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Seattle Daily Journal of Commerce REALREAL ESTATEESTATE MARKETPLACEMARKETPLACE NORTHWESTNORTHWEST

February 25, 2016 Page 2 REAL ESTATE MARKETPLACE NORTHWEST Institutional owners move in on local market Ownership goals of industrial projects have changed from short-term to long-term, thanks to the institutions.

f the 26 years I’ve been industrial owners are institution- streams that grow over time. current success, the growth of cess would kick off a flurry of in commercial real estate, al. Additionally, more than 90 One of the best ways to discipline in the market has led speculative developments. When O 15 have been focused percent of the purchasers and ensure a continuous, growing to the best landlord market I’ve the market was at its peak, some solely on the Puget Sound indus- developers of industrial invest- income stream is to make sure seen in 15 years, and probably new developments were built trial market. During this time I’ve ment properties are either insti- supply and demand stay in ever. with disregard to competition in seen Seattle tutions or funded by institutional check. Institutional owners are Since 2012, 24 buildings con- the pipeline. Today only seven mature into partners. first and foremost concerned taining 6 million square feet additional buildings totaling 1.9 one of the What does this ownership with supply matching demand. have been completed in the million square feet are slated to most desired structure mean for the Seattle They constantly monitor the Kent Valley, which is the larg- start construction in 2016. industrial industrial market? It means market to make sure there est industrial submarket in the In short, the new breed of deci- markets in industrial developers are mak- is enough demand to support Pacific Northwest. As of January, sion makers is showing restraint. the United ing more disciplined new project the current development pipe- 5.35 million square feet of this As a result, overall vacancies are States. The decisions. line. These institutional owners space, or approximately 89 per- at historically low levels and it’s result of our In past Puget Sound cycles, are also in the market for the cent, has been leased and active becoming common to see tenants city’s growth private developers completed long-term; which makes decid- negotiations continue. Remain- competing for new Class A space. By PATRICK GEMMA is a change in most industrial developments. ing not to build a comfortable ing vacancy is primarily small More importantly, we’re witness- DCT Industrial owner compo- The motivation of these private decision. portions of larger buildings, with ing the strongest rent growth the sition. developments was short-term Institutional owners are also the biggest vacancy being only Puget Sound has ever seen. In the early 2000s, ownership profits: The goal was to lease conservative because of their 135,000 square feet. Seattle’s industrial market has was a mixture of private parties and sell the projects as soon internal structure. Institutions These statistics are strong evi- matured into a shining star on and institu- as possible after completion of answer to Wall Street (REITs), dence of a market that is in the national stage. With recent tional entities construction. The thought was internal boards (sovereign balance. strong demand continuing into (real estate that more development would wealth funds) and fiduciary rela- During the first quarter of 2016, the new year and supply being investment lead to more profit. The problem tionships (pension fund advi- another eight buildings contain- restrained by institutional deci- trusts like becomes evident at the end of sors). These parties value steadi- ing 2.4 million square feet will be sion makers, it looks as though DCT Indus- cycles, when absorption slows to ly growing returns over time. delivered. As of January, approxi- the health of the market will stay trial, pension a crawl and large industrial build- These returns are accomplished mately 1 million square feet, or strong through 2016 and beyond. fund advisors ings are left vacant, sometimes by making smart decisions. 42 percent, of this space has and sovereign for long periods of time. This institutional conserva- been pre-leased. This level of As senior vice president for wealth funds). In contrast, the motivation tism with a focus on long-term pre-leasing is unprecedented in DCT, Patrick Gemma oversees Fast forward behind institutional industrial objectives is prevalent in the the Seattle industrial market and development and capital deploy- to 2016, the development is a long-term ben- Seattle market. While demand speaks to the lack of larger Class ment in the Seattle market, overwhelm- efit to the market. Institutional fundamentals do play a role in A options available. Gemma has over 26 years of INDUSTRIAL ing majority of owners value long-term income the Seattle industrial market’s In past cycles, this kind of suc- real estate experience.

