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Nat Levy
Real Estate Reporter

October 9, 2014

Real Estate Buzz -- For sale: about half of Yesler Terrace

By NAT LEVY
Real Estate Reporter

Seattle Housing Authority is selling three parcels of the land within Yesler Terrace to private developers to finance the replacement and expansion of low income housing in the neighborhood.

The land totals about 14 acres and is split into three pieces: one for office and retail development, one for housing, and one piece along Yesler near Broadway where Vulcan plans to build housing in structures up to 240 feet tall.

About half of the 30-acre Yesler Terrace site will be sold.

“It's fundamental to the kind of community we want to build to have the full mix (of incomes), and we also rely on sale of land to fund the building of the infrastructure, amenities and affordable housing,” said Stephanie Van Dyke, SHA's development director. “Other sources are not sufficient to fund all the affordable housing.”

Image courtesy SHA and GGLO [enlarge]
Kidder Mathews is marketing about 4.4 acres of land along the north edge of Yesler Terrace where future office buildings like these could be built.

A study done two years ago suggested SHA will need to get about $145 million from land sales to fund all the housing, infrastructure and other projects it wants to do at Yesler Terrace, Van Dyke said, though the amount needed could change due to the cost of construction, infrastructure projects and design changes.

Van Dyke said SHA doesn't have a timeline for selling the land.

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. King County's area median income is $61,800 for an individual and $70,600 for a two-person household.

The first 15 replacement units are done 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 is also in the middle of a $12 million infrastructure project that includes improvements to Yesler Way, a hillclimb, sewer work and grading the site of a future neighborhood park.

Private developers are also at work. 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.

Next up for SHA is approximately 100 apartments at 221 10th Ave. S., and Van Dyke said construction will begin next year. SMR Architects is designing it, and Andersen Construction is the general contractor. That building is scheduled to open in early 2017. Once it is done, SHA will have replaced about 40 percent of the original 561 units.

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.

Van Dyke said the final composition of the neighborhood will depend a lot on what private developers do.

Currently SHA is negotiating with Vulcan Real Estate for about three acres along Yesler Way near Broadway. Originally Vulcan was going to be the master development partner for Yesler Terrace, but during negotiations, SHA and Vulcan decided it would be best for SHA to be master developer. When negotiations are completed, Vulcan could buy the land and build market-rate and workforce apartments on three blocks. Those buildings could be up to 240 feet tall and would be set back from the street, according to design guidelines for 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.

Rosauer said there is interest from a variety of groups: local and national developers; tech companies from here and California; and health care companies.

“We are getting broad interest from all different avenues,” Rosauer said. “There is a number of ways it could go at this point.”

Rosauer said a call for offers could be coming soon.

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.

Van Dyke said towers on this property could be as high as 160 feet in some places and 240 feet in others.

SHA wants to see a mix of mid- and high-rise buildings on this land to accommodate a mix of household incomes, which is the agency's goal for Yesler Terrace. SHA wants low income, affordable and market-rate units as well as office space to be intermingled with parks and other amenities throughout the neighborhood.

“We're trying to move from having what were isolated concentrations of poverty — which is what happened with past public housing projects — to neighborhoods where people have the opportunity to stay in the neighborhood as their income rises,” Van Dyke said.



Seco picks team for Southport hotel

Image courtesy of MulvannyG2 Architecture [enlarge]
Seco Development broke ground last week on this 12-story hotel, part of a 17.5-acre development called Southport.

Seco Development just broke ground on a 12-story, 350-room hotel in Renton. It's not far from the Seattle Seahawks' practice facility, and the height is an homage to the 12th Man fanbase.

The $180 million hotel is set to open in 2017, said Michael Christ of Seco Development.

MulvannyG2 Architecture is designing the hotel, and Sellen Construction Co. is the general contractor. Other team members are Coughlin Porter Lundeen, Berger Partnership and WSP Group.

The hotel is part of the larger Southport complex, a 17.5-acre site on Lake Washington that used to be home to a steam plant.

Christ said the steady improvement of the economy and a new flow of capital into the Seattle market triggered the start of the hotel. Seco is working with Seattle Family Regional Center, a federally approved EB-5 center, on the project. The EB-5 program allows foreign investors to get green cards and a path to citizenship if they invest $500,000 or $1 million in a qualifying project.

“It's the perfect time in the economy where people want to get money out in the market, and they are willing to indulge the designers to do something better,” Christ said.

Seco has already finished 383 apartments at Southport.

The next step for Southport is an office project. Christ said ZGF Architects is updating plans for three buildings totaling 778,000 square feet.

Shortly after buying the land in 1999, Seco was close to landing Amazon.com for a 750,000-square-foot lease, but the deal fell through. Since then, Christ said three major companies have taken hard looks at the space but still no bites.

Christ said he is confident the office market is trending upward, and that his site on the shores of Lake Washington and close to Interstate 405 is a great location. He would not say if he'll start construction without a tenant.

“I think it depends on the marketplace,” Christ said. Back when he bought the land, the market would have supported spec development. “It is unlikely now, but that could change really, really quickly.”

Got some news for the Buzz? You can reach Nat at nat.levy@djc.com.


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