Uwajimaya and Uwajimaya Village
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Uwajimaya and Uwajimaya Village Seattle, Washington Project Type: Mixed-Use/Multi-Use Case No: C033022 Year: 2003 SUMMARY The Uwajimaya retail store and Uwajimaya Village apartments are a successful experiment in medium-scale, mixed-use retail and housing development. Covering an entire city block in Seattle, Washington’s International District, the ground floor houses Uwajimaya, a 60,000-square-foot (5,574-square-meter), 50-year-old Japanese grocery store and import business with the upper five floors devoted to Uwajimaya Village’s 176 apartments. Replacing a truck maintenance facility on the site, the development builds upon the historic identity of the neighborhood while reaching out to a larger regional market. FEATURES Urban infill development Apartments over a grocery store Shared parking arrangement Apartments successfully leased in a down market Uwajimaya and Uwajimaya Village Seattle, Washington Project Type: Mixed-Use/Multi-Use Volume 33 Number 22 October–December 2003 Case Number: C033022 PROJECT TYPE The Uwajimaya retail store and Uwajimaya Village apartments are a successful experiment in medium-scale, mixed-use retail and housing development. Covering an entire city block in Seattle, Washington’s International District, the ground floor houses Uwajimaya, a 60,000-square-foot (5,574-square-meter), 50-year-old Japanese grocery store and import business with the upper five floors devoted to Uwajimaya Village’s 176 apartments. Replacing a truck maintenance facility on the site, the development builds upon the historic identity of the neighborhood while reaching out to a larger regional market. SPECIAL FEATURES Urban infill development Apartments over a grocery store Shared parking arrangement Apartments successfully leased in a down market DEVELOPERS Lorig Associates, LLC 2025 First Avenue, Suite 420 Seattle, Washington 98121 206-728-7660 Fax: 206-728-5847 www.lorig.com Uwajimaya, Inc. 600 Fifth Avenue South, Suite 100 Seattle, Washington 98104 206-624-6248 Fax: 206-405-2996 www.uwajimaya.com ARCHITECT Arai Jackson Ellison Murakami, LLP 1601 East John Street Seattle, Washington 98112 206-323-8800 Fax: 206-323-8518 www.araijackson.com CONTRACTOR Marpac Construction, LLC 1225 South Weller Street, Suite 500 Seattle, Washington 98144 206-329-4992 Fax: 206-329-4766 www.marpac.net PROJECT ADDRESS 600 Fifth Avenue South, Suite 100 Seattle, Washington 98104 GENERAL DESCRIPTION Seattle’s Uwajimaya retail store and Uwajimaya Village apartments are a successful experiment in medium-scale, mixed-use retail and housing development. Based on a homegrown business, it has become a strategic building block in a historic, low-income urban neighborhood that is rapidly changing at the edges. Covering an entire city block, the ground floor of the building is devoted to Uwajimaya, a Seattle retail institution and family-owned business, and its retail partners. On the upper five levels, Uwajimaya Village brings 176 units of new housing to the area. Seventy-five percent of the new units are market-rate rental apartments, and the rest are priced in the affordable category. With underground parking and surface parking on an adjoining lot, the project also creates 360 new parking spaces for tenants, store customers, and the pay-to-park public. The 50-year-old Japanese grocery store and import business behind the entire project has become a chain of three stores in the Seattle area, and expanded its import business to include other Asian product sources and markets. With the new mixed-use building, Uwajimaya has expanded its flagship store and relocated from a cramped 36,000-square-foot (3,344-square-meter) building with parking on one block to a new 60,000-square-foot (5,574-square-meter) superstore just across the street. Replacing a truck maintenance facility on the site, the mixed-use development successfully builds upon the historic identity of the neighborhood while reaching out to a larger regional market. Compared with the original location, the new site has good visibility from major arterials around the district and adequate parking. Economies of scale are realized through shared parking for the retail and residential portions of the project, which have different daily peak demand periods. Should economic conditions allow, the owner can redevelop the surface parking area in the future. The project leverages the vision of an experienced developer with high-quality urban design, and builds upon Uwajimaya’s commitment to long-term investment in the area. It has added to the community capital by bringing in mixed-income housing, expanding a historic grid, and creating new links among ethnic groups and businesses inside and outside the project. The vacated street has been redeveloped