June 29, 2000

Real Estate Buzz

Samis tries industrial build-to-suit

Samis Land Co., the non-profit developer set up to rule over the late-Sam Israel’s empire, is going industrial.

As it happens, Israel assembled and left behind about 6.5 acres next to Interstate 5 and south of the West Seattle Bridge in the close-in Seattle industrial section. But he missed one parcel, a “missing tooth,” as Samis head William Justen described it.

Samis recently paid $2 million for the 1.5-acre missing tooth, bringing the property to a contiguous eight acres. Justen said Samis is close to signing a deal with a tenant for which Samis would develop a build-to-suit project on the eight acres.

According to King County property records, Samis bought the parcel at 4701 Airport Way S. from Cascade Airgas. Two small, nondescript buildings occupy the site.

Justen declined to identify the user of the planned new building out of caution over losing the deal. Observers have said for months that the area is crawling with telecom companies seeking to set up "telecom hotels" to house digital equipment, so that’s one guess, but just a guess, as to what Samis may have going.

Three brokers negotiated for Cascade Airgas: Stan Snow of Kidder Mathews & Segner, Russ Johnson of CB Richard Ellis and Jeff Cole, who has left Leibsohn & Co.

Justen is a partner in his own development firm, The Justen Co., which contracts for work from Samis, and he brings some industrial experience to the Airport Way project. He developed industrial space in Canyon Park and the Burlington Air Express building.

O'Keefe, Rhodes shop in Redmond

Broker Tim O'Keefe and developer Jeff Rhodes continue buying properties together.

In their latest deal, they paid the former owners of Northwest Manufacturing $5 million for a small, three-building industrial complex in Redmond for which they'll soon have to find a new tenant.

In their next deal, they're under contract to buy a small, run-down, historic building in Pioneer Square from former Microsoft executive Scott Oki. They intend to substantially refurbish and then rent out the vacant, 25,000-square-foot Moses Building after buying it from Oki Development Corp.

"It's a total rehab," O'Keefe said.

O'Keefe is a leading broker for Colliers International whose prodigious deal-making has won him various area office-broker-of-the year awards in the past few years.

Rhodes led development of the Pacific Place retail center in downtown Seattle and assembled the Palladium Center proposal as part of the expansion of Meydenbauer Center in downtown Bellevue. Rhodes lived in Seattle during much of the '90s, then moved back to Pennsylvania last year, but he continues investing and developing here.

The Northwest Manufacturing complex of three buildings totals 64,000 square feet at the corner of Northeast 92nd Street and 151st Avenue Northeast. The price O'Keefe and Rhodes paid equals $78 per square foot, somewhat low, though the ultimate assessment of that price depends on how much rent they can get from a new tenant.

Northwest Manufacturing makes consoles for computers and other machines. Owners Alvin Reed and James DePhelps sold Northwest three years ago to Texas-based Simon Ventures.

Now Northwest has signed a lease to move its roughly 170 employees at year-end into 105,000 square feet in the one-building Opus Business Center near Woodinville on 63rd Avenue Southeast, said Steve Balkman, a Puget Sound Properties broker who negotiated that lease for Northwest.

Cushman & Wakefield brokers Gary Bullington and Mike Livingston represented Opus Business Center.

Balkman said it's a plus for Northwest to remain on the Eastside when high rents or a shortage of large spaces have driven some manufacturers to move further out.

"It's great to keep a manufacturer on the Eastside," Balkman said. "There aren't that many left." Opus Business Center is in unincorporated King County.

O'Keefe and Rhodes started investing together a couple of years ago, when they bought two Pioneer Square office buildings: the Olympic Block and the Westland. Late last year they, along with Seattle developer John Teutsch, bought a 116,000-square-foot former Boeing building in Auburn that Key Bank occupies on a long-term lease.

"If some properties come up for sale that don't compete with my clients' interests, I look at buying them because real estate's all I know," said O'Keefe, whose relationship with DePhelps goes back to childhood in Issaquah.

Kirkland gets more Class A

Taylor Development began construction on a low-rise 50,000-square-foot office building in Kirkland called Forbes Lake Corporate Center.

The two-story, Class A structure will be on 122nd Avenue Northeast north of Northeast 85th Street. The site is two blocks east of Interstate 405 and one block east of the Costco outlet.

Steve Balkman of Puget Sound Properties has the job of finding a tenant for the spec building. Taylor hopes to finish construction before the year ends, so Balkman is promoting the space as "the only new office building available in the fourth quarter on the Eastside."

The architect is Lance Mueller & Associates. Foushee & Associates is general contractor.

Taylor Development is owned by Redmond gravel mine operator Paul Taylor and run by his son Kevin Taylor. The firm recently finished developing its first project, a 35,000-square-foot office building called 15 Lake Bellevue. A Web company leased the full space before construction finished.

No McD's in the ID rally today

A community group that opposes the opening of a McDonald's restaurant in Seattle's International District has scheduled a rally for noon today in front of the McDonald's at Third Avenue and Pine Street.

The ad hoc group calls itself No McD's in the ID.

Significant leases