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SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page xx3 Get ready for a soft landing in lodging Hotels across the U.S. reached a milestone in 2015: annualized occupancies exceeded 65 percent and the average daily rate was $120.

t ceases to amaze me that just daily rate, consumer demand growth, something no one a few short years ago the hotel is at an all-time high, and we thought possible. Forecasts I industry across the U.S. was, will go from a virtual standstill estimate 2016 will set another for the most part, on life support. in new construction to a peak record in occupancy on a national Perhaps development phase unseen in basis and many markets, includ- most owners recent history. ing the Northwest, are predicted of commercial Hotel investors who bought into to exceed 90 straight months of real estate felt the euphoria between 2010 and RevPAR growth through 2017. this way. Con- 2015 reaped unheard of returns With that said, for the first time sumers were (think Hotel 1000). since 2009, both PKF and Smith all but nonex- To say things are strong in the Travel expect a slowdown in year- istent, group hotel space is an understate- over-year RevPAR growth both and corporate ment, but as with any segment regionally and nationally. travel had of commercial real estate there It is difficult to continue to By CHRIS BURDETT been paired are always storm clouds on the make such predictions and CBRE Hotels to nothing, horizon. postulate over the enormous resorts were success of our industry with- virtually giving rooms away, loan Record setting pace out thinking about when it will delinquencies were at historic end — especially given the cur- highs and owners of hundred- As 2015 came to an end, rent forecast that growth (albeit million-dollar hotels across the U.S. reached slower) will continue for the fore- hotels were a milestone never seen: annual- seeable future! mailing their ized occupancies exceeded 65 Recent sales transactions in keys back to percent and the average daily Portland, Bellevue and Seattle their lenders. rate was $120, according to that have set all-time highs on Fast-forward PKF Hospitality Research and a price-per-room basis suggest a half-dozen Smith Travel. Here in the North- investors don’t believe it will end years and our west, both Seattle and Portland soon. How often can a hotelier industry is on reached unseen levels of 76 buy and sell a hotel in the space the verge of percent at $150 and 74 percent of 18 months and return over $1 setting records at $128, respectively. million a month to its investors? in both nation- Our industry has experienced Consumers willing to pay al occupancy 72 straight months of RevPAR HOTELand average (revenue per available room) LODGING — PAGE 5

Moody National REIT II earlier this month paid $74.1 million for Marriott SpringHill Suites-South Lake Union on Yale Avenue. Photo by Matthew Behrens INSIDE Institutional owners move in on local market ------2 Get ready for a soft landing in lodging ------3 Office market shows no signs of slowing down ------4 For apartments: Go West young man, go Northwest! ------6 10 questions developers should ask an architect ------8 10 questions developers should ask a contractor ------9 Greenbacks available for local brownfields ------10 Fighting blight? Condemnation may be the way to go ------13 3 projects are putting a new face on the Denny Triangle ------14 2016 DJC Real Estate Market Surveys ------15 ON THE COVER Hill7, a 285,000-square-foot office building, is one of many developments changing the face of Seattle’s Denny Triangle. Find out what’s behind the transformation on page 14. Photo by Benjamin Benschneider 2016 Real Estate Marketplace Northwest Section editor: Benjamin Minnick • Section design: Jeffrey Miller Web design: Lisa Lannigan • Advertising: Matt Brown Surveys: Lynn Porter, Jon Silver, Nat Levy, Sam Bennett

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 Page 4 REAL ESTATE MARKETPLACE NORTHWEST Office market shows no signs of slowing down Total sales volume should exceed $3 billion this year and the record for pricing per square foot will fall for the seventh consecutive year.

lion square feet, as nearly 2.5 million square feet were taken down in 2015. More than 7.1 million square feet have been absorbed since the beginning of 2013. As in previous years, the robust demand we’re seeing is driven primarily by the high-tech industry, which accounted for approxi- By STUART ALEX mately 47 percent of all regional & office leasing activity in 2015. WILLIAMS MUIR No longer are tech companies JLL looking exclusively for space in stereotypical “creative” submarkets such as Lake Union and Fre- eattle’s population growth mont. We have seen numerous is far outpacing the nation- tech tenants move into tradition- S al average, and due to the al high-rise buildings, including strong job market and high qual- Groupon at 1201 Third, Uber at ity of living, it continues to attract Second and Seneca, and Pitch- millennials at a faster rate than Book at 901 Fifth. nearly every other major U.S. city. With owners spending signifi- In 2015 the economy continued cant capital improving their build- to strengthen, with unemployment ings, it is no surprise that the in the summer trend of tech companies migrat- dropping to the ing to the CBD has intensified. lowest figure These companies are finding not the region had only the quality of space they seen since mid- desire, but also a level of ameni- 2007. Local job ties that only downtown can offer. growth looks to Total vacancy in the Seattle For the third consecutive year net absorption surpassed 2.0 remain strong, metro area declined for the sixth with the most consecutive year, dropping 50 million square feet recent employ- basis points year-over-year to ment forecast 10.2 percent, which is as low from the Puget as the market has seen in the Net absorption Vacancy rate Sound Eco- last 10 years. At 4.5 percent- 4,000,000 20.0% OFFICE nomic Fore- age points below the national 2,926,8853,052,695 18.0% caster calling average, the Seattle market is 2,751,160 3,000,000 2,585,636 for impressive growth of 2.3 per- the sixth tightest office market 2,461,440 16.0% 2,091,420 cent in 2016. in the country; behind Salt Lake 2,000,000 14.0% 1,450,411 The Milken Institute recently City, Nashville, San Francisco, 1,311,936 1,203,365 released its 2015 Best-Performing Portland and New York. Subse- 896,556 792,531 12.0% 1,000,000 552,410 Cities report, which listed Seattle’s quently, average asking rents 206,314 10.0%

