April 7, 2000

The Buzz

The Seattle City Council will hear Monday who the likely buyer is for its historic Dexter Horton Building.

Don't tell council members, but it's Triad Development, the increasingly active Seattle company owned by Pinnacle Realty head John Goodman and partner Fred Grimm.

City staff wouldn't comment while Goodman, Grimm and the city's broker, Craig Kinzer, all couldn't be reached. But other sources familiar with the city's sale of the 15-story office building northeast of Pioneer Square said Triad has a purchase and sale agreement.

Observers expect that Triad will wire up the terra cotta structure enough to lease it to Internet and high-tech companies. Dexter Horton totals 300,000 square feet.

City staff will apprise the council of the Triad deal and seek permission to close it in an executive session Monday. If that goes smoothly, a public vote would be scheduled for later in the month.

Pinnacle, headquartered in Pioneer Square, manages apartments all over the country and beyond. Starting from that expertise, Triad has developed apartments in the Seattle area and other markets. It expects to start construction soon on 103 luxury condominiums in Wallingford, immediately north of Gasworks Park.

In the past couple of years, Triad has also moved into office development. It's redeveloping Pier 70 on the north end of the downtown Seattle waterfront, having leased the upper floor to Go2Net.com.

Triad tried to buy the nearby, 7.5 -acre Unocal site to turn that into a major housing, retail and office complex linked to the pier but the prime site will become a sculpture garden instead.

More recently Triad bought the former Skyway Luggage warehouse close to the pier in order to convert that into about 100,000 square feet of offices for tech companies.

Goodman, meanwhile, likes history and historic structures. In 1997 he bought the Colman Building, which is a red-brick office tower on the north end of Pioneer Square. Late last year he bought a block covered by a parking lot immediately west of the Colman Building on which Triad plans to develop a historic-looking 15-story office building called Colman Tower.

The Dexter Horton is two blocks east of the Colman Building.

The city put Dexter Horton up for sale last year because city employees who work there will move during the next few years into the city-owned, 62-story Key Tower. After listing the building, the city began $500,000 in cleanups, including replacing some of the terra cotta tiling.

City facilities administrator Norma Miller declined to talk about whether the city has a buyer. But she said the Department of Design, Construction and Land Use will be the first to move, going early next year. The last city employees will move in 2006, she said.

Martin Smith is going after Lenora Square

A pension fund guided by Lowe Enterprises has only owned the seven-story Lenora Square building in the Denny Triangle for seven months.

Lowe hasn't yet wired up the 1929 warehouse as it had planned in hopes of switching the tenants from lower-rent-paying architectural and design offices to high-flying tech firms.

But investors assembled by Martin Smith Inc. have already made Lowe a deal the pension fund can't refuse.

Lowe's Ric Anderson and Martin Smith principal Greg Smith confirmed that a Martin Smith partnership has Lenora Square under contract. They declined to reveal the price for the 112,00-square-foot structure on Denny Way at Lenora Street.

"They have it under contract," Anderson said. He said Lowe has plenty of other projects to turn to, so when Martin Smith came asking Lowe was willing to listen.

Lowe bought the building last October from a Morris Piha partnership for $10.8 million.

Lenora Square sits on downtown Seattle's fiber optic loop. It's across the street from a growing collection of South Lake Union properties amassed by Microsoft cofounder Paul Allen as potential future tech company homes, including the similar Quinton Instruments building.

Greg Smith said his partners expect to follow Lowe's path of wiring up Lenora Square to draw technology tenants.

"We think it's a strategic addition to our urban technology campus," he said.

CB's forecast breakfast skips a year

CB Richard Ellis for years staged the region's preeminent real estate gathering. The brokerage's annual forecast breakfasts filled the Four Season Olympic Hotel's Spanish Ballroom beyond standing room only.

Now it's official as it's going to get: CB missed this year.

In response, CB is retooling to jump ahead of the growing crowd of imitators by staging the next one in November, ahead of the pack.

Local CB Richard Ellis head Ann Chamberlin tried returning calls but didn't connect to give the details of how this year's event, initially scheduled for January, as always, failed to materialize. For a while the brokerage talked of getting the event together for March, but now is shooting for November, said sources who know.

Scheduling it for November will allow more forecasting and less recapping the past year, said one source.

Previous columns:

• Real Estate Buzz, 03-31-2000
• Real Estate Buzz, 03-24-2000
• Real Estate Buzz, 03-10-2000
• Real Estate Buzz, 03-03-2000
• Real Estate Buzz, 02-25-2000
• Real Estate Buzz, 02-11-2000
• Real Estate Buzz, 02-04-2000
• Real Estate Buzz, 01-28-2000