May 25, 2000

Real Estate Buzz

Simpson Housing revs up Yellow Cab site

Having sold its Pier 89 site, Simpson Housing Limited Partnership’s Seattle office will likely start fueling up its 1¼-acre Yellow Cab site in Seattle’s South Lake Union area, said Simpson executive Greg Arms.

The vacant 54,000-square-foot site is on Dexter Avenue at Aloha Street, south of two roughly 100,000-square-foot office buildings Alper Northwest built there in the past few years.

"We’re not in permitting yet, but we should be going in soon," said Arms, senior vice president and head of the Denver-based company's Seattle office. The site carries C-265 zoning, so to build apartments there would require receiving a city administrative change of use, he said.

Office developers such as Alper, which was recently sold to Starwood Capital Group and became TriMet Development LLC, have been hot to take over the site to build offices. A sale could happen, Arms said.

Simpson recently sold 6.4 acres on Pier 89 for $12.25 million to a partnership led by Denver investor Chuck Wathen. Simpson planned to create a major housing project there, next to Immunex’s future headquarters campus, but would have had to change the zoning. Now Wathen intends to put 480,000 square feet of high-tech offices there.

Simpson’s Seattle office has three other apartment projects underway:

• The firm began grading for a 272-unit garden-style complex called Peregrine Point in the new Redmond Ridge subdivision.

• Construction has begun on 204 units across from Klahanie on the Issaquah-Pine Lake Road.

• Permitting has finished and construction may begin in a month on 238 units on Lake City Way in Seattle.

Palladium catches the wave

Raging demand for office space in downtown Bellevue has spurred Palladium Center developers to return a 22-story office tower to the big mixed-use proposal.

"With less than a 2 percent vacancy rate, we feel we really hit a home run by putting the office back in," said Connie Grant, an executive with Tochterman Management Group. The office tower would total 438,000 square feet.

Bellevue-based Tochterman and East Coast-based partners Jeff Rhodes and Ken Himmell recently submitted revised plans to the city of Bellevue with the tower in place of a 16-screen movie theater. Grant said the partners are still arranging financing and have moved their targeted construction start to spring 2001.

As now proposed, Palladium Center, which was originally named Meydenbauer Place, would consist of a 550-room Marriott Hotel, a 300-room Ritz-Carlton Hotel, 60,000 square feet of retail and 2,300 parking spaces. The Marriott would stand about 17 stories and the Ritz about 20 stories.The Meydenbauer convention center would nearly double in size to 563,000 square feet as part of the project.

The 8-acre "superblock" site is at Northeast 8th Street and 100th Avenue Northeast.

The development group proposed Meydenbauer Place in 1996 with a hotel tower and an office tower over a large retail center adjacent to the convention center expansion.

Three other new office projects got underway in downtown Bellevue, so the Meydenbauer group dropped the office tower and put in a second hotel instead. They also renamed the project Palladium Center, derived from the name of Himmell’s Palladium Co.

By the start of this year, however, vacancy rates tightened further, and the structures under construction filled with pre-leases, sparking developers to launch a new wave of downtown Bellevue office proposals. Add Palladium Center to that wave.

Future Buzz

Two to look for:

• Rumblings indicate Opus Northwest is near to closing its slow sale of three office buildings under construction at Union Station, on the south edge of downtown. The four- to 11-story structures will total 570,000 square feet. E-tailer Amazon.com signed leases to occupy around 450,000 of those square feet.

  Real estate players have monitored Opus' efforts to sell because the deal will reveal institutional investors' take on buildings occupied by volatile, money-losing Internet companies, which happen to be gobbling up space all over the region.

  Opus NW head Tom Parsons didn't want to comment on a sale other than to say it's coming along.

• Expect to see Unico Properties of Seattle buy the 42-story U.S. Bancorp Tower in downtown Portland.

  Unico reportedly has the 1.04 million-square-foot tower under contract from U.S. Bancorp. Unico CEO Dale Sperling said a deal is pending but he won't comment until it closes.

  The building, downtown Portland's largest, is known as "Big Pink." CB Richard Ellis brokers are working the sale.

  Minneapolis-based U.S. Bancorp said last year it would sell its buildings. It will remain a tenant occupying about 40 percent of Big Pink.

  Unico, which is aggressively buying office buildings outside of downtown Seattle, earlier this year bought the 20-story U.S. Bank Plaza, the largest office building in downtown Boise, from U.S. Bancorp.

Significant leases