heavy.
“We feel the renewal negotiations are a huge strategy game, and we are fearful we will have to leave ‘our home’ or accept an increase
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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that we simply don’t feel comfortable with economically,” say the husband and wife, who are not being identified due to ongoing
negotiations with their landlord.
“This year, you have to jump when you find the right home, unlike a few years ago when properties languished on the market, for
months, in some cases.”
Lawyer Lauren Sancken, who signed a one-year lease in April for a Capitol Hill flat with a patio garden and a spectacular view of the
Space Needle, says she wishes she had signed a lease extension to lock in her rate.
“It is far more competitive than I expected, especially when several people are willing to submit applications and deposits right away. I
found myself offering cookies, muffins, just to try to get a bit of an advantage on places that I really liked,” says Sancken.
Not surprisingly, tenants with limited means are being hit the hardest, says Jonathan Grant, executive director of the Tenants Union of
Washington State.
“Many low-income tenants displaced by the foreclosure crisis, sometimes evicted by no fault of their own due to a landlord’s default
on their mortgage, are now finding an even tighter market, while many former homeowners are returning to renting after losing their
homes,” says Grant.
Adding insult to injury, many of those low-income tenants will have an eviction on their record from the foreclosure, further complicating their ability to secure housing, he says.
Ramos says she is not daunted. “We are willing to wait for a good one,” she says.
Real Estate Buzz: Holland plans more than 1,000 apartments
By Marc Stiles, Daily Journal of Commerce
Holland Partner Group has started 1200 Madison, a mixed-use complex with 237 apartments on Seattle’s First Hill. Expect more from
the Vancouver-based developer, which this summer is starting another project in the South Lake Union area.
Holland has under contract a property at 901 Dexter Ave. N. where Korry Electronics operated until moving to Everett a couple of
years ago. The plan is to build about 285 units in a mid-rise structure. Runberg Architecture Group is designing the project, and Holland does its own general contracting.
Two or three more starts will follow next year, and even more are possible, said Chairman and CEO Clyde Holland. Over the next few
years, Holland hopes to build 1,000 units in addition to 1200 Madison and 901 Dexter.
Holland is one of many developers who are bullish on Seattle’s multi-family market. The question is who among these competitors will
prevail. One apartment broker, Jon Hallgrimson of CB Richard Ellis, said, “Clyde is going to lead the charge.”
While other developers stayed in the game expending capital during the depths of the recession, Holland was content to sit on the
sidelines after finishing M Street on First Hill in 2007. Now, he says, some of those other developers are “in the penalty box for two
years.”
So is the road ahead smooth for Holland?
“I have not seen a better time to be investing in new real estate development,” he said. “I also have not seen a time as risky.”
To make new projects pencil, rents are going to have to go up 30 to 35 percent, and Holland expects that will happen in the next
couple of years. But there’s no guarantee so lenders and equity partners want more assurance. In the wake of the Great Recession,
can you blame them?
Equity providers want a bigger piece of the pie, and lenders are requiring borrowers to pony up more of their own cash. And now they
want bonding, Holland said. He put $4 million of his own cash up for a bond on 1200 Madison, but declined to say what the total cost
of the bond was.
Bonding a project is a first for Holland, who has directed the development or rehabilitation of more than 25,000 units with a total
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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transaction volume of almost $5 billion. People who work for lenders and equity providers say they’ll lose their jobs if there’s a mistake this time, so developers have to get projects bonded. The Hartford provided the bond, with Invesco of Dallas and PNC providing
equity and financing, respectively, for 1200 Madison.
Tighter standards mean less competition, and that means fewer new units at a time when there’s already a shortage.
So when will equity and credit standards loosen? Holland isn’t sure that will happen soon enough to unleash a wave of development
though he thinks that will change when 1200 Madison is completed in a couple of years and sold for a hefty profit.
“If the dam breaks, we’ll see a lot of projects in 2015,” Holland said.
