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October 22, 1999

Real Estate Buzz

Under the utterly unsubstantiated rumor category comes this speculation: The owners of the swanky Alexis Hotel are eyeing the two old buildings across First Avenue for expansion. The plan, according to very unofficial talk on the street, is that the buildings that now house Warshal's sporting goods will be converted into luxury suites.

More than a year ago, Portland hotel developer Gordon Sondland and Seattle real estate investor N. Jack Alhadeff bought half-ownership in the two buildings at First and Madison Street. At the time Alhadeff said the space might be made into a hotel, condominiums or office. It's been said the decision has been made to go with the hotel.

Those who would know, however, aren't talking. Sondland, who holds an interest in the Alexis, declined to comment. And Alhadeff, who several weeks ago told a DJC reporter that news about the site was forthcoming, did not return telephone calls.

Brokers who specialize in hotels aren't sure what will happen. Andy Olsen of the Chambers Group said the speculation is a sign of the times. There's plenty of rumors what with Ritz-Carlton and Hyatt Regency reportedly trying to elbow their way into the market. And there's one hamstrung project now that the state has told Marriott it can't build its waterfront hotel because, in part, it would block views of Elliott Bay and the Olympic Mountains. But, Olsen noted, nothing is happening.

Craig Schafer of Colliers International thinks the owners of the Warshal's site haven't decided what precisely its highest and best use would be. "I have an idea a hotel will be part of it," he said.

S eattle developer Wright Runstad & Co., is having a party Monday to celebrate the topping out of its 22-story office tower, Three Bellevue Center.

The Colliers International brokers working on the marketing of the space report brisk activity but declined to offer up specifics. However, rival brokers weren't so restrained and they back up the brisk activity line.

There's talk that only about three floors remain available for lease. Just one lease -- the 44,100 square feet taken by Regus Business Centres, the British company that provides clients office space on a short term basis -- has been announced. So this leaves a lot of room for gossip. Two companies are said to be taking down big leases and one of them is Infoseek, according to an Eastside broker.

Statistics typically don't lie but true stories are more insightful. Such is the case when it comes to the shortage of industrial space on the Eastside and especially Woodinville.

First the dry numbers: According to CB Richard Ellis' third quarter report, the vacancy rate in Woodinville dropped by more than 1 point to 3.79 percent.

But for real-life evidence of how tight the market is we turn to CB Richard Ellis broker Scott Davis. He reports that 10,360 square feet of prized space became available in the Underwood 122 Building. In a normal industrial market, such space might sit vacant for some time and bring in low offers. But in just three days, Davis says, three full-price proposals rolled in, and a fourth offer would have been tendered had the prospective tenant not been so discouraged that he dropped out of the running.

"And this is in Woodinville," added Davis, who noted that high land prices are restraining construction activity.

Don't you just hate it when a big sale is announced but the sale price isn't?

It happens all too often for our taste, and we vow to track down the prices.

So, in the spirit of better late than never, we bring you the official price of one high-profile property. According to Metroscan, Bentall U.S. LLC sold the Willows 124 Business Park in Kirkland to a Colorado group for $14.85 million. That works out to $115 per foot for the 129,000-square-foot center. The same Metroscan record shows that Bentall bought the property two years ago from the Vyzis estate for $7.175 million.

Ka'ching.

A few weeks back, Seattle-based Sabey Corp., brought the Queen Anne Square office complex for $21.5 million. The seller was Lincoln National Life Insurance, a partner in the proposed 1.4-million-square-foot Lincoln Square mixed-use project in Bellevue.

The logical question was whether Indiana-based Lincoln sold the property to help bring in some dough for the Bellevue deal. The short answer from a Lincoln vice president, Walt Karinke, was: "That's ludicrous." He noted that with $100 billion in assets, Lincoln isn't exactly hurting for money.

Like his Lincoln Square partner, developer Ian Gillespie of Vancouver, B.C., he vows the dirt will be moving soon on the project site.



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