December 9, 2004
By BARBARA TRAVERS
Firm: Nitze-Stagen & Co.
From the east-facing office window in his centerpiece property, Starbucks Center, Seattle developer Frank Stagen can see the future.
Others may see the "Yummy, Yummy" sign atop a vegetarian restaurant and the string of storefronts across the street bordering First Avenue South, but not Stagen. He sees a bustling monorail station and snazzy new Starbucks. He sees an axis of energy where there is none. He sees progress.
Fifteen years ago, when he and partner Peter Nitze bought the shabby Sears warehouse south of downtown Seattle (aka SoDo, as in South of the Dome), people thought we were crazy, said Stagen, who is CEO of Nitze-Stagen & Co.
Originally planned as a retail center and multi-level storage facility, the 2 million-square-foot, 17-acre complex is recognized nationally as a one-of-a-kind redevelopment combining historical preservation and modern technology. It is the largest multi-tenanted building west of the Mississippi, with retail, office, warehousing, manufacturing and distribution operations. It serves as world headquarters for Starbucks, and it also has the oldest continuously operated Sears store in the world.
Whether the building's steadfast stamina comes from its caffeine infusion or its commerce heritage, it's clear Stagen saw its potential. "We got lucky," said Stagen, as he smiled down at the full parking lot below.
Born in Los Angeles, Stagen did the trans-continental shuffle for 20 years after graduating from UCLA law school. His parents had a small residential real estate management firm and, armed with a broker's license at 18, he knew real estate was his game.
First stop was New York. After "knocking on many doors," a letter-of-introduction landed him an interview with N.Y. real estate mogul Harry Helmsley.
Helmsley, who was once one of the biggest property holders in the United States, made a deal with Stagen.
"He offered me $50 a week to be his half-time assistant," Stagen said. "The other half I leased space in the garment district." He was off and running and immediately upgraded to a shared one-bedroom, walk-up apartment in the Bowery, shelling out $48 a month in rent.
Back in California after his invaluable Manhattan tutelage, Stagen headed up the real estate operations of National General Corp. and Sunset International Petroleum.
A call from Wall Street brought him back to New York to a partnership at White Weld & Co., underwriting mergers and acquisitions for the investment banking firm. It was there that Stagen met Peter Nitze and the two joined forces.
Forming Nitze-Stagen & Co. in 1970, they raised money from a "host of characters" and devised their business formula: Half of the firm's money is invested in securities and venture capital and is handled by Nitze in New York; the other half is invested in real estate and handled by Stagen in Seattle.
Never to shy away from challenges, the company set its sights on the potentials of overlooked and dormant properties. In 1997, in a joint venture with Vulcan Northwest, Nitze-Stagen acquired Seattle's deteriorated, albeit it historic, Union Station.
Deserted after the last train pulled out in 1971, there were several failed attempts over the years by other developers to restore Union Station. Stagen successfully navigated a unique and innovative public-private partnership with Sound Transit, the regional transit authority, to redevelop the property. He was the overseer of the station's striking restoration, including the installation of the red clay roof by the building's original supplier (first commissioned in 1911).
The building's resurrection proved to be a catalyst for further development, breathing economic life into Seattle's oldest neighborhood and creating a thriving transportation hub and an adjacent two-block urban cluster of high-tech and office space.
Stagen subscribes to the live-work-play triad of urban living and continues to seek out projects in and near downtown. Increasing urban density is his focus; for example, his Pioneer Square Merrill Place complex mixes retail, an upscale restaurant, office space and condominiums.
His dictum is, "If you build it differently they will still come."
"We have an upside-down paradigm here," he said. "Downtown Seattle is not attracting employers of significant size. Used to be you'd build the building and employment would follow. Now we need to establish an employee base by supplying adequate and affordable housing that will attract a skilled workforce that will attract employers."
Aware that some may consider him quixotic, his intrepid determination has led him to "Vision 46." Developed with the Justin Co. and Gregory Broderick Smith Real Estate, Vision 46 is an urban master redevelopment plan for 89 acres of Port of Seattle-owned waterfront property.
Stagen said the redevelopment of Terminals 37 and 48 would be a giant stride in south downtown economic growth. The plan includes constructing residential and office space, a park, hotel, retail and entertainment venues, and a stadium. But, he said there are political hurdles with such a bold and elaborate proposal.
Patience and persistence seem to pay off for Stagen. That letter-of-introduction to Harry Helmsley took three weeks to get written by his benefactor, a lifetime for a young man in pursuit of his first break into business.
"I waited and waited and waited for that letter," Stagen said.
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