Beachworks acquired this Beacon Hill house for $126,000, spent an undisclosed amount on repairs and listed it for $289,000. It was
under contract five days after it went on the market.
You probably haven’t heard of Beachworks LLC but you might if the North Seattle family investment company continues to grow as it
has for the last two years.
The company pays cash for single-family houses that need to be finished or remodeled. Last year, Beachworks bought and sold
seven properties. This year it forecasts volume will increase 20 percent as the company invests $3.2 million. Ultimately, brothers-inlaw Erik Ekstrom and Bentley Pugh hope to make long-term investments in commercial real estate, including multi-family. Last week,
the company was in contract to buy a 22-unit apartment project in Burien.
The company was launched three years ago by Pugh’s parents, Dick and Nella. The retirees had dabbled in real estate investment
and wanted to do more.
“My parents just had this vision of investing and the family working together,” said Bentley Pugh, a broker at Windermere’s Northgate
office. He manages and operates Beachworks with Ekstrom, who worked at Wilcox Construction where he built projects for Krispy
Kreme, Starbucks and car dealers. The family turned to Bob Bernstein, a Bellevue CPA who helped them put together a mission
statement.
Beachworks is named for the family’s cottage in the South Sound. The family holds weekly conference calls to talk about business including leads on distressed sales. With more and more capital coming to the market, competition is picking up, according to Bentley
Pugh. Still, the company usually does a couple of projects at one time, working with different contractors, whom Ekstrom manages.
For Beachworks, caution is key because they are investing their own cash. For example, Beachworks bought a small Beacon Hill development site with a house on it for $126,000 and considered doing a four- to five-unit project with another developer. After deciding
that was too risky, Bentley Pugh said Beachworks rehabbed the house and put it on the market for $289,000. Five days later it was
under contract.
“Right now we aren’t doing huge projects but I see us going in that direction, but conservatively,” Bentley Pugh said, “because I know
you can get hurt.”
We were wondering what’s the latest on Clise Properties’ Denny Triangle land. At 13 acres, it’s one of the nation’s largest metropolitan
assemblages, if not the largest. There was big interest until three years ago when the venerable Seattle company put the land sale on
hold due to turmoil in the global capital markets.
Company Chairman and CEO Al Clise said at the time he was in “serious negotiations with an astute international developer who
shared our vision for a world-class redevelopment project on par with London’s Canary Wharf or New York’s Rockefeller Center.”
The capital markets are back on more stable footing, so we dialed up Clise to find out what’s happening. “The short answer to that is
not much,” he said. “We really don’t have anything to report.”
Harbor opens 195-unit Link apartments in West Seattle
Daily Journal of Commerce Staff
Harbor Properties will hold a reception at its new project, Link in West Seattle, from 5:30 to 7 p.m. Thursday.
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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Harbor officials said they think the 195-unit complex is one of only two large mixed-use apartment projects opening this year in Seattle. The other is the 351-unit Station at Othello Park in South Seattle.
The lack of new construction and growing demand are fueling the development of new apartments, especially in Seattle.
Link is at 4550 38th Ave. S.W.
Fifty-nine of the units in Link were pre-leased at rents that range from
$1,050 to $2,500 for studios, one- and two-bedroom units and groundfloor
lofts. The retail space has been leased to Bright Horizons day care, Chaco
Canyon Organic Cafe and Breathe Hot Yoga.
Harbor took advantage of the city’s Homes Within Reach Multi-Family Tax
Exemption program to build Link. The program provides economic incentives for projects that enhance urban communities and serve people who
earn moderate wages.
Baylis Architects designed the project and Exxel Pacific was the general
contractor.
Harbor said the interiors were designed to provide “a refined condominium-grade urban living experience.” The lobby has a fountain and touchscreen monitors that stream news and real-time bus schedules, and there
are community iPads near the resident mail area.
The hallways have works by 19 local artists.
A rooftop lounge and deck has views of downtown and the Cascades. Other amenities include free wifi in common areas, tended
vegetable and herb gardens, and shared bicycles and kayaks.
