December 14, 2006
Couple builds a legacy in the U District
By TERRY STEPHENS
Special to the Journal
Billed by its developers as the largest single project ever built on University Avenue in Seattle’s University District, the $22 million Lothlorien Apartments will provide a mix of residential, office and retail space when it opens next fall.
Since “the Ave” is comprised of so many small land parcels in the retail blocks west of the University of Washington, being able to erect a five-story, 160,000-square-foot structure there could only happen with the right set of circumstances. That’s what Seattle attorney and developer Tom Ferguson and his wife, Kristen, provided.
“We’re one of the major landowners in the district, particularly on University Way. The fact that we already owned 3.5 lots in that area made an otherwise difficult project possible. So when we had an opportunity to buy the other two lots we did. Leveraging that land we already owned as part of the project might be terrible economics to make the project feasible but it’s not bad sociology,” he said, adding that he felt the U District needed that type of development and his close ties to the community encouraged him to pursue it.
Born in Seattle and raised on Mercer Island, Ferguson earned his undergraduate and law degrees at the University of Washington and practices law in Seattle.
Matching the UW
“The Ave is the centerpiece of the University District and the district’s raison d’etre is the University of Washington. Our Seattle architect, Roger Newell, agreed the building’s design should logically match the style of ‘the Ave’ but also incorporate a facade relevant to campus architecture. So it was designed with a classic stone and brick exterior that we think will not only preserve but improve the look and feel of the University District,” Ferguson said.
All the more important, Lothlorien is being built adjacent to Ferguson’s Wilsonian, a classic brick structure he bought in 1975. It’s since been listed as a historic landmark. Similar to Lothlorien in purpose, the Wilsonian has 100 apartment units, plus retail and office space.
Designing Lothlorien with five stories 9,500 square feet of street-level retail, 9,500 square feet of second-floor offices and apartments on the top three floors satisfied Ferguson’s recognition that single-story retail is not the highest and best use for the property.
“It made more sense to us to provide higher density use there,” he said, adding that Seattle’s mayor and City Council favored that type of development, too, because it provides higher density use of land already in an urban setting. Lothlorien also will have two levels of below-grade parking, solving another problem that’s a hurdle for new developments in the U District.
A mix of tenants
Ferguson originally thought the university might be interested in office space in Lothlorien because of its proximity to the campus, but after it bought the former Safeco Tower he supposes “that’s not going to happen.”
Tenants he does expect, however, will probably include service businesses, particularly companies that want to be close to the university. On the retail side, he’s looking at clothing stores, perhaps one that caters to a range of shoppers from college students to professional women.
“Restaurants, too, are always possible on the Ave, so long as they’re good ones,” he said.
As for the apartments, they’re not meant for undergraduate students but more for junior faculty at the university, people working at Safeco or Microsoft or graduate students in professional fields working on their degrees, he said.
Several buildings on the site were razed to make way for the development but it’s still a challenge for Charter Construction since work has to be done between other buildings and busy thoroughfares. Charter has been on the job since June and is expected to finish by the fall of 2007.
The Wilsonian’s ballroom also had to be demolished, but its fixtures and items such as leaded glass will be reused at the Lothlorien. The project will use complex engineering methods for the compact jobsite, including underpinning adjacent buildings to strengthen their foundations.
“The brick and stone front cost more than other options, but it’s aesthetically in keeping with campus-related architecture. Probably a lot of developers wouldn’t do that but we just have our family involved in this and it’s important to us,” said Ferguson. He said he and his wife, Kristen, and his former wife, Sheri, are the owners of Ferguson Property Management, which is run by Kristen.
“Also, with our family ownership, we can take a really long view of this development, which will someday be owned by our kids and grandkids,” he said.
“I think the Lothlorien will fit in perfectly with what the market along University Way wants and needs. It’s a good mixed-use project,” said Tim Foster of Colliers International, one of the agents marketing the office space. Retail space is being marketed by Wallace Properties of Bellevue.
Teresa Lord Hugel, executive director of the Greater University Chamber of Commerce, watches the construction progress from her office in the Wilsonian, through a window that eventually will be covered by the new building.
“I love it, it’s going to be such a great addition to the University District,” she said, adding that she expects the Fergusons will be developing a highly attractive addition to the Ave, judging by their past involvement in area projects.
Financing is locked in
“Another thing that helped us with the financing was getting a really good fixed-rate loan from Principal Financial Group in Des Moines, Iowa, for both the construction and the long-term financing,” Ferguson said. “That type of financing is a pretty rare animal these days but it took the interest rate swing out of the picture before breaking ground. When you’re a family development, you worry about that kind of risk and it was a great help to be able to work that out.”
A small part of the financing for the project will come from a $1.5 million property tax break granted recently by the Seattle City Council to encourage bringing more affordable housing into the market. Ferguson will provide affordable rents in 30 percent of the apartments, with prices ranging from $914 to $1,112 a month. In this development, affordable housing means rent for people making 70 percent of Seattle’s median income level, which is higher that many other areas in Puget Sound.
Ferguson said his family venture has developed, re-developed, owned and partly owned about 20 properties in Seattle since he bought the Wilsonian in 1975. He sold a 56-unit apartment in West Seattle and a corporate headquarters and manufacturing facility in Georgetown, along with another property, to invest in Lothlorien.
Today he and his family own Lothlorien, the Wilsonian and Rivendell, a 25-unit apartment building he built in 1999, all in the University District, and a three-story office building in the Eastlake neighborhood.
Terry Stephens is a freelance writer based in Arlington. He can be reached by e-mail at email@example.com.
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