August 23, 2010

Seattle University is turning to private partners for new dorms

Image courtesy Hewitt Architects [enlarge]

The Douglas is a $25 million, 145,000-square-foot building at 12th Avenue and Cherry Street. The Seneca Group is managing the project for a private ownership entity.

The first new dorm built on the Seattle University campus since 1990 is under construction, thanks to a partnership a private developer, The Seneca Group.

The university recently issued a request for qualifications to build another dorm using a similar process.

Under the process, Seattle University enters into a ground lease with a separate party and continues to own the land. The party builds the project, taking on all risk, maintenance and profits while renting the housing to students. Eventually, the building is turned back to the school.

The school is turning to such partnerships so it can keep growing despite the downturn.

Ron Smith, the school's vice president for finance and business affairs, said Seattle University likes to build its own dorms and get the revenue, but it is working on a number of other big projects, such as upgrading the A.A. Lemieux Library, and couldn't afford to take on more debt, even though it needs housing.

“If we had all the money in the world, we'd like to do it ourselves,” he said. “If we can pay for it ourselves, we probably will in the future. But we're just growing so fast we need to keep up and be able to provide housing for our students, and this is one way to meet that need immediately.”

Smith said Seattle University lost about $50 million from its $216 million endowment between 2008 and 2009. In the last year, the school has spent $91 million on major capital projects.

The first dorm to be built via a ground lease is a $25 million, 145,000-square-foot building called the Douglas, at 12th Avenue and Cherry Street. The Seneca Group is the development manager for a private ownership entity. The dorm was designed by Hewitt Architects and is being built by Walsh Construction Co.

The Douglas will have 256 beds in 81 units and 9,000 square feet of retail space. There will be studios and apartments with one, two, three and four bedrooms. The first floor will have laundry space, a conference room, a media room, kitchens and a game room.

After 75 years, Seattle University will own the dorm, which is slated to open in the fall of 2011.

Amy Worthington, a partner with Seneca, said ground leases are not uncommon but are somewhat unusual for a university. She called it a good investment for the owners because demand for student housing far exceeds supply.

Sari Graven, interim head of facilities, said Seattle University has traditionally provided on-campus housing for freshman and sophomores but now has more students than it can house. The school's 1,900 beds are enough for 40 percent of its students. The goal is to be able to house 60 percent.

“We've got a plan, we've got growth,” she said. “Our freshman class is growing, our programs are growing and we're taking action on it.”

Seattle University now is looking for developers, investors, architects, contractors and consultants for a second mixed-use dorm using a ground lease. Qualifications are due by noon Sept. 1.

The residence hall will be at 12th Avenue and East Spring Street, on school land now used for parking. Retail and parking will be included, and the building may house a student bookstore and space for events.

The school may choose a single team or assemble a group from different firms who respond to the RFQ.

Graven said there seems to be a lot of interest from developers in creating apartments or multi-family housing, especially for schools because they come with built-in customers.

“It's a pretty attractive investment opportunity,” she said. “Everybody's happy because we've also been able to expand our housing.”

The school expects to have a development partnership for the dorm at 12th and Spring by the end of this year. Programming and design would begin in early 2011, with the dorm opening in 2014.

There is a 65-foot height limit for the area, but the school is going through a major institutional master plan process and that could raise the height limit to 105 feet. The university has not yet determined the project height or size.

Green features will be included. Seattle University has a LEED gold minimum for all campus buildings.

The Douglas will have a rainwater detention system, energy-efficient light fixtures and low-flow plumbing fixtures.

Graven said the 12th and Spring dorm will be near the school's famed Saint Ignatius Chapel, so the architecture, site lines and massing will get a lot of scrutiny.

Smith said many U.S. colleges and universities have chosen private development for housing. The theory is that it is better to let the private sector take the risks if they can make a return.

Some large developers have agreements with universities to build all their housing, she said. “Whether it turns into a trend, I think that will be something to watch.”

For more information on the RFQ, see the public notice in the Aug. 3 DJC.