April 19, 2019

Unico says latest deal ‘rounds out' plan of buying properties near the waterfront

Photo by Unico Properties [enlarge]

The three-story Washington Park Building was developed in 1890 following the Great Seattle Fire of 1889.

With a Portland minority partner, Unico Properties has acquired the historic Washington Park Building, at 68 - 80 S. Washington St. in Pioneer Square.

Unico confirmed the sale in a press release, but didn't name its partners or specify a price. The nominal recorded price of about $5.75 million only reflects about 60 percent of the building's actual value, for reasons explained below.

The buyers were three LLCs associated with Unico and the Unkeles family of Portland. Unico now looks to have a 51 percent ownership interest. Ken Unkeles is an experienced investor and developer, very familiar with old brick and warehouse buildings in north Portland.

One of the parties in the transaction was longtime local investor and developer Rich Reel. He transferred an equity stake, about 25 percent, into Unico's boutique office fund. “Technically I still own a stake” of the building, which he purchased from Craftsman Press in 1982.

Back then, “It was full of printing presses. It was built for weight it'll never have again. It's solid.”

The three-story building was developed in 1890 following the Great Seattle Fire of 1889 for the Lowman & Hanford Stationery and Printing Co. The architect is unknown.

It's on the 9,306-square-foot corner at Alaskan Way South. It now faces the viaduct, which will be gone by late summer or early fall.

The building is in the Pioneer Square Preservation District. It's also about a block west of the Grand Central Block, which Unico owns with a Goldman Sachs-related LLC (the majority owner), where an office renovation plan is anticipated.

Unico and Reel say the Washington Park Building effectively has four stories, since there's a 6,202-square-foot mezzanine dividing the entire first floor. It has about 36,000 square feet, including the retail.

There were 10 recorded sales involving multiple, often overlapping parties with various shares in the building. Some of those transactions were unpriced, untaxed transfers of ownership stakes into the new Unico LLC, meaning the final aggregate recorded sales price doesn't really reflect the value of building.

About 36 percent of the deal was a zero-dollar transfer of interests. A fair guess would be that the building is worth somewhere around $9 million.

MaKensay Real Estate was also an owner, but confirmed that it has sold its interest. MaKensay has its offices there, and will continue to manage the building, which was last renovated in 1982.

Unico didn't announce any new plans for the building, and none have been filed.

Unico's Ned Carner said in a statement, “The purchase of Washington Park Building rounds out Unico's five-year strategy of acquisition of properties along and near Alaskan Way and the planned waterfront redevelopment. Since 2014, we've been intentional in identifying and purchasing these unique opportunities — the end of the viaduct marks the end of this strategy, because the value of Alaskan Way real estate is now obvious. Over the long-term, the redevelopment is going to improve the market more drastically than what people imagined.”

Unico owns and/or manages about eight buildings near the waterfront. There have been rumors for the past two year that it will buy the Colman Building from a group including Goodman Real Estate.

Tenants in the Washington Park Building include Planet Java Diner (since 1993), Seattle Publishing, Flutter Studios, and various small offices. Unico says the building is 83 percent leased.

It's on the city's list of unreinforced masonry buildings, making it a candidate for a costly seismic upgrade.

However, even for small old brick buildings, values are unquestionably rising near the waterfront. Other comparable sales include the Main & Alaskan Building, at 76 S. Main St., which sold two years ago for $3.4 million. That works out to about $600 per square foot. The tiny Triangle Tavern building, at 553 First Ave. S., sold two years ago for almost $1.9 million, or around $671 per gross square foot, including the basement.

A somewhat similar three-story building, at 95 S. Jackson St., was recently renovated by Hudson Pacific Properties for master tenant Spaces to create 32,000 square feet of co-work office space, now called 95 Jackson.

If and when the Washington Park Building empties out, a full renovation seems inevitable. “That's what they told me,” says Reel. “It'll get nicely fixed up. It makes sense.”

Reel will be able to watch that process from his office across the street in the 1890 St. Charles Hotel Building. He bought it some 40 years ago.

“I have no plans to sell,” he says, since it gives him such a great vantage point to watch the viaduct demolition. “I have been waiting for a long time.”