October 14, 2014

Vulcan agrees to pay $22M for three blocks in Yesler Terrace

Image courtesy of GGLO [enlarge]

Vulcan Real Estate wants to buy the sites shown in gold. The blue sites are office and retail properties now being marketed by Kidder Mathews. Sites in red are being developed by SHA. The purple site is Spectrum Development Solutions’ Anthem on 12th.

Vulcan Real Estate has agreed to buy three blocks within Yesler Terrace from Seattle Housing Authority for $22 million.

The property totals 3.7 acres and is along East Yesler Way between Broadway and Boren Avenue.

Vulcan wants to build 650 market-rate and “workforce” apartments. Workforce units will be reserved for people making up to 80 percent of area median income.

Vulcan expects to spend about $200 million developing the three-block site.

Construction on the first block — at Yesler Way and Broadway — could begin in early 2016, with the units opening by the end of 2017.

The agreement is structured so the sale of each block will have a separate closing date, one a year between 2015 and 2017.

Lori Mason Curran, Vulcan's real estate investment strategy director, said the blocks will be developed one at a time. The second block is likely to start in early 2017, about a year after the first one. Development of the third block would start in 2018.

The buildings will likely be mid-rise, up to 70 feet tall. Zoning allows towers up to 240 feet, but Mason Curran said Vulcan opted for shorter buildings because they better fit the neighborhood scale and Vulcan's vision.

All three blocks will target LEED gold certification and have ground floor retail.

Vulcan will do infrastructure and street improvements nearby.

Vulcan and SHA have been negotiating this agreement for several months. Originally Vulcan was going to be the master development partner for Yesler Terrace, but later SHA and Vulcan decided it would be best for SHA to be master developer.

SHA will use proceeds from property sales to replace low income housing at Yesler Terrace, construct new housing and upgrade infrastructure. SHA will replace 561 aging housing units, which are reserved for people making less than 30 percent of area median income. In addition to those units, the agency plans to build 290 apartments for people making between 30 and 60 percent of area median income, and 850 units for people making less than 80 percent of area median income.

SHA is selling about 14 of the 30 acres in Yesler Terrace for private development. A study done two years ago suggested SHA will need to get about $145 million from land sales to fund housing, infrastructure and other projects at Yesler Terrace.

Stan Snow, Timothy Foster, Jason Rosauer and Rob Anderson of Kidder Mathews are marketing 4.41 acres of land along Alder Street near Broadway, where about 900,000 square feet of office space and 100,000 square feet of retail could be built in two towers up to 300 feet tall.

SHA is looking for a residential broker to handle the final land sale: a total of about 6.5 acres that is earmarked for market-rate housing. Submissions from brokers are due Oct. 21.

Towers on this property could be as high as 160 feet in some places and 240 feet in others.

Eventually Yesler Terrace could have as many as 5,000 housing units, 900,000 square feet of office space, and 153,000 square feet of retail and community space. That could take 20 years and cost as much as $2 billion.

SHA has finished the first 15 replacement units with the renovation of Baldwin Apartments at 124 13th Ave. Units in the Baldwin are open and fully leased.

Two other SHA buildings are under construction: 103 units at 1105 E. Fir St. and 83 units at 820 Yesler Way. SHA wants to begin construction next year on about 100 apartments at 221 10th Ave. S.

Spectrum Development Solutions is constructing Anthem on 12th, a 120-unit project that's the first private development at Yesler Terrace. For the first 15 years, 20 percent of units in Anthem will be reserved for people making less than half of area median income, and another five percent will be reserved for people making less than 80 percent. For five years after that, 25 percent of the units will be rented to people making less than 80 percent of area median income.

This is one of three projects Spectrum is planning near Yesler Terrace.