Hill Raaum Pietromonaco

Specialty: Industrial properties
Management: John Pietromonaco, managing partner
Founded: 1969
Headquarters: Mercer Island
Recent projects: 114,000-square-foot Dri-Eaz facility in Burlington; 68,000-square-foot rehab on the former Skanska headquarters in Seattle

Hill Raaum Pietromonaco is a low-profile firm that’s content to fly under the radar, according to its managing partner, John Pietromonaco. But that doesn’t mean you’re unfamiliar with its holdings.

‘We don’t have exit strategies. We don’t believe in exit strategies.’

The firm, which develops and manages industrial properties, “has a whole bunch of big boxes all over the Kent Valley” as well as in Burlington and Marysville, he said.

In Seattle, its properties include the Pyramid Alehouse building across from Safeco Field and the Outdoor Research headquarters, also on First Avenue South. It also owns the Mor Furniture building in Kent, across from Ikea.

The buildings are a testament to the firm’s buy-and-hold strategy.

“We don’t have exit strategies,” Pietromonaco said. “We don’t believe in exit strategies.”

No subprime worries

In the past seven years the firm has curtailed new construction in favor of buying existing buildings. “Before that, most of the buildings we owned we built,” Pietromonaco said.

Yet it’s much easier to buy and lease up a building that’s already built, he said.

The firm favors buildings that sell for less than $10 million, where it doesn’t compete with institutional buyers or require outside financing.

“The subprime fallout is not hitting us at all,” he said.

Still, it’s been hard to find properties to buy in the current market, where capitalization rates have been low. “We’re having to turn over a lot of rocks,” Pietromonaco said.

He expects cap rates to rise as interest rates do, giving his firm a chance to dive back into the market as speculators disappear.

“The Seattle market is going to be fine,” he predicted.

Long-term outlook

During the last real estate downturn in 2001, the firm saw vacancies rise to 10 percent from less than 5 percent.

Pietromonaco said the firm has survived by being a low-cost provider, working with all the brokers, shying away from exclusive listings, and working with a long-term stable of tenants, contractors, banks and title companies.

“We’re looking at the long-term basis rather than short-term profits,” he said.

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