Benaroya Co.

Specialty: Real estate development

Management: Larry Benaroya

Founded: 1956

Headquarters: Seattle

Current projects: Fee developer for 770,000-square-foot warehouse for AMB in Auburn

Photo by Stewart Hopkins Benaroya Co. in October sold the Metropolitan Park complex for $263 million to Walton Street Capital.

The question for the Benaroya Co. is: Now what?

The family company, known as a long-term holder, made headlines in October when it sold its two downtown Seattle office properties — Metropolitan Park Towers and Park Place — for a total of $345 million to Walton Street Capital.

That’s a lot of money to invest. What will Benaroya do with it? “Time will tell,” says Larry Benaroya. At the time of the sale, he said he will not defer the capital gains tax with a 1031 exchange.

Try the hotel/condo market?

Benaroya does have some concrete plans for 2006. The company is the fee developer for a 770,000-square-foot warehouse for AMB Property Corp. It’s on a former Boeing site, says Benaroya, who does not know if AMB has a tenant in tow.

The company also is trying to decide what to do with its land at Eighth and Pine in downtown Seattle. It’s working with NBBJ on a project that’s very much up in the air. “I just don’t know,” Benaroya says, adding office rents aren’t high enough to justify new construction. A hotel/condo project is one possibility, even though the company’s specialty is office and industrial development.

Benaroya said he does not expect to sell any more properties, though he would dispose of Canyon Park, a Bothell high-tech building that has been vacant for about two years. “It’s a nice building but it’s just sitting there. The market’s soft up there,” says Benaroya. The building is for sale or lease, though he prefers to lease it.

The market “is soft all over,” he says. “It’s not horrible, but it’s not great.”

I-90 corridor improving

Along the Interstate 90 corridor, where Benaroya owns two properties — I-90 Centers North and South — he’s seeing the market improve. Verizon occupies one of the buildings, which is 43,800 square feet, but does not plan to renew. Benaroya says his company has a letter of intent with a user for 37,000 square feet of the Verizon space.

It’s that kind of activity that gives Benaroya hope. He said he thinks demand will improve because of job growth and the lack of new construction. So, he predicts, rents will rise.

The strength of the industrial sector continues to impress him. It’s a build-it-and-they-will come market. “It’s amazing.” The trouble is costs are “way up and rents aren’t.”