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“Nabbefeld”
Joe Nabbefeld
Real Estate Editor

June 22, 2000

Real Estate Buzz

Gensler working on Warshal's tower

Jerry Warshal and Jack Alhadeff are feeling like they just went through The Machine.

Warshal runs Warshal’s Sporting Goods on First Avenue at Madison Street in downtown Seattle, a dog-eared but cherished old-line store now exalted as the last outpost of old Seattle, or at least "downtown Seattle’s last full-line outdoor supply store."

Two years ago Warshal sold half ownership of the building that houses the store to hotel developer Gordon Sondland and partner Alhadeff, who envision replacing the store with a hotel. Sondland developed various downtown boutique hotels such as the Alexis, across the street, and the Paramount.

More recently, the three partners hired the big San Francisco architecture firm of Gensler to draw plans for a 26-story building that would combine a hotel topped by condos or apartments.

Gensler’s John Falconer recently scheduled the group’s first pre-application meeting with city officials, a step that starts the lengthy design review process. The move ignited a barrage of newspaper and TV reports Warshal feels left the impression that his store was about to close.

"I’ve been getting lots of calls from people wondering when the big sale is," said an exasperated Warshal. (The answer: "There is no sale. We don’t even know if this thing’s going to happen.")

In fact, Warshal says, nothing may happen. And even if something does, it won’t be for more than year and possibly much longer than that.

Hiring an architect represents a real step, though. The limited paperwork the partners submitted also lists a representative of housing developer Murray Franklyn as a contact. A source said Bellevue-based Murray Franklyn holds the position as developer of the project. Falconer referred calls to Alhadeff, who said there’s nothing to talk about yet.

Without a residential component in the project, zoning allows construction of no more than eight stories of hotel or offices on the site. With residential a project can reach 26 stories.

Warshal said: "I haven’t decided if I’m going to retire or move to another location downtown or out in the suburbs. It’s too early."

CenterPoint hits 30 percent leased

Broadband provider Winstar Communications signed a lease for 82,000-square-feet at CenterPoint Corporate Park, a former a Boeing facility in Kent that Seattle-based Intracorp is redeveloping.

Another company, Integra Telecom, signed a 14,200-square-foot lease.

The two deals bring the 763,000-square-foot rehab office complex to 30 percent leased, said Intracorp’s CenterPoint general manager Jack Rader.

New York-based Winstar plans to initially move 100 employees to CenterPoint from Southcenter Corporate Square in Tukwila. Winstar said it hasn’t determined whether it will retain its Southcenter space. The 100 moved employees will work in customer circuit provisioning, network operations and surveillance.

Winstar plans to place another 100 employees at CenterPoint later. Some may transfer from Virginia or from Internet service providers that Winstar bought or be new hires.

Brokers from Pacific Real Estate Partners in Bellevue handle leasing for CenterPoint. Dave Young of Cushman & Wakefield represented Winstar.

Portland-based Integra is expanding in Washington. It plans to hire 66 employees for work at CenterPoint and by the end of this year place another 30 in a Bellevue office for which a lease is under negotiation, said Keith Foltz, an Integra senior vice president who heads Washington operations. Integra expects to add another 60 sales employees for offices between Olympia and Bellingham by the end of 2001, he said.

Greg Hume of Hume and Myers negotiated the CenterPoint deal for Integra.

Onyx growing into 112th@12th

Onyx Software signed a big lease for 178,000 square feet in Hines’ 112th@12th office complex next to downtown Bellevue.

The e-business software maker plans to expand into the new space early next year, and thus to remain in 100,000 square feet it occupies in Sunset Corporate Park in Bellevue’s Eastgate area.

Brokers John Black, Paul Sweeney and Jason Furr represent Hines on 112th@12th. Broderick’s Jim Kinerk negotiated opposite his partners for Onyx.

The deal brings the 480,000-square-foot office project to 90 percent leased with the first of three buildings set to finish construction in December. The complex’s other signed tenants are HomeGrocer.com, Mulvanny Architects, Nortel Networks, Hacker Group and Foundation Bank.

Pacific Gulf selling to CalPERS

Pacific Gulf Properties, a California-based REIT, agreed to sell its industrial portfolio, including six Washington properties, to a joint venture between Rreef Funds and the California Public Employees Retirement System.

The joint venture would pay about $929 million for Pacific Gulf’s 72 properties, which total 15 million leasable square feet. The real estate investment trust said the price equals an 8.75 percent cap rate, or projected first year net operating income yield.

Pacific Gulf also has its apartment portfolio for sale. It plans to distribute the proceeds from both sales to shareholders and explore what to do with its remaining collection of eight senior centers. Pacific Gulf will continue managing the industrial properties for the buyers.

Pacific Gulf owns four industrial properties in the Seattle area totaling about 730,000 square feet and two in Algona that total 466,000 square feet.

The Seattle-area holdings are: Pacific Gulf Industrial Center on 16th Avenue South in Seattle, Pacific Gulf Airport 200 on South 200th, Pacific Gulf Business Park on Stranger Boulevard in Tukwila and Pacific Gulf Renton Center on Southwest Lind.



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