greatest assets as its well-educat- are up 7.5 percent year-over-year, (s.f.) absorptionNet 0 8.0% ed and highly skilled workforce, as and have hit a 10-year peak. -263,285 rate (%)Vacancy well as the fact that high wages in -1,000,000 6.0% Leasing market fundamentals -891,039 tech industries support consump- will continue to improve with 4.0% tion-related jobs throughout the strong rent growth anticipated in -2,000,000 2.0% rest of the local economy. the short and mid-term. -2,382,221 Due to those and several other -3,000,000 0.0% factors, Seattle was ranked as the 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 seventh best-performing large city Too much development? in the U.S., an improvement of four Seven major office projects spots from last year’s report. were delivered last year totaling more than 2.2 million square Leasing trends feet. This makes 2015 the most active year for development since For the third consecutive year net absorption surpassed 2 mil- OFFICE MARKET — PAGE 5

Images from JLL

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page xx5 lodging continued from page 3 upwards of $500 a night in the essential “hole in the ground” A offices and hotels. control mechanisms on our some- consumer and although short- summer for a Seattle hotel also that was once a budding project Both Seattle and Portland CBDs times over exuberant developers. term pain will occur for hotel inves- suggests the balance continues (think Potala Tower in Belltown). have an unparalleled number of But these “adjustments” are tors, owners and operators, the to tilt toward the hotelier. However, this time there are hotel developments in the pipeline good as hotel operating fun- long-term prospects for hotels and Coupled with ongoing demand certain economic and develop- representing a 32 percent and 27 damentals continue to remain hotel development remain bullish. for hotel development sites and ment governors that will slow percent, respectively, increase in strong and the average consum- regular announcements of new our descent to a controlled level. upper-upscale hotel supply. er — not experiencing many of Chris Burdett is senior vice hotels, perhaps there is no end Underwriting criteria and The good news is most of this these negative corporate pres- president at CBRE Hotels and to the greatest growth in the unprecedented lending regula- is occurring over a period of four sures and enjoying low fuel pric- part of the company’s broader Northwest hotel space in record- tions (Dodd-Frank Title XIV) have to five years and most, if not all, es — continues to travel and global debt and equity finance ed history. But that would be helped control the euphoria of is being developed by seasoned spend discretionary dollars. division. He has been a hotel bro- foolish as we all know. new development. Interest rate hotel developers. Competition and controlled cha- ker, owner and investor for more Even the youngest consumer risk is finally coming back into os can be good for the average than 20 years in the Northwest. understands the simple econom- play, albeit slower than expected. Prep for a downturn ic theory of supply and demand, Competition with other commer- and we all have borne witness to cial real estate for land continues Resilient hotel developers the one truth that what goes up, to hedge new hotel development, understand the cyclical nature office market must eventually come down. We but intelligent developers under- of our industry and can weather continued from page 4 tend to forget this euphemism in stand the economic conditions the impending downturn that our hour of euphoria, but eventu- and ever-changing development generally comes about every five ally someone will be left without environment. And yet the great- to seven years. Recognizing we prior to the recession. quarters in 2012, and provided a seat as the music stops. est risk — consumer confidence are going into the seventh year With more than 5.9 million clear evidence of foreign investors’ All good things must come to an — seems to be the most difficult of this current cycle, it is impera- square feet under construction, interest in Seattle. end but this time around I expect to predict given all the recent tive for hoteliers to prepare for Seattle is the second most active The two largest office sales in it will be different than those hor- economic and cultural gyrations a downturn, as the long-range market in the U.S. for develop- the region this year — Colum- rific crashes of the last few cycles. throughout the U.S. and the world. averages predict we are now ment as a percentage of existing bia Center and Amazon Phase With that said, the Northwest is overdue. inventory, behind only Nashville. VI — were purchased by foreign Soft landing in an unprecedented expansion As of late, economic conditions While this is a substantial amount investors, so it should come as no of corporate growth and devel- nationally have had an impact of construction, concern locally surprise that Seattle moved from Barring the unpredictable cata- opment. Global players such as on our industry with REITs and about overbuilding remains fairly eighth to fifth in terms of best U.S. strophic event that models gener- Amazon, Intel, Costco and Nike C-Corps feeling the brunt of the low, since demand is as high as cities for real estate investment ally do not predict, this time around continue to expand and push the volatility of the capital markets. it’s been in recent memory. in this year’s Foreign