Seattle Commercial Real Estate News of the Day

Thursday, February 16, 2012

Seattle Times Daily Journal of Commerce Headline
Amazon to buy Denny Triangle property; plans 3 big office towers

Real Estate Buzz: Amazon could build 3 towers on Clise land

Amazon’s Denny Triangle deal: A real blockbuster | Jon Talton Clise Properties Chairman and CEO Al Clise confirmed that his company has an agreement to sell three blocks in the Denny Triangle to Amazon.com.

Amazon could build three 1 million-square-foot office towers on the property, which is between Westlake and Sixth avenues and Blanchard Street.

The company also has options to buy more land from Clise, which owns nearly 13 acres in the Denny Triangle. Clise did not say how much additional land Amazon could acquire.

"They have options to acquire more property, significant amounts of property, that will allow them to plan for their future," Clise said.

Clise said he did not know if Amazon plans to build in phases or all at once. He also was unsure whether Amazon has hired a design and construction team. "I don’t even know if they’ve made that decision."

The real estate advisory firm Seneca Group filed papers with the city on Wednesday to develop the blocks.

A spokesperson for the Seattle Department of Planning and Development said NBBJ is listed as the designer.

Just $4.9M for an eyesore

We were intrigued when we heard the Second & Pike Building is on the market.

The Wall Street Journal once called it one of downtown Seattle’s “most intractable eyesores.” The seven-story building’s upper floors are vacant and a needle exchange for drug addicts operated on the first floor up until a few years ago. Dr. Martens opened a shoe store there, joining a few other businesses including a teriyaki joint that seems to have been around since the Denny party landed.

Over the years, city officials and developers have been trying to get owner Richard Nimmer to do something with the property, also known as the Eitel Building. It is a key part of a rough strip between Pike Place Market and the retail core.

All along Nimmer has refused to sell, and in 2000, city officials openly talked about condemning the property.

Five years later, William Justen was working to help Nimmer redevelop the property.

“Pike should be one of the absolutely best pedestrian experiences in the city… It is far from that,” Justen said at the time. He and Opus Northwest were developing the Fifteen Twenty-One Second Avenue luxury condo tower next door.

Nimmer announced a 22-story mixed-use project in 2006, after the city declared the 1904 building a landmark. The facade would have been preserved as part of the plan.

Now comes the possible sale. We can’t say what prompted Nimmer’s change of heart. He hired broker Dane Murphy of Windermere in Ballard to market the property, but Murphy said he won’t discuss the situation. His website shows the asking price is $4.85 million and a cap rate of 2.64 percent.

“I guess they’ve had 40 tours and four or five offers,” one source said.

You want charm, cool or day-old bread?

Colliers International brokers David Gurry, Dan Dahl and Laura Hurley have come up with some data showing this market is bifurcated between “commodity” office space and “unique” space.

Unique space ranges from the bricks and beams you find in Pioneer Square to glitzy Class A+ properties with views. (Think Russell Investments Center.) Commodity space is in run-of-the-mill buildings with all the character of day-old white bread.

Colliers determined there’s 4.4 million square feet of commodity space with a 36 percent vacancy rate. The inventory of unique space is just over 6 million square feet, and 9 percent is vacant.

“It’s a tale of two markets,” Gurry said. “For landlords with truly unique properties, we’re telling them to push rates.”

Classical grandeur meets today’s economy

Even the well-to-do are feeling pain in today’s real estate market. Consider what Henry “Skip” Kotkins has gone through.

Kotkins listed his Magnolia mansion for $9.9 million in 2010. He ended up giving it back to a lender, who recently sold it to Mark Milgard for $4.7 million.

“We continued to drop the price and drop the price,” said Kotkins. “Eventually it was under water.” Long before that, he said, he decided to give it back to the bank through a deed in lieu of foreclosure.

Kotkins, who is on the board of directors of the Seattle branch of the Federal Reserve Bank of San Francisco, said it was not a foreclosure.

“It was a voluntary decision that we decided to initiate, and it was a good business decision.”

The house is at 3025 Magnolia Blvd. W., and was built in 1940, according to Zillow. It totals nearly 11,300 square feet and sits on more than two acres.

Here’s how Zillow puts it: “Classical grandeur meets contemporary massing and space planning as only an architectural genius of George Suyama’s caliber can deliver in a stunning and evolutionary remodel.”

See for yourself at http://tiny.cc/tunj2 .

Kotkins said the house sale is unrelated to yesterday’s sale of Skyway Luggage to Ricardo Beverly Hills. Last month, Skyway Luggage sold its office building in Belltown at 2501 Western Ave. for $2.1 million. Music Group Services was the buyer.

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About CRE Northwest

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