into a pedestrian-friendly open space faced by storefronts and furnished with traditional artifacts, newly commissioned artworks, kiosks, lighting, trees, and plantings. The housing complements the earlier arrival of two high-rise office buildings just across the street, and the Uwajimaya retail complex has been able to realize the economic synergies of convenient parking and hundreds of customers living in the floors above. In turn, the success of Uwajimaya and Uwajimaya Village has spurred further development in and around the block. DEVELOPMENT PROCESS The Moriguchi family, owner of Uwajimaya, began tying up land for a prospective expansion in the mid-1980s. As his business grew, CEO Tomio Moriguchi became certain that more than a block would be needed for a new flagship store. After the final parcel of the two-block site was secured in the mid-1990s, planning for development began in earnest. Daunted by the need for parking, the cost of development, and the regulatory requirements, Moriguchi began consulting with Seattle developer Bruce Lorig. The decision to build a mixed-use structure with housing above was based on Lorig’s sense of the ultimate potential of the site and the market timing. Lorig’s ideas complemented Moriguchi’s vision for expanding his Japanese grocery store business into a pan-Asian import store with related services. Lorig’s company, Lorig Associates, has built a portfolio of projects inside emerging neighborhoods based on strategic timing and staged risk. The company emphasizes design quality and engagement with urban context. Its current portfolio includes seven buildings listed on the National Register of Historic Places. The company has over $125 million in projects underway and an equal volume in predevelopment. Many are mixed-use projects built under complex community, market, and regulatory circumstances. Lorig Associates develops property for its own account and also acts as a consulting developer for private, nonprofit, and public clients. Projects have been structured as joint ventures, public/private partnerships, and leaseholds as well as more conventional fee simple ownership. Many include some element of public participation. For Uwajimaya, Lorig and Moriguchi agreed that a two-block, mixed-use project with housing offered many opportunities. It would enhance the immediate environment in a way that was sensitive to the historic context, while adding to the housing stock of the community and making the construction of a new flagship store feasible. Although the requirements for special district review, the need for storefronts on all sides, and the construction of pedestrian amenities would be costly, the prospect of benefiting the entire community was adopted as a goal and not perceived as a barrier. By reassessing the costs and benefits of the project at each critical stage, the Lorig team could manage the risk through the entire project. FINANCING The financing and ownership of the mixed-use development reflects a complex marriage of interests. The Moriguchi family, founder of Uwajimaya and initiator of the entire project, also owns and financed it through construction under Uwajimaya Village LLC. Weller Street Housing, the owner of the housing on the second level of the project, is a pool of investors that includes Lorig Associates, the American Communities Fund of Fannie Mae, and the Moriguchi family as major shareholders. Following completion, the ownership of the project was legally separated into a two-party condominium. Uwajimaya Village LLC retains ownership of the store and parking areas, and Weller Street Housing owns the apartments above and common areas on the platform. Shared spaces include stairs, elevators, and mechanical spaces. Bank of America provided the construction loan for the entire project, in the amount of $28.45 million. It was understood at the outset that Bank of America would also provide permanent financing for the store in the amount of $12 million, leaving $16.45 million to be financed by the apartments. The portion of the loan for the store was underwritten based on the long-term financing projections for store operations, following its reopening in the new space. In banking terms, this kind of underwriting comes under the heading of “owner occupied,” and must satisfy the following question: “Will the store be able to generate enough revenue to pay its expenses as well as a fixed rent/debt payment over a long period of time?” Meanwhile, the apartment portion of the construction loan was underwritten based on more traditional multifamily underwriting standards, using a 1.25 debt service coverage ratio standard (which included an assumed interest rate level of 9 percent), and a maximum 80 percent loan-to-value ratio. Construction loan advances were priced at the prevailing rate, and