Seattle Commercial Real Estate News of the Day

Thursday, June 09, 2011

Seattle Times Daily Journal of Commerce Headline
Snohomish developer’s plot rescued as ‘working forest’ area Real Estate Buzz: Is big Des Moines project about to take off?
Mastro’s creditors may get a penny on the dollar this year A Port of Seattle spokesman says the agency is negotiating with a potential tenant for Des Moines Creek Business Park, the long-planned project on 89 acres south of Sea-Tac Airport.

The port and city of Des Moines have been working for six years to develop the property, which is northwest of the corner of 24th Avenue South and South 216th Street. It was a residential neighborhood until the late 1980s when the port, which operates Sea-Tac, began buying and removing homes under the flight path as part of a noise mitigation program. A business park there could accommodate up to 1.1 million square feet of space, according to studies.

Three years ago, the port picked Majestic Realty, a Southern California company, which planned a big-box retail center and other space for tenants who need to be near the airport. The initial budget was $90 million. The project was expected to start in the summer of 2009, but was shelved.

Now the port is talking to a tenant for about a third of the park, according to a source.

Port spokesman Perry Cooper said contracting directly with a tenant rather than a master developer is an option, though a developer could be part of the project.

The source wouldn’t name the tenant, but said it would likely contract with a developer.

The port also is being tight-lipped. “We are as excited as anyone else to announce a tenant, but we are not to that point yet,” Cooper said.

Development, post-recession-style

Developer Rico Galliano is looking for investors for Steel Lake Plaza in Federal Way.

Wake up at 3:45 a.m. Be at work at 5 for a full shift as a video editor at MSNBC in Redmond. Head home to Renton, pick up the three kids, get them to soccer practice and then fix dinner. In between, try developing a small commercial project in Federal Way.

That’s the reality of Renton resident Rico Galliano, who in the last 20 years has stitched together a small portfolio. Like developers everywhere, he has a big dreams but no cash. What sets him apart is a compelling story, 1.5 acres of land and architectural plans — all of which are paid for, he says.

“Our capital structure is paramount,” he says. The “our” refers to his partner — and wife — Karen, who works afternoon and evening shifts as a card dealer at a casino and banquet server at a hotel.

Galliano’s real estate career began when he was growing up in SeaTac. His father invests in housing.

“As a kid, I would get the Sunday paper. I would circle [properties] that I thought were good ones for our Sunday drive-arounds.” As a very young adult, he bought a run-down condo from an uncle, with help from his folks. “I couldn’t really go to the bank at 18,” he said.

Galliano got his degree in radio, television and film, but continued working in real estate. He pulled equity out of his properties to buy more, including a 12-unit apartment complex in which he converted some units to condos.

Three years ago, he paid $390,000 cash for the land near Steel Lake in Federal Way where he wants to build the 17,000-square-foot retail project. “We bought it at a fire sale. The guys were desperate to sell it.”

He worked with architect Dave Thorstad of Federal Way and said he had a loan lined up from First Savings Bank Northwest in Renton. The bank wanted about three-quarters of the space preleased. Galliano landed three letters of intent, but the tenants all came in at different times.

When the bank’s loan offer evaporated, he considered selling shares in the project but the legalities of that were too complex so he backed off. He also talked to general contractor/investors but they unable to execute financially.

“Now we see some rays of light with the market improving,” Galliano says, so the couple is seeking local investors through Galliano Real Estate Investments.

It’s a bit daunting to solicit money from strangers. “I’ve never had to do that before,” Galliano says.

With banks and other traditional lenders turning the flow of capital to a trickle, it’s something that folks like Galliano will be doing more.

Welcome to the world of development in the post great-recession world.

An apple ripe for picking

Here’s some news about the Capitol Hill parcel south of the Braeburn condo/retail complex at 15th Avenue and Pine Street.

HAL Real Estate Investments built the Braeburn about five years ago, on the site where a Red Apple grocery once operated. Earlier this year, HAL applied to the city to extend the permit for a 58-unit project called Cameo across the street. The name reflects the site’s history in several ways. Cameo and Braeburn are types of apples, and the Cameo site is where a 900-seat movie theater called the Venetian operated for 32 years until 1958.

Now HAL is selling the site. Last month, HAL President Dana Behar told a neighborhood group that his company probably won’t be the Cameo’s developer.

“Someone has it under contract,” Behar said after the meeting, adding the money could still be refunded.

Trade deficit narrows in April to $43.7 billion
Puget Sound Business Journal
Washington state budget woes not over
Groupon launches instant deals in Seattle
Washington Federal acquiring six Charter Bank NM locations
Seattle-PI.com
It’s official: McKenna wants state’s top job
Wholesale inventories and sales both increase
Fixed mortgage rates drop for 8th straight week
Other News
&B Sells Retail Center in San Antonio, Buys Office Building In Seattle
Home-Price Drop of 25% Wouldn’t Shock Shiller
Fed’s Yellen Says U.S. Housing Market Will Undergo a ‘Drawn-out’ Recovery
U.S. Federal Reserve Beige Book: San Francisco District
Archstone approaches Vornado, others, seeking bids
WaMu Still Working on Revised Reorganization Plan

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About CRE Northwest

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