Link is a transit-oriented project. Metro is increasing the frequency of the West Seattle-to-downtown Route 54 bus that stops at Link.
Link is also near the West Seattle transit hub that will be served by a bus-rapid transit line to downtown starting in 2012.
Westlake Center office tower for sale
By Eric Pryne, Seattle Times business reporter
Downtown Seattle’s Westlake Center office tower is for sale.
Brokerage Eastdil Secured has circulated an offering memorandum for the 21-story tower, which sits atop a four-story retail mall. The
mall is not included in the offering.
No asking price was listed in the memorandum.
Both the office tower and mall are owned by General Growth Properties of Chicago, the nation’s second-largest shopping-mall owner.
It tried to sell the entire Westlake complex in 2008 as it struggled with massive debt that later forced it into bankruptcy reorganization.
General Growth reorganized and emerged from bankruptcy late last year.
The 353,000-square-foot Westlake Center office tower is about 90 percent leased, according to commercial real-estate database Officespace.com. The complex was built in 1988.
Station Apartments at Othello Park opens near rail station
Daily Journal of Commerce Staff
Othello Partners recently opened the Station at Othello Park, a 351-unit mixed-use apartment building across from the Othello Link
light-rail station, at Martin Luther King Jr. Way South and South Othello Street.
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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Tenants began moving into the building last month. The apartments are 15 percent leased, and
include studios and one- and two-bedroom floorplans.
The 420,000-square-foot project houses 20,000 square feet of retail space and below-grade
parking for 307 vehicles. The retail has 12 storefronts, which have not been leased.
For residents, the building has community areas such as a fitness center, a common room, an
“amenity room” with a covered patio, and a 7,500-square-foot rooftop deck. The project was
designed to receive a LEED silver rating.
East of the apartments is the 7.6-acre Othello Park and Playground.
Hinthorne Mott Architects designed the project, and Exxel Pacific was the general contractor.
Lair Design was the interior designer, and Karen Kiest Landscape Architecture was the landscape architect.
Commercial Development and Consulting is handling retail leasing, and Pinnacle is in charge of residential leasing. USAA Real Estate
Services Co. is the financial partner for the developer, Othello Partners.
Ballard site may get 240 new apartments
By Lynn Porter, Daily Journal of Commerce
Tallman Building LLC, headed by Lee Noble, plans an approximately 240-unit apartment complex near Swedish Medical Center/Ballard in Seattle, according to the project architect.
An early design guidance meeting with the city is set for 6:30 p.m. May 9 at Ballard High School, 1418 N.W. 65th St.
The 37,000-square-foot site is at 5343 Tallman Ave. N.W., about a block from the medical center’s main campus and across from
Swedish’s Tallman Building.
S. Michael Hoffman, a partner in H+dlT Collaborative, said his firm is designing the apartments. He estimates the project will cost $30
million to build, but no construction date has been set.
The seven-story complex will have a courtyard to bring natural light into the units. It will have studios, and one-, two-, and three-bedroom units, 6,000 square feet of medical office space, approximately 10 live-work units, and 275 below-grade parking stalls.
Extensive landscaping is planned and would be irrigated by rainwater, Hoffman said.
“We consider this to be probably the remaining large-block prime site in Ballard,” Hoffman said. It is located between Market Street
and Ballard Avenue.
The project will target medical workers and Ballard residents as renters.
Given permitting requirements, the soonest construction could start is early 2012, he said.
Lee Noble could not be reached for comment yesterday.
Apartment vacancy in downtown Seattle is 4.5 percent, according to Tom Cain, principal with Apartment Insights research firm. Cain
said a number of large apartment projects were built in Ballard in the last few years and developers plan more, including two by
Goodman Real Estate: 101 units at 6559 15th Ave. N.W. and 51 units at 8022 15th Ave. N.W.
Pryde + Johnson is also planning 110 units at 5711 24th Ave. N.W.
