July 26, 2007

Seattle’s urban boundaries push outward

Neighborhoods that ring downtown could transform into campus-style layouts with low- and mid-rise buildings.

By BRUCE M. BLUME
The Blume Co.

Seattle’s commercial real estate development community had a jaw-dropping moment last month when Clise Properties announced plans to sell 12 contiguous acres in the Denny Triangle neighborhood.

Word spread quickly, and not just locally. A story about the sale made the front page of The Wall Street Journal’s Marketplace section. This type of coverage is not wholly unexpected when you consider that this offering represents perhaps the nation’s largest land sale in a major metropolitan market.

The Clise announcement demonstrates what Seattle’s development community has known all along: Seattle’s urban core is spreading outward. Just days before the big announcement, the Downtown Seattle Association issued a similar statement in its annual report, commenting on how downtown “has transcended its traditional boundaries.”

But in which direction is Seattle growing?

South of downtown, Nitze-Stagen & Co. and Opus Northwest are moving forward with a long-awaited, mixed-use development that will expand Pioneer Square’s residential neighborhood into nearly four acres of Qwest Field’s north lot.

East of downtown, on First Hill, Opus recently completed M Street, a medical services complex with retail and apartments. Opus’ 7th & Madison, a nine-story office building with 204,000 square feet, is also on the rise. These projects are the first large examples of downtown reaching east of Interstate 5.

The loudest buzz, of course, is north of downtown, thanks to Clise Properties’ blockbuster announcement. Due to the city’s recent upzone for high-rise development, the Clise parcel can accommodate more than 10 million square feet of new buildings. The build-out likely will exceed $7 billion in public and private investment.

GMA at work

What does all this mean? The obvious answer is that the state Growth Management Act is working as intended and combating sprawl. As downtown becomes denser, developers must look farther outside the urban core. The good news is that they’re not looking too far afield.

What’s not quite as obvious is the type of development we will see in the coming decades in the neighborhoods that ring downtown. Rather than high-rise development, we believe that campus-style projects with low- to mid-rise buildings will become ubiquitous in the ring neighborhoods.

This already is happening with examples large and small. The Fred Hutchinson Cancer Research Center campus, which has grown to include the Seattle Cancer Care Alliance, is the preeminent campus. ZymoGenetics’ growing campus is another longtime fixture along Eastlake Avenue.

Vulcan Inc. and Pemco Insurance’s Alley24 opened last year. Construction has begun on two more projects: First Western Development’s highly sustainable mid-rise at Thomas Street and Terry Avenue North, and Schnitzer West’s 204-condominium Equinox at the junction of Eastlake and Fairview avenues. Coming up is construction of the Bill & Melinda Gates Foundation’s world headquarters next to Seattle Center.

These projects are only the beginning. We expect this kind of product type to continue spreading up and down and around Eastlake Avenue so that eventually the area between downtown and the University of Washington will be a vibrant corridor. A major factor fueling the trend is that campus-style development offers just the sort of highly walkable lifestyle that today’s office worker and urban dweller desire.

Curiously, this kind of development was a suburban phenomenon in the 1980s. Now, as growth returns to cities, it’s easy to see why this model is a good fit for urban neighborhoods.

Sustainable neighborhood

These high-density campuses are small, pedestrian-friendly neighborhoods with a mix of office and retail uses, housing, restaurants, day-care centers, fitness centers, open spaces and other amenities. For businesses, campuses offer flexible space, which is important with the rapid changes in today’s commercial environment.

Furthermore, these campus clusters are becoming increasingly sustainable. Unlike the auto-centric suburban campuses, mixed-use projects in the city will be very much transit-oriented, thanks to the city’s Green Streets campaign, the addition of more sidewalks and bicycle lanes, and the debut of the streetcar between downtown and the South Lake Union and Cascade neighborhoods.

This sort of smart growth is why the South Lake Union neighborhood has been invited to participate in the U.S. Green Building Council’s LEED for Neighborhood Development pilot program. The city’s Department of Planning and Development is partnering with the South Lake Union Friends and Neighbors Community Council, Cascade People’s Center, Vulcan Inc., The Blume Co. and other businesses to create one of the nation’s first certified green neighborhoods.

We believe this sort of development will spread from South Lake Union up the Eastlake corridor, which will become an important intra-city transit corridor. Once the streetcar opens later this year, we wouldn’t be surprised to see it extended northward, ultimately reaching the University District and beyond.

This isn’t the only place in the city where such development is likely to occur. As noted earlier, First Hill and the north edge of Sodo already are seeing this type of product. But it’s a good bet that, given the UW’s economic draw, much of the city’s growth will occur between the University District and downtown.

Wherever the development does happen, one thing is certain: The way we look at urban development now is very different than it used to be. Until recently, when people discussed urban development, downtown was the sole focus. Now, with the vibrancy of the center city shining ever brighter, the parameters are forever changed.

Bruce M. Blume is founder, chairman and CEO of The Blume Co., a Seattle-based commercial real estate development and management company with 2 million square feet of projects completed or planned in the Puget Sound region. The company is developing 1100 Eastlake, an office/biotech building in South Lake Union.

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