Unico Properties

Specialty: Real estate development, investment and operating company that owns and operates nearly 9 million square feet of properties in the western United States; it specializes in office and multifamily

Management: Dale Sperling, president and CEO; Quentin Kuhrau, chief investment officer and senior vice president, development; John Lamb, CFO and senior vice president, property management; David Laird, senior vice president, asset management; Jim Rock, vice president, leasing; Lynn Abulhosn, chief administrative officer and vice president, marketing and communications

Founded: 1953

Headquarters: Seattle

Current projects: Inhabit — Lake Union, a modular, prefabricated complex consisting of 62 apartments plus four live-work units at 1701 Dexter Ave. N. (construction begins early next year); 64,000-square-foot George F. Russell Jr. Hall across from the University of Washington, with 30 apartments over four floors; 231-unit Asa Flats + Lofts apartment building in Portland’s Pearl District (finishing this month)

Photo copyright Mithun, Juan Hernandez Unico Properties plans to build a modular, prefabricated apartment complex in the Lake Union area similar to this prototype that was displayed on the Rainier Square roof park. Construction could begin in early 2009.

Quentin Kuhrau, Unico chief investment officer and senior vice president of development, predicts a “peel-back” in office rents in Seattle given the number of new yet-to-be-preleased buildings coming online in late 2009 and 2010, a surplus of existing office space, and limited demand from corporate America.

Kuhrau said apartment rents are starting to fall in Portland, which has heavier job losses than the Puget Sound region and a number of condo conversion projects reverting back to apartments.

In Seattle, there likely will be a softening in apartment rental rate increases in 2009, he said, but this market will be hit less by condo projects changing back to apartments.

Tough lending

On another front, Kuhrau said financial institutions nationally have dramatically pulled back lending, which will put increasing pressure on real estate owners who need to refinance.

Fewer financial institutions are lending and they are lending less, he said. For instance, he said, in recent years, a lender may have financed 75 percent to 80 percent of an asset, he said. Now it’s 60 percent to 65 percent. A large segment of investment debt was provided through commercial mortgage-backed securities, and “they’re no longer in the market,” he said.

Office building owners may increasingly be faced with lower rents, higher vacancies and a drop in the value of their buildings, he said. When they try to refinance they may have to pay higher loan rates, put in additional equity, or, in some cases, lose their buildings, he said.

The basics

In this difficult market, Unico is focusing on a “back to the basics” approach of managing assets with good customer service so tenants want to renew, Kuhrau said. The company is also keeping cash on hand for buying opportunities it expects in the Northwest in the next 18 to 36 months, he said.