Harbor Properties

Specialty: Multifamily, mixed-use development

Management: Douglas Daley, president and CEO; Denny Onslow, executive vice president and chief development officer

Founded: 1972

Headquarters: Seattle

Current project:Link apartments in West Seattle

Image courtesy of Harbor Properties The Link, at 38th and Alaska in West Seattle, will include 200 apartments and 14,000 square feet of commercial space. Baylis Architects designed the project and Exxel Pacific is the general contractor.

It’s been a challenging year for Harbor Properties, said President and CEO Douglas Daley, but it hasn’t been without its high points.

The developer completed the 136-unit Mural apartment building in West Seattle earlier this year and the 81-unit Landes apartments on First Hill at the end of 2008. Both are fully leased, including the street-level retail.

Construction is also under way on Link, a 200-unit apartment building in West Seattle with 14,000 square feet of commercial space. The project will be finished in 2011.

Projects on hold

Other new development activity is on hold. Harbor has acquired parcels in West Seattle and Belltown for future development, and work on the first phase of a large mixed-use complex in Columbia City could begin late next year.

Lenders and investors are keeping their hands in their pockets for now, but that could be changing.

“There is a lot of capital on the sidelines waiting to invest,” Daley said, and money for new development could begin to flow more freely if there aren’t too many distressed properties waiting to be unloaded.

“Lenders are out there doing business,” he said. “For the right project, developer and borrowers, there is financing out there.”

The case for apartments

In Seattle, the product likely to be in highest demand when the economy recovers will be apartments, given the rising demographic tide of young adults, who are more inclined to rent than own. Harbor has its eye on sites around the city, looking most closely at neighborhoods nearest to downtown, which are in highest demand by renters.

The company’s business also includes a portfolio of downtown office buildings and the Stevens Pass ski area. Demand for office space has slowed down with so much new supply coming onto the market, Daley said. Rents have been declining 15 percent to 20 percent for new and renewing tenants.

Harbor’s office properties, which include the Logan Building and the 1411 Building, have weathered the recession well, Daley said, which he attributes partly to their location. Street-level retailers are hanging on, he said, but the story could change if holiday sales are slow.

Day-use ski areas like Stevens Pass usually fare well during down cycles, he said, because fewer local skiers are willing to venture far from home. In the end, though, the success of the ski season will depend on Mother Nature.

Turnaround coming?

Looking ahead, Daley wondered what will power the economy once the federal stimulus spending slows down after next year. “The recovery is government-led, and there are no clear drivers that are going to take us out of this recession,” he said.

The biggest challenge the company faces is how to grapple with all the uncertainty.

“When will be the turnaround, and how quickly?” Daley asked. “It’s very difficult to plan ahead, and every business has been struggling with this.”

Still, he said, “We are more optimistic today than we were a year ago. Hopefully we are at the bottom and things are turning around.”