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Nat Levy
Real Estate Reporter

November 5, 2015

Real Estate Buzz: Shapiro ready for Harvard Exit's next act

By NAT LEVY
Real Estate Reporter

Office space has become a key tool in recruiting, with companies competing hard to have the best digs.

So what could be cooler than working in the beloved Harvard Exit Theatre on Capitol Hill? That's one reason why Scott Shapiro and his firm Eagle Rock Ventures are turning the old theatre into creative office space.

Earlier this year an entity related to Eagle Rock Ventures acquired the 1925 structure — once known as the Woman's Century Club — at 807 E. Roy St. for $2.35 million.

When the rehab is complete, there will be about 14,000 square feet of office space on three levels. The two renovated theater spaces each will have about 5,000 square feet, and there will be space for food and beverage businesses in the old theater lobby and basement.

Much of the Harvard Exit will remain the same, including the exterior, windows, molding, light fixtures and general layout. Some of the original elements will get a second act, such as windows that were covered when the club was converted to a movie theater.

“Being able to restore it back to maybe what our parents or grandparents would have seen is exciting,” Shapiro said, “and to put it to a higher and better use with more activity than what has been there recently will be a benefit to the Capitol Hill and Seattle communities.”

Some demolition has started, and Shapiro said he should get permits later this month. Depending on financing, Shapiro said he would like to see renovation start by the end of the year. He expects the work to take about six months.

S+H Works is the architect and Dovetail General Contractors is building it.

Much of the main floor is one theater. Seats and a portion of the stage will be removed, but the balcony and the open layout will remain. A second smaller theater upstairs will also be converted to open offices, and a caretaker's unit on the second floor will be converted to private offices.

One tenant could take all the office space, or it could be broken up into smaller spaces. Shapiro said Eagle Rock has not started marketing yet.

The biggest challenge is all the unknowns that come with any old structure, but that's the kind of risk Shapiro and Eagle Rock are willing to take.

“We love buildings on Capitol Hill,” Shapiro said. “We love historic buildings and we love the opportunity to be able to take something with great history and great bones and bring it back to a better place and make it more functional.”

Shapiro likes complex projects. He co-developed Melrose Market with Liz Dunn and has done several apartment projects on Capitol Hill in recent years. Eagle Rock recently finished a new hotel called Lodges on Vashon Island that involved having 16 modular units fabricated off site and brought to Vashon on a ferry. S+H Works designed the Vashon project, Cascade Built did the site work and Champion Homes was the modular builder.



Safeco HQ: Good news, bad news

Safeco's decision to consolidate its Seattle headquarters in Safeco Plaza at 1001 Fourth Ave. could be good or bad, depending on your perspective.

Colliers Senior Vice President Dan Dahl said it's great for people who own downtown office buildings but bad for people who want to develop new ones.

Safeco signed an 11-year lease to expand from 17 to 26 stories, going from 284,000 to 504,000 square feet.

That tightens up the office market at a time when vacancy is dropping. A report from Kidder Mathews shows the vacancy rate this quarter fell to 8.8 percent in Seattle.

Kidder Mathews says there are 18 office projects under construction in Seattle, and 12 of them started without any tenants. Kidder Mathews reports there is about 4 million square feet in those 12, and 46 percent of that has been leased. But Safeco's decision to stay put is a big blow.

Safeco wants to create a campus-like environment in a single building, said Glenn Greenberg, a spokesman for Safeco. It will renovate its space, expand the conference center, and add a full-service cafeteria and catering services for meetings and conferences. Work will start by the end of next year and be done by the end of 2018.

Safeco has not chosen an architect and contractor.

In addition to Safeco Plaza, the insurance company has space in an office building at Second and Seneca. It will vacate that space by the end of next year.

Today, Safeco has 1,850 employees and contractors in both buildings. Greenberg said the new space will have room for 2,300 people.



Tech-heavy cities pulling ahead

U.S. cities are quickly dividing into the haves and have nots.

Successful cities all have one thing that struggling cities lack: tech jobs, says Dr. Enrico Moretti, a professor of economics at the University of California Berkley and author of “The New Geography of Jobs.”

Moretti

Moretti was in town last week for a speech at the University of Washington's Runstad Center for Real Estate Studies. He told the Buzz that cities like Seattle, San Francisco, Boston, Washington, D.C., and Austin are thriving while former manufacturing hubs fall behind.

Companies like Microsoft and Amazon bring a lot of well paid people to Seattle, Moretti said, and each new tech job supports five service-sector jobs.

“The extra income that jobs in the tech sector bring to an area generates and supports many jobs in service sectors,” Moretti said. “A Microsoft or Amazon here is actually beneficial to people who are not software engineers.”

Booming tech cities also have problems — chiefly housing affordability, Moretti said. Cities that manage this best have policies that encourage new housing construction. Restrictive policies and building codes drive up rents because supply can't meet demand, he said.

Over the past 30 years, Moretti said, the gap between successful and struggling cities has grown, especially in the last decade. Moretti said cities need to focus on improving schools, but he said what distinguishes the most successful cities are the quality of their biggest employers.


Got a tip? Contact DJC real estate reporter Brian Miller at brian.miller@djc.com or call him at (206) 219-6517.


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