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December 13, 2012
Specialty: Real estate advisory and development management services for public and private clients with goals that include efficient, cost-effective design and delivery of urban, mixed-use, transit-oriented and environmentally sustainable development
Management: Hal Ferris and Jake McKinstry, principals
Current projects: 12th & Yesler in Seattle, with 118 workforce apartments and 4,000 square feet of commercial; Mercer Court at the University of Washington, with 930 beds of student housing and urban farm areas
Q: What issues are facing your industry locally or what trends are you seeing?
McKinstry: Across our work with both student housing and mixed-use apartment projects we are seeing a trend towards larger national entities coming into the Seattle market with very prescriptive development models. On the one hand, it is great to see Seattle getting overdue national recognition, on the other hand when you don’t have a development entity with a strong local presence in the community there is a danger that the end result will not be driven by the same principles valued by the local community.
Q: What lessons have you learned from working with public agencies that can be applied to private projects?
McKinstry: We benefit greatly from working with our public agency clients as they are constantly pushing to make sure there is both a thorough discourse during the decision-making processes to ensure all voices are heard as well as a clear focus on achieving the optimal comprehensive result for the long term. Having a long-term vision as these public agencies often do is critical and something that can be overlooked in the private development world.
Q: Where do you see growth coming from? Are there markets your firm is entering or exiting?
McKinstry: We view Seattle as being in the midst of a fundamental shift to a 24/7 live-work-play city. This shift is being fueled by a dynamic economy that is driving job growth and annual net migration as well as the presence of the echo boomer generation (ages 17-34), which has now surpassed the baby boomer generation as the largest population cohort. We see both student housing and workforce housing serving our teachers, nurses and civil servants as key markets.
Q: What has been your firm’s most innovative solution to a real estate issue recently?
Ferris: In order to satisfy a condition on Seattle Children’s Hospital Major Institution Master Plan to provide replacement housing, we created a development structure that combined a long-term ground lease on land owned by the University of Washington with a low-interest loan from Seattle Children’s Hospital to produce 180 units of workforce housing, including 34 affordable apartments.
Q: How has the mix of financing for private or public development changed since the recession?
Ferris: Lenders are looking more closely at both the strength of the project sponsor and development team. The equity requirements have increased substantially and all private debt is now full recourse. Public bond structures can be very favorable for specific development types thanks to historically low interest rate yields.