Investment the hotel space should endure a boundaries of growth, creating Continued declines in oil pric- We’re tracking more than 8.2 Survey by the Association of For- correction relatively unscathed. extraordinary numbers of comes and the weakening Chinese million square feet of tenant eign Investors in Real Estate. There are always those proj- mercial real estate development. investment juggernaut have cre- demand in the market. Fourteen Foreign investors had increas- ects that regardless of time or At last look, Seattle had over ated havoc among institutional companies are seeking space ingly been on bid lists for major place will fail. Many urban CBDs 30 construction cranes building investors, corporations and mid- options of 100,000 square feet assets in recent years, so 2015 will undoubtedly have the quint- over 10,000 apartments, Class dle-America that can be used as or larger, and there are just 10 was the natural progression of that existing blocks of space that can trend, as efforts to enter the market accommodate them. So, the sup- became increasingly successful. ply coming to market in the next As the market moves into 24 months is needed. 2016, strong landlord sentiment and expectations for robust Flocking foreign investors demand will continue to fuel investor appetite for Seattle’s In PWC and ULI’s Emerging office assets. While it may be Trends in Real Estate 2016 hard to match 2015’s volume, report, Seattle was ranked as the we anticipate total office sales strongest West Coast real estate volume will exceed $3 billion market and fourth strongest over- and the market record for pricing all in the U.S., up four spots from per square foot will fall for the last year’s eighth place ranking. seventh consecutive year. Quality + Additionally, Seattle was named the third best market in terms What’s next for Seattle? of investment potential and has surpassed San Francisco for the Lake Union, Pioneer Square Service = first time since 2010 to top the and the Seattle CBD are undeni- West Coast region. ably hot markets, but what’s the In total, the market saw 48 trans- next big thing in local real estate? actions over $10 million close, We believe the answer is CHUG which makes 2015 the most — Capitol Hill, the University District active year for office investment and Georgetown. Like the acronym, sales since 2007. The $4.5 bil- these neighborhoods all have an lion total volume represents a association with beer, namely they 157.8 percent increase over 2014. brew it in Georgetown, they serve it For the sixth consecutive year a at the countless bars in Capitol Hill, new market-record for pricing was and they are major consumers in achieved, when 2201 Westlake the University District. Serving Washington traded for $792 per square foot. The other reasons these areas Four sales closed in 2015 where should heat up is because they pricing exceeded $700 per square have the young talent that employ- General Contractors foot, and with how pricing has ers seek, and all either have or grown in the last five years, it is not will soon have great mass transit. for 30+ Years unrealistic to imagine a $900 per square foot office sale occurring in Stuart Williams, a managing Seattle in the near future. director at JLL with over 30 years Perhaps the most notable sale of of commercial real estate experi- the year occurred in August, when ence, specializes in investment Gaw Capital Partners acquired the sales and office leasing in Puget Corporate Office 76-story Columbia Center for $711 Sound. Alex Muir, a research 1010 6th Ave N • Kent, WA 98032 million. This was the largest real manager at JLL, overseas office, estate transaction in the region industrial and retail research for Phone: 253.480.2372 • Fax: 253.856.1328 since Amazon purchased its head- Puget Sound.

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 Page 6 REAL ESTATE MARKETPLACE NORTHWEST For apartments: Go West young man, go Northwest! In King County, there are 80,000 apartment units in the pipeline that would boost inventory by nearly 50 percent — if built.

he year was 1851 and John Babsone Lane Soule, quoting Horace Greeley, decried west- T ward expansion the future of America. Seat- tle’s then non-indigenous population: 12. Growth was slow and it wasn’t until 1870 that Seattle’s population topped 1,100. Yet, Seattle’s historic predilection towards boom eras soon emerged. The region’s first boom hap- pened during the ensuing decade. From 1880 to 1890 Seattle’s population increased 12-fold, from 3,500 to 42,000. As the century turned, the population of Seattle nearly doubled to 80,000 residents. Flipping By DYLAN SIMON the history books forward 115 years — to present day — we’ve Colliers seen the region add nearly International 70,000 jobs in one year alone, with overall population growth nearly leading the nation in each of the last three years. Picks and gold pans are now artfully substituted for laptops and virtual reality goggles. New claims of land, in the form of office leases, are staked by the likes of Amazon, Oculus, Tab- leau, Apple, Oracle, Facebook, Uber and Pitchbook. A modern Gold Rush era is in our midst and present day Horace could MULTIFAMILY easily decry “Go Northwest!” What’s driving the boom? Fundamentals of the current boom era span from the economic to the geographic and demo- graphic. Seattle’s West Coast location, proximity to APARTMENTS — PAGE 10 Annual rental rate growth across King County has averaged about 8 percent over the past three years.

