Thursday, March 22, 2012
|Seattle Times||Daily Journal of Commerce Headline|
|Amazon lays out design proposals for Denny Triangle complex||Real Estate Buzz: How do you revamp 11 dowdy buildings?|
|State jobless rate falls again as private sector adds 5,600 jobs||The week’s big question is: What should Bill Pollard do?
We hear Pollard’s Kirkland company, Talon Private Capital, will be in charge of repositioning 11 Seattle-area office buildings after a Goldman Sachs affiliate gives them up.
This event is long expected but also momentous, and could create a lot of work for architects and contractors because some of these buildings are dated and dowdy. They’ll need some serious panache if they want to attract the “creative class” tenants — like gaming and tech companies — that drive today’s market.
The owner’s apparent decision to let go of the portfolio is a milestone for the market. For more than a year, Goldman’s Whitehall Street Real Estate has been unable to rent the space due to the impending default.
“Those buildings have effectively been off the market,” said a broker. The property transfer will add buckets of space to the inventory.
Whitehall paid top dollar for the portfolio five years ago. Not long after that Washington Mutual, which was a tenant in some of properties, imploded and the mostly full buildings started emptying.
This left Whitehall unable to pay back the loan on the portfolio, which includes 1111 Third Avenue and Second & Spring in Seattle, and nine Eastside properties. Among the larger ones on the Eastside are Symetra Financial Center, One Bellevue Center and Bellefield Office Park.
The loan was transferred to a special servicer late last year, according to the commercial real estate information company Trepp. Trepp cites the latest servicer’s commentary: “The loan is not expected to pay off.”
The loan matures April 9. When that happens, the 2.1-million-square-foot portfolio will belong to Walton Street Capital.
Last year, local brokers said Walton Street bought a slice of the debt from another Goldman affiliate, Archon, at a steep discount. This put Walton in position to buy Whitehall’s lead position in the debt stack. It’s expected the holders of $200 million in more junior liens will be wiped out.
Whitehall-to-Walton “looks like it’s going to be a smooth transition,” a local broker said this week. He added that Talon has been selected to manage and reposition the properties. “They’ll be creative. They’ll spend money.”
A Walton Street spokesperson and Pollard did not return calls.
So what should Pollard do? How can his team make the properties, mostly built in the 1980s when staid accounting and law firms ruled the roost, attractive to today’s tenants?
We turned to architects at two companies, SkB and MulvannyG2, to get some ideas.
“For the tech and gaming world, it’s got to have soul, be bold and create buzz,” says Andrea Vanecko of SkB.
Liz Robinson of MulvannyG2 adds that Pollard and his team need to understand Generation X and millenials. “They are looking for flexibility, ways to express themselves in their individual space, and a breakdown of hierarchy.”
Here are some of their recommendations:
• Open, flexible floor plans that have natural light. Technology is shrinking the size of computers and other devices, so individual work spaces can be smaller. This allows more space for socializing and brainstorming. Robinson wants to see “comfortable, inspired and energized environments with home-like features,” like game rooms and lounges.
• State-of-the-art IT infrastructure, such as cloud computing services, so tenants don’t need servers onsite. This saves on real estate costs.
• Sustainable features, such as recycled materials, energy-efficient HVAC systems, water-saving fixtures, operable windows and efficient lighting.
“Finding honesty in the space is also important,” Vanecko said. “The tech world prefers and finds beauty in things that are in their natural state.” That means open up the ceilings and expose the concrete floors.
Valve Software’s headquarters in downtown Bellevue’s Skyline Tower — built in 1983 — is a great example. The project team “just kind of scraped” the space to the core, said Tim Hossner of Replinger Hossner Osolin, which designed the tenant improvements. JPC Architects managed the project, and LMN was the interior designer.
Drive by Skyline Tower and it looks pretty much the way it always has. Exteriors matter less than interiors, Vanecko said, but they do matter.
Re-doing the exterior of a high-rise, however, isn’t practical. Robinson said a landlord can “refresh the entrance” with a new canopy. Robinson said adding “trendy material and an artistic flair” helps create a sense of arrival and place. Landlords can also update landscaping with indigenous plants, which also use less water so you score green points.
Robinson said unique public amenities, such as an independent, organic coffee shop and restaurants that appeal to younger workers, are another draw. Zipcar parking and electric car charging stations will help, too.
Every space where tenants interact needs to be considered, Vanecko said.
“People don’t just start their day when they get to the first floor. The garage, common spaces, front door and so on all need to be approached with the similar design intent.” It’s all about creating “easy opportunities for social encounters.”
Skanska designs garage to evolve
We were surprised to read that Skanska’s super-green office and retail project in Wallingford will have underground parking for 216 vehicles. Sounds more suburban than urban.
Skanska’s Lisa Picard says that’s what city code requires. When a project first opens, parking demand is usually high until tenants and customers realize there are better ways of getting there.
Skanska and the architect, LMN, designed the garage to “transition over time,” Picard said, offering more space and facilities for people who bike to work and fewer for those who drive.
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