The downtown Seattle apartment market is doing well, said Kenny Dudunakis, a multifamily specialist and partner with Hendricks &
Partners brokerage. “Anything within a three-block radius of the Ballard Medical Center is very nice real estate. It’s very compelling.”
These days, former condo towers switch to apartments
By Marc Stiles, Daily Journal of Commerce
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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Converting apartments to condos was popular before the housing bubble burst. Now that trend is reversing as developers of some
high-rises in downtown Seattle say former condo projects may become apartments.
Goodman Real Estate has under contract a site at 1915 Second Ave. where Intracorp once planned condos. Don Fosseen, Goodman’s chief investment officer, said the plan now is to build a 24-story apartment tower.
William Justen, the for-fee developer of twin towers on the west side of Second
Avenue at Virginia Street, is exploring changing the south tower from condos to
apartments, though he emphasized that he and his colleagues are just beginning to
consider a switch.
The south tower is at 1933 Second Ave. and will also have a boutique hotel.
The Justen Co. has no plans now to proceed with the north tower.
HAL Real Estate Investments just listed for sale a mid-block site on Fourth Avenue
between Lenora and Blanchard streets with broker Jeff Williams of Moran & Co. The
site is permitted for housing, though whoever buys it would likely build apartments,
said HAL President Dana Behar.
The site is north of the Cinerama, so the project HAL planned is called Cinema Tower
and would have an outdoor cinema on the rooftop. Behar said the project is not being listed with an asking price.
The 29-story Icon Tower condo project on a triangular lot at Sixth Avenue, Wall Street and Denny Way is most likely going apartments,
according to project architect Blaine Weber of Weber Thompson.
“We are in early design work to convert it,” he said. Officials with the developer, Laconia of Walnut Creek, Calif., were not available.
A handful of other projects already have been converted to apartments. Goodman’s Colman Tower near Pioneer Square originally was
planned as office space but now it will have 208 apartments and retail. Urban Visions of Seattle switched its 35-story condo/hotel
tower overlooking Pike Place Market to high-end apartments at the end of 2009.
Now more developers are following as the apartment market heats up.
Tom Parsons of Holland Partner Group, an apartment developer that is active in Seattle, said O’Connor Consulting Group estimates
there is demand for 6,200 new apartments in Seattle but only 1,470 new units will be delivered this year.
Parsons told members of Commercial Real Estate Women yesterday that another consultant says that much unmet demand means
the vacancy rate here could fall to negative 6 percent, and push rents up 20 to 25 percent over the next four to five years.
Converting to apartments will require some re-design. The downtown market calls for smaller units and more amenities. Weber said
units in high-rises averaged 750 square feet in the past, but that’s come down to 600 square feet.
Harbor Properties is building a 17-story project, Alto, in Belltown. It will have 184 units, but only 17 will be two-bedrooms with the rest
one-bedrooms. They’ll range from 500 to 940 square feet. Economics and the market drove the design.
Alto is still under construction but if the units were available today, the average rent would be $1,600 a month, according to Harbor’s
Martha Barkman, who was a panelist at the CREW meeting. That’s $300 to $400 less than at neighboring apartment towers, where
many of the units are two-bedrooms.
Sixty-five percent of Belltown residents are single.
Fosseen said the Goodman project at 1915 Second Ave. will have 240 smaller, more affordable units. Weber Thompson is the architect, and construction could start by year’s end. No contractor has been selected.
Justen also is looking at reconfiguring the unit sizes at 1933 Second, though he said the changes would not be noticeable from the
outside. Justen worked on the Fifteen Twenty-one Second Avenue condo tower, a slender, 39-story project, and said he views this
new project “as kind of an encore” to 1521. Weber Thompson is the architect. The land owner is Columbia West.
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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In addition to smaller units and more amenities, Weber said design trends include tech-rich projects that are pedestrian friendly, with
natural light, high-end finishes and plenty of storage.
Barkman said storage is key. “That simple rod in the closet is not going to do it anymore.”
