November 18, 1993

DOWNTOWN CONDO ONE PACIFIC TOWER TESTS LUXURY CONDO MARKET

BY MAUDE SCOTT

Journal real estate editor

Last February it looked as though the $50 million luxury highrise project Travis Hammond had been planning since 1990 would never be built, despite his having presold 50 of the 75 units, secured permits and lined up financing with a Hong Kong development company.

In search of help, Hammond called his friend Basil Vyzis, an Eastside developer who controls four million square feet of office, industrial and retail property. Vyzis says he listened to his friend for awhile and then ``I said `Aw Travis, come on over.'''

Vyzis ``ran it past his lenders'' who liked what they saw. So did Vyzis who up until then had not been interested in getting involved in the project.

His feelings changed for two reasons: he was impressed by the commitment and profiles of those who had signed purchase agreements for units and he says the market for luxury housing in the area around the Pike Place Market is ``set to explode.''

Hammond moved into an office in Vyzis Company's headquarters at Factoria, the two set up a partnership and three weeks ago they closed a deal to buy the site at the northeast corner of First and Virginia.

``Now we're all baptized into one unit and Vyzis Company is leading the charge,'' said Vyzis.

What Hammond lacked and what Vyzis has is an organization. ``Development doesn't work the way it did in the 1980s when there was a lot of credit from banks and Japanese investors,'' Vyzis said. ``In the 90s you need an organization and credit to build. That's what lenders require.''

All the elements of Hammond's plan have been retained, including the design by Curtis Beattie, and financing commitments from South Seas Development Company, Ltd., whose executive Paul Hartsock commutes monthly between Hong Kong and Seattle.

One Pacific Tower marks two important moves for Vyzis: his entry into both the downtown Seattle market and the residential market. Though he says he doesn't know yet how far he'll go in these new directions, he is looking at other high end residential projects in downtown Seattle, Bellevue and Kirkland which total 500 units.

Sophisticated market

Hammond conceived of the idea for One Pacific Tower project because he saw three years ago that, ``Seattle had gotten sophisticated.'' The market for highend, highrise units has grown but there has been no new supply since First Hill Plaza was built in the 1980s.

Presales have gone very well for the units which range in price from $300,000 to $3 million. The most expensive units are already taken, mostly by what the partners call local ``people of note'' as well as buyers from Hawaii, Hong Kong, California and Japan. ``There is more demand for this than what we can sell,'' Hammond said.

``The market for downtown housing is substantially more upscale than people think it is,'' Vyzis said. ``It is not a middle class market.''

Vyzis Residential Properties has an option on the quarter block east of the site and plans to build a similarly-sized second phase with timing dependent on the success of the first phase.

Vyzis and Hammond are confident there will be plenty of takers for their project and say they have already made enough presales to cover their construction loan.

Units in surrounding residential buildings have been purchased by the same type of rich empty nesters, executives and foreign business people One Pacific Tower has attracted and the two men think some of those people who are already living nearby will decide to move over to One Pacific when the project starts construction next January.

The buyers in One Pacific have done much of the marketing themselves, telling friends and relatives about the project. ``These are very emotional people,'' Vyzis said. ``They are committed to the urban lifestyle. They don't just own a unit.''

Unlike Cosmos Development's Seattle Heights project which has some very high priced units as well as studios, One Pacific Tower is strictly high end, with no more than three units on each level and floor to ceiling windows to take advantage of views out over the market and Elliott Bay.

``This is designed for a very specific audience,'' Vyzis said. ``We're building a Ferrari. (Cosmos) is building a Chevy Impala. We're not forging new ground. We're simply putting in the best building.''

Sizes of the units will range from 1,000 to 2,000 square feet, though the penthouse is 5,000 square feet.

Vyzis is negotiating with an upscale local restaurant to occupy some of the 11,000 square feet of retail space on the ground floor and said he will also have some ``very good stores.''

The developers are putting 110 public parking stalls in the garage as a goodwill gesture to the neighborhood businesses who say they'll badly miss the popular parking lot on the site today. Easy parking will also make it easier for condo owners to have guests.

5,000 new households

Vyzis said for the region to comply with the Growth Management Act developers must build $40-$50 million worth of urban housing every year for the next 20 years, adding 5,000 new units in the Regrade, Queen Anne and Capitol Hill.

``The system wants to generate substantial urban neighborhoods and this is the only true urban neighborhood we have,'' Vyzis said. ``Bellevue has employment numbers but it doesn't have the residential base. It will be the next urban center but (residential development in Bellevue) will take eight to 10 years.''

Vyzis said the developers who will be building this urban housing will be like him -- those with large organizations, good credit and track records.

Though he doesn't lack confidence, Vyzis admits this venture is something entirely new for him and his success is not assured.

``This is not like going out to Issaquah and grading 20 acres. This is substantially more complicated. It takes a lot of people to get something like this off the ground.''

One Pacific Tower is a joint venture of Vyzis Residential Properties, South Seas Development and Hammond Pacific. The contractor, PCL Construction Services, expects to complete the building in 15 months.