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“Nabbefeld”
Joe Nabbefeld
Real Estate Editor

July 6, 2000

Real Estate Buzz

Allen buys 2nd South Lake Union pier

Microsoft co-founder Paul Allen added the Chandler's Cove pier to his still-growing collection of South Lake Union properties.

The four-acre pier becomes Allen's second. Last fall he bought the H.C. Henry Pier, located immediately west of his new acquisition. The Daniel's Broiler restaurant, formerly Benjamin's, occupies the Henry Pier.

King County property records show an Allen corporation recently paid a Taiwanese investment group called Brothers Enterprises Ltd. $16.6 million for the Chandler's Cove pier. A Cucina Cucina restaurant and Chandler's Crabhouse occupy the pier.

South Lake Union
This latest purchase brings Allen's South Lake Union holdings to an unofficial total of at least 29 acres. Allen's spokeswoman couldn't be reached to comment.

Allen's first 11 acres in South Lake Union reverted to him after voters rejected funding the creation of a large park there called Seattle Commons. Since then, he has steadily bought more properties in the area north of Seattle.

Bill Schwartz, one of the owners of Cucina Cucina and Chandler's Crabhouse, said his leases for the pier space have a lot of years left on them so he doesn't anticipate a redevelopment effort by Allen any time soon.

"My guess is he's interested in buying all the property he can and interested in as much waterfront as he can buy," Schwartz said. "I think he may eventually want to do something (to the properties), but I think it's a real positive."

Schwartz is an owner of Schwartz Brothers Inc., which also runs Daniels (and a variety of other restaurants, including a Cucina Cucina at Allen's Rose Garden basketball arena in Portland.)

"It's good to have Paul Allen as a landlord and to have our three South Lake Union restaurants under one landlord," Schwartz said.

Brothers Enterprises Ltd. bought the Chandler's Cove pier in 1989 for $14.1 million, county property records show. The pier's address is 901 Fairview Ave. North.

Allen also recently bought a small property in Seattle's First Hill area, immediately east of downtown Seattle. Allen paid Image Control Systems Inc. $1.8 million for a 7,200-square-foot lot at 317 Ninth Ave. N., property records show. The parcel is near Harborview Medical Center. Records list the property as residential but identify no building on the land.

Smith buys Lenora Square

A Martin Smith Inc. partnership closed on Lenora Square, a warehouse that has been converted to office space on the north end of the Denny Triangle, near downtown Seattle.

The partnership paid a pension fund guided by Lowe Enterprises $15 million for the seven-story building on Lenora Street at Denny Way, according to King County property records.

The purchase includes a 12,000-square-foot, triangular, surface parking lot across an alley from Lenora Square, said Martin Smith principal Greg Smith. The lot is a good candidate for development into offices, Smith said.

Lenora Square, built in 1928, totals 112,000-square-feet. Thus the price paid equals $134 per square foot.

The building is 85 percent leased by a collection of design-oriented firms at below-market lease rates and an increasing number of technology groups, Smith said. The partnership plans to renovate Lenora Square, which is located on the downtown Seattle fiber-optic loop and therefore likely to be attractive to high-technology tenants, Smith said.

"It fits into our urban technology campus concept," Smith said. "We're just going to continue to run the building in a first-class manner."

Martin Smith partnerships have aggressively bought buildings and redevelopment sites throughout downtown for the past decade. The buying started in downtown's financial district and Pioneer Square area, and extended up the waterfront. The path more recently wandered east to a development site between Interstate 5 and the Paramount Theater and now Lenora Square.

In the past year, Smith has touted the holdings as a collective "urban technology campus."

Lenora Square is also adjacent to the South Lake Union area and a cluster of Paul Allen-owned South Lake Union properties such as the Quinton Instruments building. Smith said Allen's activities are certainly a draw.

"Absolutely," he said. "We think it's a growing neighborhood that appeals to technology types."

Lowe Enterprises didn't own Lenora Square very long. A pension fund advised by Lowe paid a Morris Piha partnership $10.8 million for the building last October. Lowe said then that it planned to renovate and wire up the building to attract tech tenants.

Lowe executive Ric Anderson said his firm had yet to start the work when Martin Smith asked about buying the building. Lowe has enough other projects underway that it was willing to sell Lenora Square, Anderson said.

Joe Nabbefeld can be reached at (206) 622-8272 or by e-mail at joe@djc.com.



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