April 28, 2000

A Provident deal for Martin Smith

Martin Smith Inc. has struck again.

Downtown Seattle's most aggressive building buyer of the past two years plans to close Monday on a 60,000-square-foot furniture warehouse west of the Kingdome and promptly convert it into high-tech offices.

Purchase of the Provident Building strengthens Martin Smith's dominance in the hot district south of Pioneer Square and west of the dome.

The downtown-based developer already has a tenant signed for all of the space: a start-up online education firm called Acadio Corp., according to Martin Smith principal Jeff Roush.

Buying the Provident Building would increase Martin Smith's dominance in the transitioning stretch of warehouses south of Pioneer Square and west of the dome, which could be nicknamed "Wedo" after "Sodo," the area south of the dome.

The property straddling First Avenue South has long been primarily industrial. Yet, ever since the economic boom took off in the second half of the 1990s, pressure has mounted for office uses to push in.

Within two blocks of the Provident, Martin Smith partnerships already control:

• The 7-plus-acre Wosca site on which Martin Smith proposes to build 1 million square feet of mixed uses to anchor what Martin Smith calls its "urban high-tech campus." The Wosca proposal has various hurdles to cross, among them changing the zoning to allow other than industrial use.
• The 200,000-square-foot 83 King Street office building, which is under renovation and leased to the NBBJ architecture firm, Loudeye Technologies Inc. and other tenants;
• The adjacent 505 First Ave., where Martin Smith has applied for development permits to build 180,000 square feet of offices.

The partnerships consist of Martin Smith principals and various large investors, some local, some national and international.

Roush said Martin Smith continues to look for more properties to buy in that area, as well as throughout downtown.

A Martin Smith-led partnership will pay furniture company owner Jonathan Loop $3.8 million for the Provident Building, located at 568 First Ave. South, Roush said.

The partnership will spend an estimated $7 million to convert the six-story, red-brick building into Acadio's offices. The work includes converting the basement into 17 parking spaces and creating 10,000-square-feet of first-floor retail space.

Although this will shift the Provident from industrial to office, a zoning change isn't required, Roush said. The Provident is on a segment of the east side of First Avenue for which the zoning already allows such a use, Roush said.

Martin Smith applied for a city master use permit months ago. Roush said he expects to receive that and other permits in time to start construction in May and finish in November. Acadio, which signed the lease last week, would move into the Provident in December.

The project needs change-of-use approval from the Pioneer Square Preservation Board. The board will discuss Martin Smith's application on May 3. The discussion is scheduled for 9:20 a.m. in Room 1003 of the Arctic Building, 700 Third Ave.

The application is by Martin Smith's development arm, Martin Smith Development Services.

PROJECT TEAM Developer Martin Smith Development Corp. Architect Otak Inc. Structural engineer Perbix/Bykonen General contractor Foushee & Associates Mechanical engineer Merit Mechanical Inc. Financing Intervest Mortgage Investment Co. Proposed construction start May 2000 Finish November 2000

After the board discusses the Provident, it's scheduled to hear about, but not vote on, Martin Smith's application to build its proposed 505 First Ave. office building. The 505 First Ave. project involves razing two one-story structures: a parking garage and the Duncan & Sons Building.

Acadio, the Provident's future tenant, is flush with $30 million in fresh capital from second-round private funding that closed Monday. Acadio plans to use the money to rapidly grow its business of providing online courses for businesses and professionals.

Steven Sperry formed Acadio last June and serves as its CEO. Sperry previously founded and took public Primus Knowledge Solutions in Seattle. Primus makes customer support software.

As of February, Acadio employed 75 people. The company now occupies about 10,000 square feet in Pioneer Square.

Backers of Acadio's recent $30 million capital infusion included Trans Cosmos USA, The Phoenix Partners and BancShares Capital, which is a subsidiary of the Everett banking company EverTrust Financial Group. Sperry put up $5 million of the capital.

Acadio's first round of financing brought in $3 million last fall, of which Trans Cosmos put in $1 million.

Martin Smith's numerous other downtown Seattle projects include developing the 22-story Millennium Tower under construction north of Pioneer Square and redeveloping Piers 55 and 56.

A Martin Smith partnership started then sold the proposed 40-story IDX Tower, which the Hines development company expects to start constructing later this year.