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“Nabbefeld”
Joe Nabbefeld
Real Estate Editor

October 5, 2000

Real Estate Buzz: More spec space coming to Lynnwood

Another new, spec office project is cooking in Lynnwood.

Developers Roy Thorsen and Gus Boutsinis, who have most recently busied themselves in Mill Creek, are seeking permits for an 88,000-square-foot structure next to Interstate 5 called the Alderwood Parkway Building.

Alderwood Parkway Building
Alderwood Parkway Building
The six-story project would become the third new spec office development to hatch in Lynnwood in the past year after a 14-year stretch of no such projects.

Ron Gregory's Olympic Capital Group is completing construction of the 68,269-square-foot Lynnwood Corporate Center II. Gregory's project is at 4100 194th St. S.W., south of Alderwood Mall.

Spec means to proceed in the risky position of having no signed tenant ensuring income once the structure is built. Gregory hasn't yet signed a tenant but Trammell Crow broker Todd Battison recently said two tenants are close to finalizing deals.

Bellevue-based developer James Hwang's Cosmos Development last month started construction of the 200,000-square-foot Cosmos Lynnwood Center, southwest of Alderwood Mall. Hwang doesn't have a signed tenant either.

Now comes Thorsen and Boutsinis, operating as RG LLC.

All three projects are bets that some companies will migrate out of downtown Seattle and the Eastside to rent cheaper office space in Lynnwood.

Gregory, the furthest along, and thus the one most likely to offer the lowest rent, is asking $18.50 per square foot, triple net (excluding expenses such as maintenance and insurance). Hwang said he'll ask $20.50 triple net.

Duane Hodges, a broker at Northwest Commercial Properties who is marketing Thorsen and Boutsinis' project, said they'll ask between $21 and $25 triple net.

"The project makes sense because of the low vacancy rates down the I-5 corridor," Hodges said. "For about half the leasing rate of downtown we can provide a new Class A office building with high-speed broadband communications capabilities."

Hodges said Alderwood Parkway Building's location next to the freeway gives it an edge.

The developers hope to receive their building permit next spring and have the building ready for occupancy in November, Hodges said. They have yet to secure financing.

They also don't own the 66,000-square-foot site yet, but they have it tied up. The Yun family of Seattle owns it.

The architect is CDA Architects and no general contractor has been selected yet.

Thorsen and Boutsinis recently finished developing a 193,000-square-foot office park in Mill Creek and have another 50,000-square-foot office building under development there. They also have a 24-acre mixed project under development in Arlington.


DeVry begins NW expansion

Quadrant Corp. landed the computer school DeVry Institute of Technology to occupy 11.5 acres of Quadrant's East Campus Corporate Park along Interstate 5 in Federal Way.

The school will be the first in Washington for the nationwide chain of DeVry universities. Jerry Murphy of the school's development arm, DeVry Inc., described it as "the initial step in DeVry's geographic expansion in the Pacific Northwest.

"The area's burgeoning high-tech industry supports our belief that DeVry will offer Seattle-area residents a valuable educational resource," Murphy said.

The East Campus school will also include DeVry's Keller Graduate School of Management, which provides graduate management training for working adults.

Chicago-based DeVry Universities operates 17 schools in 10 states and three in Canada. The schools provide bachelor's programs in computer, telecommunication and other electronics engineering and business administration.

Quadrant has a 100,000-square-foot building, and a two-story parking garage, under construction for DeVry on 11.5 acres in East Campus, said Quadrant sales and leasing manager Deborah Frausto.

East Campus totals 106 acres, part of the larger, wooded, 500-acre Weyerhaeuser corporate campus. Quadrant expects East Campus to build out at about 1.2 million square feet of office buildings. So far, 400,000 square feet are built, with 45,000 square feet of that unleased.

Other East Campus occupants include Capital One Financial Corp., Safeco, Financial Pacific, Tesoro Petroleum and World Vision.


Teutsch may pass on telecoms

John Teutsch says he intends to target straight-up distribution tenants, instead of the hot trend of data centers, to lease a close-in West Seattle warehouse one of his partnerships just bought.

"I think there's still a great market for that," the Seattle-based developer, investor and broker said.

In fact, with data centers moving into so many warehouses, a contrarian could see now as the time to offer up some traditional space. Telecoms pay substantially higher rent, but hooking up the kind of extra power capacity data centers need has started taking a lot longer than earlier anticipated, easily more than a year these days.

Teutsch and his broker for the warehouse, Al Robertson of Kidder Mathews & Segner, said the newly purchased 114,000-square-foot former Bank of America warehouse is positioned to obtain extra power and fiber connections. "So we're perfectly willing to look at telecoms ... but we'll start by marketing it to traditional distributors," Teutsch said.

The building, at 4201 W. Marginal Way S.W., now receives 1,200 amps and "has the potential for 12,000 amps," Robertson said.

The Teutsch-led partnership last month paid BofA a little over $6 million for the warehouse, which Teutsch has renamed the Westbridge Building.

BofA has vacated all but 11,000 square feet of "tech space" in the building.



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