August 12, 2024

Smith Tower sells to local investors

Photo from Freestone Capital [enlarge]

The 462-foot-tall tower.

Goldman Sachs acquired Smith Tower as part of a larger portfolio sale from Unico Properties in 2019, pre-pandemic. In a deal announced on Friday, that landmarked Pioneer Square tower and two related properties have sold to a trio of local investors led by GT Capital. King County hadn't recorded the sales before deadline; so prices will be updated later.

TG Capital's Joe Razore said in a statement, “This investment is a testament to our core belief that the future of the city of Seattle, along with the people who live and work here, is very bright.”

Photo from Unico Properties [enlarge]

The ornate elevator lobby.

Freestone Capital founder Gary Furukawa said, “As a firm with deep roots in Seattle, we are incredibly excited to add one of the city's most iconic buildings to the Freestone Real Estate Fund.”

The third partner is Evergreen Gavekal, with its primary office in Bellevue. Once known as Evergreen Capital Management, it's led by David Hay.

Unico had retained a small stake in the prior ownership with Goldman. The sellers' broker was Eastdil Secured, which offered Smith Tower about a year ago. It traded in 2019 for almost $138 million. It's located at 506 Second Ave., on the corner of Yesler Way. (The neighboring two-story Florence Building was also part of the deal.)

The Butler Garage, at 601 Second, last traded for $31 million. That 12-story building has about 460 stalls, plus a few retail bays.

What's to become of the iconic tower? It will remain offices, with a little retail; no residential conversion is planned. The building has about 268,748 square feet; a year ago, it was about 67% occupied. The situation appears a little better today.

The office leasing effort will shift from CBRE to Broderick Group's Damon McCartney and Lauren Hallgrimson. Razore once worked at Broderick; and one of his GT partners, Chris Langer, still does. Both are very savvy investors.

Current asking rents aren't listed. Triple-net expenses add $16.70 per foot per year. The building was last renovated in 1998 under Unico, and is rated LEED Platinum.

Razore said of the future leasing effort, “Our new cost basis gives us the ability to offer tenants the most competitive terms in the city.” The current vacancy rate in Pioneer Square remains stubbornly high. The county has in recent years lowered its assessed value for Smith Tower by over 21%.

Photo by Tim Van Asselt [enlarge]

The Penthouse at Smith Tower.

The city rates the tower at 37 stories. It's traditionally said to be 42 stories in height. It was completed in 1914 as the tallest structure west of the Mississippi, at 462 feet. The architect was Syracuse, New York firm Gaggin & Gaggin, for developer the Smith family — which made its fortune in typewriters. The family, also based in Syracuse, bought the land from Seattle's own J.W. Clise, still an important name in local real estate.

The building's famous observatory will remain open to tourists. It's unclear if there's now a renter for the spectacular penthouse apartment above. That has about 2,128 square feet on several levels within the tapering, pyramidal walls. Graham Baba Architects and Valor Builds did the last renovation in 2021. The asking rent, three years ago, was $17,000 per month.

The ground-floor retail is represented by Tiffini Connell and Avery Connell at West Coast Commercial Realty. It appears that only the former Sprouts space, with 2,369 square feet, is vacant.