Rose Street Apartments opens near Othello station
Daily Journal of Commerce Staff
Housing Resources Group has opened the 71-unit Rose Street Apartments in Rainier Beach. The site is on Rainier Avenue between
South Henderson Street and Columbia City, near the Othello Light Rail station, bus routes and Rainier Beach Community Center.
HRG said it holds a parcel north of the complex where it plans more workforce
housing.
The Rose Street units are one- and two-bedroom and the complex has a play area,
underground parking and laundry room. Residents who meet income qualifications
will pay between $733 and $958 per month.
Three live/work studios and corner retail space on Rainier Avenue are available for
businesses or artists’ studios.
The building meets the Washington Evergreen Standard with energy efficient appliances, lighting and central hot water heating.
SMR Architects designed the building and Rafn Co. was the general contractor.
Financing came from a variety of sources including US Bank, Union Bank, Rainier
Valley Community Development Fund, JPMorgan Chase Foundation, Puget Sound Energy, and state, city and county programs.
Astronics buys two Mastro buildings
By Marc Stiles, Daily Journal of Commerce
Astronics Corp. paid nearly $5.2 million for two tech/flex buildings that the bankrupt company Mastro Properties lost to Union Bank.
The price is $462,000 less than what Mastro paid for just the land in 2008, and a little less than half what the buildings would cost to
construct today, according to one expert who asked not to be named.
Steven K. Linkon, a bankruptcy attorney who wasn’t involved in the disposition to Astronics, called the price “shocking.”
Astronics designs and makes power, lighting and other systems for aerospace and defense industries.
Executive Vice President Mark Peabody said Astronics will move into the buildings at 12960 Willows Road N.E. in about 18 months.
They total about 92,000 square feet and sit on roughly eight and a quarter acres. The company also acquired another five and threequarter acres.
The deal took about two years to complete, according to one of Astronics’ brokers, Paul Jerue of the Broderick Group. “Kudos to
Astronics for sticking with it,” said Jerue, who worked with colleague Chris Langer.
The chance to buy the property at such a low price motivated the company to persevere. Astronics is in about 97,000 square feet of
space about a mile and a half away, and its lease will soon expire.
Jerue said the property wouldn’t work for just anyone.
“For a third party, it would have been risky,” he said, because it is neither pure warehouse, nor pure office.
Astronics will use the space for office and production uses. It is working with a designer to finish the buildings and talking to contrac-
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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tors, but Peabody declined to name the companies.
Jerue estimates Astronics spent a year on due diligence with no guarantee it could acquire the property. “This buyer went above
and beyond what most people would do.” Others took a run at the property, but Astronics made an all-cash offer with no contingencies.
Court records show Frontier Bank loaned Mastro $22 million in March of 2008. Last December’s trustee’s sale notice stated that
Mastro owed the lender nearly $22.8 million in principal, interest, late fees and expenses. David R. Riley of Weinstein & Riley was
Union Bank’s trustee. He did not return a call.
Mastro was forced into bankruptcy in 2009.
“That stops everything in its tracks,” Linkon said. The process was further slowed when bank regulators closed Frontier, which was
taken over by Union Bank.
The timing of a commercial foreclosure depends on a number of factors, starting with how a lender deals with the borrower, said
Linkon. “Everyone is different because the borrowers have a story to tell about how they are going to pay them back.”
As those conversations occur, lenders take time to weigh their options. They have to decide, for instance, whether it’s better to do a
short sale than foreclose.
Taking a property back can be expensive and risky. Bankers don’t know how long it will take to dispose of a property. As they wait,
they have to manage the property and pay other expenses.
Unlike many troubled residential borrowers, some commercial note holders tend to be better off financially. This makes lenders
more willing to work with them, said Linkon, who added that many commercial borrowers make personal guarantees.
Linkon said he sees commercial foreclosure activity slowing. He said there are fewer new filings, indicating the market is healing.
