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Brian Miller
Real Estate Editor

August 24, 2017

On The Block: Bergman Luggage building poised for sale; 40-story residential tower is likely there

The Bergman Luggage building, at 1901 Third Ave., is in play. Longtime property owner Brooke Barnes confirmed that he's reading letters of intent from potential buyers, some of them local, and that a sales agreement could be reached by mid-September.

“It's been on the market for some time,” says Barnes, though never officially listed. “Those who are active downtown know.”

New downtown zoning would permit structures up to 440 feet on the site. Barnes says that, plus rising property taxes, prompted his decision to sell. “The time is right.”

Barnes, a fifth-generation Seattleite, has owned the almost 13,000-square-foot property since 1984, when he paid $1.36 million for the two-story building, according to county records. It's at the northwest corner of Third and Stewart Street.

As part of the stealthy sales effort, Hewitt recently filed early plans with the city on Barnes' behalf for a 40-story mixed-use tower. It would have parking above and below grade. The tenant entrance and street-level commercial space would incorporate the existing facades.

Photo by Hewitt [enlarge]
New downtown zoning would permit structures up to 440 feet on the site.

And about those distinctive facades: The building was constructed circa 1909 as a parking garage for the New Washington Hotel (now the Josephinum). Barnes says the terra cotta-clad building is not a landmark, and has never been submitted to the city Landmarks Preservation Board. Barnes does expect that he or a prospective buyer will do so.

“The people that I have talked to would want to preserve it. It's one of those buildings that's iconic,” says Barnes, who is an engineer by training. He recalls removing the old false-front cladding from a former Peoples Bank branch before he signed Bergman as a tenant in 1986. “It had not been maintained at all. Sections of the roof fell in.”

Barnes supervised much of the costly restoration himself. Today, though the facade is in good shape, the clock has stopped on the old Bergman sign, reading 6:45 and 5:35 on its two faces.

Surprisingly, the building has no basement. In fact, the original parking garage was on the second floor, accessed from Stewart. For most of its life, says Barnes, the building has had restaurant and retail tenants. One of the two restaurant spaces was vacated a few years ago by The Blarney Stone (now relocated to First near the Pike Place Market). The other is home to The Retro Restaurant & Lounge, whose happy hour Barnes unequivocally endorses.

Bergman Luggage has operated at different locations downtown since 1927. Operated by the Bergman and Hurwitz families until its 1991 sale to a regional chain, the company later went into bankruptcy and was acquired by West Coast entrepreneur Hardial Gill. Bergman has other locations at Northgate, Southcenter and in Bellevue. Parent company Luggage Center also has a downtown store at 1420 Fifth Ave., in the U.S. Bank Centre. At 1901 Third, Bergman stores its inventory on the second floor, which is otherwise vacant.

Barnes says of both Bergman and the Retro Restaurant, “The people that are there are expecting to be there another two years. They all know it's a development site.”

He has no plans to fill the vacant former Blarney Stone space with a short-term tenant. Current leases will accommodate a sale and redevelopment of the property. “There's no constraints on it.”

On the same block, between Stewart and Virginia streets, there's quite a bit of activity, as Barnes is aware. Immediately north, at 1915 Third, Ariel Development will turn the existing self-storage facility into the 14-story Cambria hotel and apartments. Then on the corner of Virginia, at 1931 Third, Martin Selig is planning a high-rise that's likely to be office space.

Back in the 1980s, says Barnes, “That area was kind of a backwater — it wasn't quite Belltown, and it wasn't quite the downtown retail core.” Later came the transit tunnel, then light rail, and now the City Connector streetcar line is planned to run along Stewart as it links South Lake Union to First Avenue. Construction has begun for that, with completion expected in 2019.

As a result of those transit connections, and the seemingly insatiable demand for Amazon worker housing, Barnes says of the Bergman property, “You can't argue with the location. I think it's the best site remaining. I bought it in part to preserve it.” But, he adds, “It was bought for development. This is a tower site.”

Before the new zoning, says Barnes, “From time to time, I've had people making lowball offers. I've turned down the majority of offers.” (Well, all of them, in fact.)

Today, he won't speculate what the Bergman property is worth. But for comparison, Martin Selig paid $14 million in 2015 for his equal-sized corner at 1931 Third. King County values the Bergman property at almost $11 million.

Selling the Bergman building doesn't mean that Barnes is done with Seattle real estate. Though now semi-retired and living mostly on Whidbey Island, he plans to do a 1031 tax exchange deal and buy new property with the proceeds. And he still owns the landmarked Barnes Building at 2320 First Ave, a former Masonic Hall that's now home to the Belltown Pub, with offices above. He also owns commercial property in Ballard, where his family first settled.

What would Barnes like to see happen with the property? “It's not really up to me anymore. It'll be sold, and it'll probably be apartments. I really want to do [a deal with] a local guy.”

Is a sales agreement imminent? “Talk to me in two weeks,” says Barnes. “I plan to make a deal.”

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

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