October 23, 1998

CB forecast will feature Sam Zell

  • Real Estate Notes

    • By MARC STILES
    Journal Real Estate Editor

    Sam Zell's interest in the Puget Sound region is growing so much that he's returning to Seattle to keynote the CB Richard Ellis Forecast Breakfast Jan. 26.

    "I will give all of the credit and a sincere thank you to Jon Runstad who contacted Sam Zell," said Ann Chamberlin, CB's managing director and regional operations officer. Runstad is chairman and CEO of Seattle's Wright Runstad. Equity made a big splash in the Northwest last year when it acquired eight Wright Runstad office properties for $610 million.

    Zell heads Chicago-based Equity Office Property, the nation's largest real estate investment trust with global designs. The Wright Runstad deal cleared the way for Equity to snatch up nearly a fifth of Bellevue's downtown offices and become the largest commercial land owner in downtown Seattle. Then there are the 12,000 Seattle-area apartment units that Zell's Equity Residential Properties Trust owns.

    Despite recent hits to Equity's stock price, Zell, who last week gave the keynote to the National Association of Broadcasters in Seattle, appears poised to continue expanding his empire. He probably won't shed his reputation as The Grave Dancer anytime soon.

    Naturally, it takes months for even the most powerful to get Zell on their schedules, but thanks to the Wright Runstad connection, CB had to change the date of the 24th annual forecast by only a few days.

    The breakfast at the Sheraton Seattle Hotel and Towers is by invitation; don't expect many tickets to go unused.

    And speaking of Wright Runstad... Turner Construction on Wednesday topped out the six-story World Trade Center East office building that Wright Runstad developed for $31 million. Equity has agreed to buy the building for $38.5 million when all 69,000 square feet are occupied, which according to Wright Runstad, should be around March. Seattle software company Visio has taken the office space and plans to move in Feb. 12. Wright Runstad spokeswoman Lois Pendleton said all that remains to be leased is a small retail space on the ground floor, off the rotunda.

    In the last three months, Turner has poured 192,000 square feet of concrete and celebrated structural completion by having the construction team sign a banner that was encapsulated in a PVC tube hoisted to the top floor and buried in the final pour.

    Wright Runstad officials hailed Turner's efficiency. Tenant-improvement work started on the lower floors before the shell-and-core work was finished. Dry wall work starts next week and the carpet will go down in November, Pendleton said.

    The World Trade Center complex, a public-private partnership between the Port of Seattle and Wright Runstad, won't stop at two buildings. The port's four-story west building opened last month, and Pendleton said work on the north building -- to be constructed just north of Wall Street between Elliott Avenue and Alaskan Way -- could start at the end of the year. The port will own a 350-space, three-level parking garage at the base. Pendleton said she does not know if Wright Runstad will sell the five-story, 134,000-square-foot building to Equity.

    In the same neighborhood... Development of the World Trade Center buildings are helping fuel a construction boom along the waterfront. Now Koehler McFadyen confirms it intends to raze two buildings on its development site in the next few weeks and a third structure, which is occupied by a glass recycling company, when that lease expires in January. Actual construction on the project -- a three-building, 302,000-square-foot office development called 401 Elliott -- won't start until at least 40 percent of the space is preleased.

    Where will all the workers live?... More office space in the Belltown and waterfront neighborhoods means more housing will be needed nearby. Developer T. Jones Inc. is laying the groundwork to fill that need beyond what the Canadian firm already has on the table. There is the 224-unit Concord Condominiums under construction in Belltown and the renovated Elektra, a 16-story, 200-unit First Hill condo conversion. East of the Elektra is the firm's next project: Terry Avenue Condominiums, a 160-unit development that could reach 240 feet.

    The company's Seattle team, composed of folks who have worked on about a dozen high-rise residential towers in Trevor Jones' hometown of Vancouver, B.C., is working with First Hill community groups. And the company is under contract for land at Third and Virginia where another high-rise is being considered.

    "We've got a couple pending projects," said marketing director Dean Jones. It's premature to discuss them specifically but, Jones said, "Everything we are looking at is in downtown."

    The company is applying to Seattle what it learned in Vancouver: "The only reason you go up is because you can't go out."