Average sales prices per square foot for apartments in urban King County hit a record last year. Source: Dupre + Scott; Real Capital Analytics; Colliers Research

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page xx7

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 Page 8 REAL ESTATE MARKETPLACE NORTHWEST 10 questions developers should ask an architect hoosing the right design goals first. Ask your prospective references from other developers, team for a project can help team to explain their mission, but success depends on the abil- C ensure certainty and suc- and the tenets that underpin ity to work well with a broad team cess — from pre-design through their approach to design and the that includes general contractors, stabilization. process that guides the many consultants, city officials and But how does an owner choose thousands of decisions that go many others. It is also important the best team? Here are 10 into creating a great project. Col- to ask for references from core questions to ask your prospective laboration is essential. project team members, not just architect in order to cull the field: for the firm. Ask for at least three Design + Technical Exper- references from clients and proj- Longevity + Business Acu- 3tise. Some firms are out- ect collaborators for each core 1 men. You want a firm that standing designers, but are weak team member. Ask for several has demonstrated it can operate in technical execution. Some are examples of repeat clients and successfully over an extended great in production and techni- repeat project collaborators — period of time cal execution, but lack the abil- this speaks volumes to a firm’s — in both good ity to create inspired, innovative ability to lead, and your project times and design that will connect with the depends on it. bad. How long market. The best firms excel at has the firm both, recognizing that even the Design Professional Liabil- been in busi- best design can fall apart in exe- 6ity. Design and development ness and how cution for lack of proper attention are risky businesses. Predicated many business to detail. Design is a problem- on the Professional Standard of cycles has it solving process, and your archi- Care, you count on your design weathered? tect must be exceptionally good team to help navigate treacher- By BLAINE WEBER How is the at asking and answering the right ous waters, and to help you mini- Weber Thompson firm managed? questions. Ask how the architect mize risks where possible. How What are the will ensure both excellent design many claims has your design firm credentials of the managing part- and great technical execution had since opening its doors, or in ners? What is the secret to its from start to finish. the last decade? How much liabil- longevity, and what measures ity insurance does it carry, and have been taken to ensure suc- Track Record. It is vital that what is the rating of its insurance cession and firm sustainability? 4your design team possess company? Does the firm have cur- Has the firm been recognized by the knowledge of a given project rent or pending claims that could the Circle of Excellence or some type and there is no better way erode policy limits? other measure of business acu- to demonstrate expertise than men? that which comes from deep Entitlement + Permitting experience and success. Ask for 7Expertise. Time is money, and Design Philosophy + Process. at least three case studies that the time required to obtain per- 2Find a firm that will work hard demonstrate knowledge of this mits can have a huge impact on to understand your vision, keep project type, and how the design project success. The reputation egos in check, and respect you team helps its clients bring this and relationships of a firm at a as a valued design team mem- type of project successfully to given planning or building depart- ber. Architects have an obligation market. ment is of paramount importance to their clients, the project’s end relative to timely processing and users and the greater community References + Ability to Lead. approvals. Ask for a track record — but they need to satisfy your 5Most developers will ask for of experience in working with the planning and building depart- Images from Weber Thompson ments in expediting approvals. Ask what the team will do to ensure that these approvals are issued quickly. Repeat client Weber Thompson designed this 40-story apartment tower Community. Taking a project at 970 Denny Way in Seattle for Holland/NASH. 8through the approvals pro- Crews from Holland’s construction arm are working on cess almost always involves some phase one, which includes demolition, excavation, shoring measure of engagement with the and the mat foundation. local community. The firm you are When it opens in summer 2018, the building will have 468 considering should have a good units, 15,580 square feet of retail and 359 parking spaces. reputation for listening, should be Weber Thompson designed two other high-rises for Hol- an active contributor to the com- land, as well as several mid-rise buildings. munity, and must be able to work Blaine Weber says his firm’s relationship with Holland successfully with local citizens “speaks to all 10 of the items in my article.” — through design review and community interaction. Document the firm’s involvement in community organizations and design-review firm uses — on how its delivery and capability to take you there. programs, and its ability to work process will help ensure cer- with both community and plan- tainty in schedule, budget and These 10 questions are funda- ning agencies. project delivery. mental, but the answers will help you confidently select the firm Project Certainty. One of the WOW Factor. Your design that has the expertise and desire 9most important contributions 10 team must have the capa- to help you realize your vision of your design team will make is to bility to create extraordinary a great project. help ensure certainty with regard design that will differentiate to schedule, budget and project your project in the marketplace. Blaine Weber, AIA, is a found- delivery. As quarterback of an A great design team will help ing partner of Weber Thompson, expanded design team of over ensure both value creation and a West Coast-based architec- 20 collaborators, your architect profitability. Your prospective tural, planning, interior design must be a great orchestrator, design team must prove that it and landscape architectural firm organizer and task master in understands your vision and the that specializes in residential, order to stay on schedule. Ask for wow factor that you are after — hospitality, commercial office details — including the tools the and that it has the passion, skill and mixed-use projects.