Another plus is the lack of new supply, he said. According to Cushman & Wakefield Commerce’s first quarter report, only 237,000
square feet of new office space is being built in downtown Seattle compared to more than 1 million square feet at the end of 2009.
No new warehouses are being built in the Kent Valley, where 1.2 million square feet was built in the first half of 2009.
Linkon said he thinks the commercial market is 18 to 24 months away from recovery.
2 downtown Seattle hotels are sold
Daily Journal of Commerce Staff
SEATTLE — Two downtown Seattle hotels, the Red Lion and Homewood Suites, have sold.
Red Lion Hotels announced yesterday that it has entered into an agreement to sell its property on Fifth Avenue for $71 million to
Lowe Enterprises of Los Angeles. The 297-room hotel will continue to operate as a Red Lion.
Red Lion anticipates the deal will close by the end of the second quarter. Chris Burdett of CBRE Hotels in Seattle is representing
Red Lion in the sale.
A Lowe official declined to comment.
Chesapeake Lodging Trust announced it has closed on the previously announced acquisition of the 195-room Homewood Suites
Seattle near the convention center. The purchase price was $53 million. It will continue to operate as a Homewood Suites.
Benaroya sells tech building in Bothell
Daily Journal of Commerce Staff
BOTHELL — Benaroya Co. sold a nearly 69,900-square-foot Bothell building that Lockheed Martin leases for nearly $17.5 million.
The buyer is the Sade family trust of California.
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
Week Ending 5/15/11 | Philip Assouad & Giovanni Napoli | 9
The Sound Review
Philip Assouad & Giovanni Napoli
The trust bought the Canyon Park property as part of a 1031 exchange, said its broker Bob Miller. The exchange was for a Tukwila
warehouse store that Costco bought.
Miller, who has his own firm in Alamo, Calif., negotiated the deal with Terry Wirth of Colliers International. Miller declined to provide
the cap rate.
Chris Langer and Paul Jerue of the Broderick Group represented Benaroya, which bought the building in 1997. Marc Nemirow of
Benaroya said the company decided to sell because Lockheed Martin had just signed a new lease, and significant upgrades had
been completed.
The building contains office, warehouse and production space.
Miller said the trust wants to buy more properties here and is focusing on single-tenant warehouse, production and research facilities.
Office/lab lease signed in Bothell
Daily Journal of Commerce Staff
BOTHELL — Seattle Genetics leased an 81,000-square-foot building at Highlands Canyon Park, says an asset manager for Washington Capital Management.
Washington Capital advises the pension fund that owns the Bothell property at 21717 30th Drive S.E. Terms weren’t disclosed.
Tom Gehrig of Washington Capital said half or more of the building will be office space, and that the project will have a lab. The
design and construction team for the buildout is in place, but he did not have the tenant’s OK to name members.
Seattle Genetics leases the building next door. On May 2, the company announced the U.S. Food and Drug Administration accepted for filing two “biologics license applications” for treatments for lymphoma patients.
Mark Flippo and Daniel Seger of Pacific Real Estate Partners listed the property for Washington Capital. Hans Kemp and Bob
Mooney of Jones Lang LaSalle represented the tenant.
Kent warehouse sold for $10M
Daily Journal of Commerce Staff
KENT — McMorgan & Co., an investment pension fund adviser, bought a Kent warehouse for just over $9.9 million in an off-market
deal.
Grocery Service Center, a third-party logistics company, occupies the approximately 150,000-square-foot facility at 19005 64th Ave.
S., according to Tom Posey, a CB Richard Ellis broker who put the transaction together. He declined to say how much time is left on
the lease, but put the cap rate at around 7 percent.
He said pension fund advisers have been sitting on the sidelines for about two years, waiting to see “how values are going to shake
out.” Now that they’re “more comfortable” with the state of the market, they’re returning but finding few willing sellers.
Officials of San Francisco-based McMorgan, an affiliate of New York Life, were not immediately available. Records list Tom Herche
as the seller; he is president of United Warehouses of Seattle.
This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an
independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL ADVISOR.
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