Seattle Commercial Real Estate News of the Day

Thursday, January 05, 2012

Seattle Times Daily Journal of Commerce Headline
Equity Residential buys Lake Union parcel

Real Estate Buzz: Equity jumps on West Seattle bandwagon

Prolific Seattle real-estate developer John Radovich dies The price Equity Residential paid last month for a development site in West Seattle is further validation of the city’s 20-year effort to turn the one time “outpost” into an urban center.

Back in the 1990s, there was a big brouhaha over City Hall’s plan to funnel density into urban villages throughout Seattle. Nowhere was the fight as fierce as in West Seattle, where it reached the point that neighborhood activists were pushing for secession. In the end, the City Hall plan moved forward.

Now comes the nation’s biggest landlord, Chicago-based Equity, to put the plan into action in a big way. Equity, which is busy elsewhere in Seattle, paid $11.4 million for a “Main and Main” property in the West Seattle Junction. The site comes with a master-use permit for about 200 units and a good amount of retail. Backing out the commercial space, the price works out to $57,000 per unit.

That price is “right smack dab in the middle” of the market, said apartment broker Kenny Dudunakis of Hendricks & Partners. Land between First Hill and South Lake Union is going for $50,000 to $65,000 a unit.

The Junction is a sweet neighborhood, but it’s a ways from those close-in areas.

Dudunakis said it’s a strong market and getting better. He estimates West Seattle rents could peak at $2.20 a square foot, or $2.50 for units with views.

CBRE’s Jon Hallgrimson thinks Equity’s price reflects the rents that local developer Harbor Properties is getting at its new West Seattle projects, Mural and Link, which total 331 units.

Harbor officials wouldn’t say what apartment tenants are paying on a square foot basis, but they did tell us that Mural and Link are 95 percent occupied, and that Harbor is offering “very limited and selective concessions” to lure tenants. The retail spaces are full, with tenants paying more than $20 a foot plus expenses.

That success has spurred Harbor to start building the 62-unit Nova at 4600 36th Ave. S.W. Company officials say they have nothing else planned in West Seattle, though opportunities abound with the recent rezone of the Triangle, an area east of the Junction that’s ripe for development. Harbor worked with the community and City Hall on the rezone that allows taller buildings in some blocks.

[Editor’s note: The Buzz has been updated to include information about the Nova project and recent rezone.]

The West Seattle Blog (westseattleblog.com) has been all over Equity’s purchase of the approximately acre property at the southeast corner of California Avenue Southwest and Alaska Street. Reader comments suggest many West Seattleites remain unconvinced that density is a good thing. Some are concerned that the out-of-state developer will put up a project with an uninspired design.

Here’s one comment: “Oh, joy! Maybe someday the Junction will have all the character that Belltown has now…”

Leisure Care sings a different tune

Valentine’s Day is still about six weeks away, but a Seattle senior living and hospitality company already is in the game with its own “dating” site.

Instead of looking for love, One Eighty, the parent company of Leisure Care, is looking for matches in the form of acquisitions and management agreements.

You don’t have to look long at One Eighty’s oeMelody.com to realize it’s a takeoff on eHarmony.com and other such sites. Visitors are greeted by a young man dreamily staring off in the distance and asking guests to tell him a little about themselves.

Instead of eye and hair color and likes and dislikes, would-be partners are asked how many properties they have and what the average rental rates are. The site also asks guests whether they like pina coladas, and encourages them to meet “the nice fellow behind” the site: One Eighty CEO Dan Madsen.

If you know anything about One Eighty, this unconventional approach should not surprise.

“Everything we have done on the marketing side has always had a strong aspect of humor,” said Leisure Care Senior VP Jason Childers. In announcing the site to industry peers, the company wanted to show its desire to partner with like-minded groups.

It’s also important to stand out these days, when developing new communities can be challenging and competition to buy and manage existing properties is increasing. Plus, One Eighty is new to the dating game. This is the first time it has looked to buy or lease existing property.

So how’s oeMelody panning out? Several weeks ago, Childers said the site, which went up in October, hadn’t led to any matches. “We looked at a couple that came to us through the website that weren’t good fits,” he said.

Leisure Care operates more than 35 communities in the United States and Canada, and One Eighty International manages retirement communities in Mexico and India, and also owns three hospitality brands. Childers said One Eighty is exploring some opportunities, but couldn’t say for sure if those were connected to oeMelody.

The important thing, he said, is that the industry knows the company is ready to dance. And if that dance leads to something more permanent, well, vive le romance!

More wildlife in the city

Last column we told about how transgender hens are vexing Seattle Department of Planning and Development inspectors. This week we have a more itchy topic: bedbugs.

According to a recent report from DPD to the City Council, infestations of the blood-sucking insects are on the rise. During the first 11 months of last year, DPD received 41 bedbug complaints, up from two complaints in all of 2007.

About a third of the complaints were from the eastern part of downtown and Capitol Hill, said DPD spokesman Bryan Stevens. Another 25 percent were from the U District and North Seattle. The rest were scattered throughout South Seattle, mainly in West Seattle and the Rainier Valley.

This can be big trouble for commercial property managers. City code requires property owners to “exterminate insects, rodents and other pests which are a menace to public health, safety or welfare.” Owners must use a licensed exterminator.

Stevens notes that eradicating bedbugs can be tough and requires cooperation and sometimes behavior changes by tenants. If a tenant is unwilling to follow the exterminator’s recommendations, the bugs may just come back.

Itchy yet? We are.

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About CRE Northwest

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