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page xx9 10 questions developers should ask a contractor Choosing a contractor is one of the most important decisions a developer makes. Qualitative questions cut through the buzzwords and help find the right fit.

evelopers live in a crazy, competitive and often risky How much prior experience world of conceiving and does this team have togeth- D 3er? delivering incredibly complex There is no substitute for projects on fixed budgets and the synergy and track record timelines. The process of navigat- of a team with a proven history ing land purchases, financing, of delivering great results. The leasing, design, entitlements, introduction of different people permitting, invigorates a team and provides construction, additional skills, but ideally the move-in and leadership has delivered several operations projects together. is not for the faint of heart, Are you guaranteeing this and unexpect- 4team for the life of the proj- ed setbacks ect? Nobody wants to be a “bait- lurk in every and-switch” victim. However, the corner. number one staffing challenge a By BILL DEJARLAIS Despite contractor faces is an uncertain GLY Construction these chal- project start. Open up an hon- Ask to take a guided tour of a project under construction. A clean and orderly jobsite lenges, two est dialogue about what options minimizes time and material waste, promotes quality and respects human lives. things tend to remain static: the exist in the event your project budget and the completion date. is delayed. In addition, have a Image copyright Sozinho Imagery The task of hiring a team of spe- candid conversation about how cialists to help reach those goals the contractor manages the tran- will communicate with their field and provides options to develop planning and decision making. can be daunting and uncom- sition from preconstruction to personnel and subcontractors. the best solution. Ask for specifics around activi- fortable. A construction partner construction. A failed hand-off ties that support you and the is arguably the single greatest is one of the biggest (and most How will you help me solve What will you do for me extended design team. How will asset, or liability, if not chosen costly) disappointments for the 8this challenge? Put a real 9in the next 60 days? In they be attentive to the schedule, in a meaningful way. entire project team. issue on the table. It can instantly this busy market, preconstruc- and appropriately engage early The traditional request for pro- reveal how the contractor deals tion and construction phases subcontractor support? Mate- posal process focuses on quanti- Tell me about your safe- with adversity. If you direct this are moving closer and closer rial procurement, for example, is tative criteria such as fees, team, 5ty program? In addition to question to a team, watch for together, many times overlap- especially critical to keeping the business terms, and — depend- learning industry-standard mea- a project manager who probes ping. A contractor should feel ing on the information available sures, such as an EMR or insur- with questions to understand, the urgency of this phase of 10 QUESTIONS — PAGE 11 — some form of cost estimate ance rate, you want to know how and schedule. Those are all good much value a contractor places practices that fulfill basic internal on maintaining a controlled and controls for a selection process. organized jobsite. If you can, tour But the quantitative data is no a project under construction to the substitute for qualitative informa- see their safety philosophy up tion that truly reveals whether or close. You should also ask for not the contractor is the right fit. three subcontractor references. 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SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 Page 10 REAL ESTATE MARKETPLACE NORTHWEST Greenbacks available for local brownfields This year, the EPA anticipates awarding $54.5 million to over 200 communities across the U.S., and the state has additional funds for local projects.

