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DJC.COM Special Issue © June 15, 2000
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By JOE NABBEFELD
Let's set aside the question of whether he has become one of the area's biggest real estate developers because Paul Allen is certainly about the most interesting one. Allen was been labeled "the accidental billionaire," because Microsoft stock made him one of the world's richest people after he left the company he co-founded.
Call him the accidental developer, too. Allen's array of projects spring, almost incidentally, from other interests and activities, instead of from a typical developer's drive to make money by building.
Allen already has the money.
He wanted a home for his many companies, so he instantly became the biggest developer in Renton. Allen's Vulcan Northwest intends to build a hotel, up to 1 million square feet of offices, thousands of housing units, all sorts of retail, new highway ramps and fitness facilities on about 60 acres of Renton's Lake Washington shoreline in an area known as Port Quendall. That's the stuff most developers can only dream about.
Port Quendall bogged down in years of pollution studies, highway improvements and purchase options, so Vulcan grabbed a back-up office complex site in Issaquah called Sammamish Park Place.
Construction of Sammamish Park Place's 600,000 square feet is well underway by Vulcan's fee developer, Opus Northwest. But Allen changed his mind about locating his companies there, so he has leased most of the space to Microsoft, fulfilling yet another developer's fantasy of doing business with the software giant.
Most developers don't just "grab" 20 prime development acres, but when you're a $30-plus-billionaire, pocket change buys the Issaquah site.
Allen still needed a home for Vulcan, so he partnered up with the re-developers of Union Station on the south edge of downtown. Vulcan took one of five Union Station office building pads and is nearing completion of an architecturally distinct 11-story office building there called 505 Union Station. Vulcan will occupy the top floors and plans to lease the remaining space to tenants.
At more than 1 million square feet, Union Station is the biggest office development in Seattle and among the biggest in the entire Northwest, but it's a small fry compared to what Allen's got going next door: construction of a $500 million Seattle Seahawks stadium on the site of the recently imploded Kingdome.
Allen bought the Seahawks when the previous owner threatened to move the team to Los Angeles. He spent millions to gain voter approval for a public subsidy to build a new stadium for the team.
After he arrived in the neighborhood of the Kingdome, Allen came across a vacant six-story warehouse building called Palmer Court that was for sale on First Avenue. Vulcan bought Palmer Court for $650,000 and converted it into 36 loft-style condos atop first-floor retail. Then there's South Lake Union, a generally drab fringe area consisting of a mix of aged, low-level structures extending north from downtown to the lake.
Planners for years envisioned South Lake Union as the best site for a badly needed downtown park called Seattle Commons. Allen bought 11 of the proposed park's 42 acres to contribute to the cause. When voters rejected funding the park for the final time in 1996, the 11 acres reverted back to Allen, suddenly putting him in position to redevelop South Lake Union himself.
Vulcan has steadily bought more South Lake Union properties as they've become available, generally paying top dollar. So far Allen's collection exceeds 25 acres, including a pier, and is expected to jump by another five with the addition of the city of Seattle's "Mercer Mess" collection.
Observers have long expected Allen to aggressively reshape South Lake Union into a dazzling campus for biotech and high-tech companies. Speculation also wanders to whether he'll create a private Commons-style park surrounded by new housing.
Vulcan executives consistently say they haven't formed a concerted plan for the area other than to collect properties as they become available, listen closely to the community about what it wants and potentially redevelop each property individually. So far, Vulcan and developer partner Schnitzer Northwest have remodeled only one structure, the Rosen Building, to house University of Washington biotech researchers.
While in the South Lake Union neighborhood, the Cinerama Theater faced closing down. Allen enjoyed watching wide-screen films at the Cinerama as a child, so he bought and remodeled it. Then there's Experience Music Project. Allen wanted to create a music museum to honor Seattle native Jimi Hendrix and the result has become a $240 million extravaganza housed in a unique, attention-grabbing building designed by architect Frank Gehry.
Vulcan's real estate activities collectively receive a lot of attention. Some people fear the image of an individual, whose billions free him from normal constraints, buying up such a large swath of South Lake Union to seemingly reshape it at will.
Allen is not among the area's largest developers and land and building owners. The big players include Chicago-based Equity Office Properties Trust, Seattle-based Unico Properties, Texas-based Trammell Crow Co., Minneapolis-based Opus Northwest, Boeing and Microsoft. Within the real estate industry, Vulcan is generally regarded as cautious with Allen's funds.
"When I look at other wealthy people in other areas in real estate, sometimes they don't make sound decisions based on fundamentals," said Unico vice president Quentin Kuhrau. "But his organization does its due diligence. It makes very solid observations about real estate dynamics."
Seattle Mortgage Co. loan officer Pat McLean said, "I think it's impressive that he's taken the time to make a difference instead of spending more money on jumbo jets. His motivation doesn't seem to be to own Seattle or start some monopoly. He just wants to make his mark on the planet, like we all do, the way I see it."
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