March 4, 2014

Auto dealers find refuge along Airport Way

Image courtesy of Zimmerray Studios [enlarge]

Miller-Nicholson Inc. is developing dual car dealerships in a single mid-rise building along Airport Way South.

Motorists driving on Interstate 5 near Seattle's Sodo area may have noticed a beacon of blue and white light that appeared last year west of the freeway.

That glow is coming from the new Mercedes-Benz of Seattle dealership along Airport Way South, and now more lights will brighten an adjacent lot at the corner of Airport Way and South Holgate Street.

The new glow will be courtesy of Sodo Partners LLC, which has plans for a development that will combine two competing car dealerships — Honda and Toyota — under one roof.

New cars will be stored in elevated parking decks above showrooms for each dealership. Taking into account surface parking, there will be space for 550 cars on each side. The showrooms will be separated by six drive lanes leading to a 50,000-square-foot service department. The entire project will be 420,000 square feet.

Brad Miller, who leads Sodo Partners through its parent company Miller-Nicholson Inc., said the collocated dealerships in a six-story building will be unique.

“This will be the only one of its kind in the United States, of this scale,” he said.

The building was designed with separate entrances, showrooms and service departments. Miller said there will be common areas, but they will look separate to customers.

Will the mechanics be trained to work on both brands of cars? Nope. Miller said that won't happen because there has to be a complete division between the sales and service operations of the two dealerships.

Miller-Nicholson currently operates Seattle Honda at 1015 Olive Way and Seattle Toyota at 2121 Eighth Ave. Honda has been at the site since 1928 and Toyota has been at its location since 1961.

Miller said Amazon bought the property where the Toyota dealership operates and plans to build a high-rise there. The Honda site was bought by the Washington State Convention Center for a future expansion.

(Editor's note: The buyers of the properties were transposed in an earlier version of this article. Also, the number of spaces for cars in the new location has been updated.)

“We've certainly known that our time was borrowed,” he said.

Miller said car dealers have tight margins and can't afford expensive downtown properties and the corresponding taxes. That has put him on the prowl for a new location for the past decade.

“We finally found what we think is absolutely the perfect property,” he said.

Miller gave three reasons why: easy access to Interstate 5, high visibility, and its proximity to Mercedes-Benz of Seattle.

About two years ago, Miller's company paid about $6.8 million for several parcels that make up the 2.58-acre site. The sellers were Global World LLC, Oberto Associates LP and BNSF Railway Co.

Miller said Toyota requires its dealers to have 8 acres to park inventory, employee cars and customer cars. He said they had to get both Honda and Toyota's approval to use the smaller site and build higher. He said car manufacturers will be watching closely to see how it works out.

Miller said the idea to build up came from necessity. “We either needed to figure out a solution we could afford or we were going out of business,” he said.

Miller could only name one other U.S. car dealership in a tall building: Mercedes-Benz of Manhattan in New York. He said that facility is four or five stories and about 330,000 square feet, but is not a dual-dealership like the one he is building.

Miller said car manufacturers want dealers that are fully committed to their franchises and are somewhat concerned about a lack of focus with a dual dealership. He said they assured Honda and Toyota that there would be exclusive management, sales and displays at each store.

Jobs will be created after the new location opens in February 2015. Miller said they employ about 180 at the two existing locations, and that should grow to 250 after the new location has been operating for 12 to 18 months.

The construction cost of the Airport Way project is about $30 million.

Miller said they had to install 418 piles because the site is on reclaimed land. The concrete piles are 18 inches in diameter and go down 50 to 95 feet. Driving the piles required one of the largest drilling rigs in the state, according to Miller.

General contractor Foushee and Associates recently poured the building's first slab-on-grade and will spend a few more months making additional concrete pours.

Zimmerray Studios is the architect and Falkin Associates is the owner's representative/development manager.

Bob Zimmer of Zimmerray said the project is designed to LEED gold standards.

Mercedes is not done with its development along Airport Way. It has filed plans with the city to build a 75,000-square-foot, three-level parking garage for 306 cars at 2015 Airport Way S., between the new Mercedes showroom and Miller's project. The permit value is $4 million.

A representative for the Mercedes project didn't return phone calls.

When asked if he knew of any other car dealers considering a move to Airport Way, Miller said the only car dealers left in the downtown area are Ferrari and Maserati, both at 1401 12th Ave. near Seattle University. He said the rest have long since closed their doors because of the expense and inefficiencies of operating downtown.