that without community vision ¼-acre vacant lots once occupied EPA funding is helping provide a road map for future and support many decades ago by gas stations and dry cleaners uses of the old Kent Highlands Landfill area. these iconic Seattle landmarks to multi-acre former industrial may have become brownfields. facilities, such as mills and manufacturing plants. Many are along What are brownfields? waterfront areas and historic railroad corridors. Others are found Brownfields are vacant or under- in suburban settings, such as utilized properties for which reuse aging strip malls. By CHRIS ANDREA or redevelopment is hindered by & actual or suspected contamina- Why reinvest in brownfields? GDAK pEDERSEN tion. While their characteristics Stantec Consulting Services vary, brownfields share many Many brownfields have potential common redevelopment chal- for reuse that could spur the revi- lenges. Left ignored and aban- talization of struggling areas but ports fans using Link light doned, sometimes for decades, remain idle due to fear of hidden rail, Amtrak or Sounder brownfields put the health, safety environmental liabilities. Historic S commuter rail service to and economic vitality of our com- industrial and commercial opera- visit CenturyLink and Safeco munities at risk. tions, as well as dated buildings fields are reminded of the Sta- According to the Environmen- that may contain asbestos or dium District’s legacy as a rail tal Protection Agency, there are lead-based paint, present valid Rendering courtesy of Stantec yard. Likewise, visitors to Seat- as many as 500,000 brownfield concerns regarding the potential tle’s one-of-a-kind Gas Works sites throughout the U.S., includ- presence of contamination. the financial gain from selling or centers, waterfront and corner Park are reminded of its history, ing dozens lurking in nearly every If concerns are great enough, redeveloping may be less than lots along major transportation as the park retained features of community in Washington. property owners may favor leaving the cleanup costs. Furthermore, corridors), the stigma attached the former coal gas plant. Brownfields vary greatly in their property as-is or abandon- although many brownfields occu- to them causes private inves- Most, however, are unaware size and character, ranging from ing it altogether out of fear that py prime real estate (e.g. city tors to look for seemingly less apartments continued from page 6 San Francisco/Silicon Valley and A pipeline to envy ing hubs outside Seattle and Bel- averages between 6 percent investors is pricing for build- hyper-desirability to the millennial levue. Namely Lynnwood, Bothell, and 8 percent — an extremely ings 60-plus years old trading at cohort conspire in creating a near Eighty thousand units! Yes, Redmond, Issaquah and Burien. strong cumulative trend. Rental small discounts to new buildings. perfect storm of demand fostered 80,000 apartment units are in One may marvel at the amount rate appreciation during a time For years I have called Seattle by capital eager for deployment. some form of development or pro- of development occurring in the of expansive inventory growth a dollar-cost-average market and Accordingly, over the course of posal in King County. If completed, region, yet there is more to this speaks volumes to the region’s I see few signs that high pricing the last five years the combina- this figure represents a near 50 story. The economic sound- economic fundamentals. Overlay will abate. Although most pundits tion of these factors created and percent increase in the current ness of the current expansion sub-4 percent vacancy rates and agree that the market peak is buoyed the strongest apartment apartment stock in King County. or “boom” cycle beget further one can easily understand inves- nigh, don’t expect any period market experienced in over two During the current expansion investment on behalf of market tors’ desire to put investment of market softening to reflect decades, principally fueled by: cycle, spanning 2011 to 2015, participants, contributing to an dollars to work in Puget Sound. appreciable discounts. apartment developers delivered apartment development pipeline • Pent-up demand from lack of approximately 32,500 apartment yet to slow. However, despite Apartment building sales A look ahead development during the Great units — roughly 6,500 units each record number of new apart- Recession year. Apartment developments ment deliveries, rental rates con- Apartment sales volume is a Looking ahead, the same funda- • Emergence of a millennial underway and slated for delivery tinue to rise while vacancy rates great bellwether of investor confi- mentals paving the way to current generation as the largest renter between 2015 and 2019 total remain stable and in many cases dence in the region. In 2015 new robustness in the apartment mar- cohort in decades another 48,000 units — equating well below 5 percent — a historic sales volume records were set. ket remain. Job growth remains • Expansion of tech-sector to nearly 10,000 units each year measure of a balanced market. Serving as the most prominent pacesetting for the nation. Young, employment and drafting off Sili- for five continuous years. More Apartment developers built example of investor demand, talented workers continue to con Valley fundamentals are planned, yet without defined them and the residents came! regionally investors spent over relocate to the Seattle region • Capital flooding investment delivery dates. $4.7 billion on apartments in and well-capitalized companies markets with a focus on invest- Although the lion’s share of Rental rates match demand 2015 — surging 42 percent over snatch them up to the point of ment in the Seattle region apartments thus far delivered are sales volume in 2014, which a labor shortage (a quick search concentrated in the region’s urban Early in the current econom- itself stood as a near 10-year reveals Amazon has over 6,400 The reality of these drivers is no centers and core neighborhoods, ic cycle apartment rental rates record for the region. job openings in Seattle alone). more manifest than in the region’s apartment developers continue grew spectacularly in core, urban The measure in the market tru- Rest assured, a threat of head- apartment development pipeline. to seek developments in emerg- markets — exceeding most other ly punctuating investors’ thirst to winds exists. The supply pipeline markets in the nation and landing own apartment assets in Seattle is mounting. Capital markets are Seattle in Top 10 rankings on list is the meteoric rise in the price- showing signs of caution. And we after list. As the cycle matured in point of apartment buildings. all know that trees don’t grow to 2013 and 2014, and new deliv- Using price-per-square-foot as a the sky. With the looming reality eries met demand, continually measure, average sales price in of the cyclical nature of commer- EQUITY CAPITAL FUNDING, LLC rising rental rates spurred devel- urban markets grew to $529 per cial real estate, professionals in opers and investors into action. square foot in 2015, 23.6 per- the apartment investment space • Real Estate Secured Fixed Income Over the last 12 months rental cent higher than 2014 and 2.5 remain cautious, yet optimistic for rate growth expanded markedly in times the average sale price dur- clear seas despite predictions of Investments secondary and tertiary markets, ing the market bottom in 2009. mild choppiness ahead. % • 1st Position Deeds of Trust while growth in core markets sta- Continuously escalating price- • 50%-60% Loan to Value bilized with more modest growth. points is truly a measure of both Dylan Simon is vice president APR investor demand and quality of of investment sales with Col- • 2-5 Year Term 2015 rental rate growth assets trading hands. It is ines- liers International in Seattle. He capable that new-vintage, well- focuses on the sale of apartment 8For more information please call (253) 627-5116 Looking back at three- and five- appointed apartments will sell buildings and development land year trends, across the region for high prices. However, what in Seattle and the Puget Sound rental rate growth continuously has come as a surprise to many region.

