Seattle Commercial Real Estate News of the Day

Friday, May 13, 2011

Seattle Times Daily Journal of Commerce Headline
Rising food and gas costs push up consumer prices These days, former condo towers switch to apartments
Pace of U.S. foreclosures slowed in April, but not in Puget Sound area 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 surface parking lot at Fifth Avenue and Lenora 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 east 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.

The Cinema Tower site is east of the Cinerama. HAL had planned to put an outdoor cinema on the rooftop.

“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.

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.”

Weather: Seattle stuck in soggy, sub-70-degree slump
Puget Sound Business Journal
Seattle-area mass transit: No. 18 in U.S.
Everett facing $10M shortfall
Boeing-NLRB fight could end up in Supreme Court
Nordstrom 1Q net income up 25 percent
Apple’s giant new location to cast shadow over Microsoft Store
Washington state cancels 2012 presidential primary
Other News
U.S. Inflation Jumps as Gas and Food Prices Rise
U.S. Fast-Food Giant Yum Bids for Chinese Chain
U.S. Apartment Rents and Occupancies Seen Set to Rise
Property Buyers Expand as Rebound Spreads
Apartment Rents and Occupancies Are Poised to Rise in U.S.
Foreclosure Filings Fall 34% Amid ‘Saturation’


About CRE Northwest

Specialist in office & investment real estate in Seattle & the Eastside
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