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page 11xx risky opportunities — which all and private developers). The city is using grants for reality. With additional commu- too often are “greenfield” sites a public-private partnership nity support and public-private 10 questions on undeveloped lands. Turning brownfields into assets approach to redevelopment. partnerships, the landfill area Reinvesting in brownfields pro- Restoring the site for industrial is poised to become a regional continued from page 9 vide many community benefits, When faced with brownfield use will provide shovel-ready destination. project on track and on budget. including attracting new business issues, the city of Kent knew space that will attract new opportunities that create jobs and exactly where to begin the revi- employers to the area and cre- Many other communities How will you help man- generate increased taxes that talization process. In 2012, the ate jobs for local residents. throughout Washington are tak- 10 age my specialty con- can fund infrastructure improve- city secured $400,000 of EPA The Kent Highlands Focus Area ing advantage of state and fed- tractors? You have a business ments, as well as neighborhood assessment grants. A city-wide was prioritized due to its prom- eral funding to support revital- right to directly hire specialty programs or park developments. brownfield inventory identified inent location along the city’s ization of publicly and privately contractors. A proactive contrac- Other benefits of brownfield hundreds of potential sites, so highly visible western gateway owned brownfields, such as King tor will embrace this, and will be or “urban infill” development the city established criteria to (adjacent to an I-5 interchange) County (http://your.kingcounty. able to tell you how they plan to include reducing blight and crime rank sites based on factors that and the significant opportunities gov/solidwaste/brownfields) integrate those companies from in neighborhoods and protecting included reuse potential, stake- associated with over 170 acres of and the city of Everett (https:// a risk management, coordina- sensitive environments, such as holder interest, and protection underutilized land. Centered on everettwa.gov/675/Brownfields- tion and scheduling standpoint. farmland and natural areas, by of human health and the envi- the former 114-acre Kent High- Assessment-Grant). reducing threats to the environ- ronment. lands Landfill (which received If you own or are interested in Cost, schedule and quality — ment and urban sprawl. The 12-acre former aluminum municipal waste from Seattle redeveloping a brownfield prop- the old adage is that you can only Years of systemic disinvestment smelter site (in the “red hot” until its closure in 1986), the area erty in Washington, there may pick two. These questions should in brownfield-impacted areas, Kent Valley industrial market) remains largely undeveloped due be local, state or federal funding help differentiate your options so however, leave many communities was prioritized due to its desir- to regulatory, environmental and available to support your project. you can determine which contrac- without the necessary resources to able location (including railroad engineering constraints. tor lets you pick all three. address these issues. As a result, access) and redevelopment EPA funded a community Chris Gdak and Andrea Ped- valuable brownfield properties that interest. The site has been idle visioning exercise led by Kent ersen are leaders of Stantec’s Bill DeJarlais is a principal could serve as catalysts for revital- for nearly 30 years due to debris and Stantec to engage local Bellevue-based Brownfield and senior project manager at ization often remain vacant until piles left following the smelter’s stakeholders in creating a com- Grants Team, which has assisted Bellevue-based GLY Construc- funding is available to complete closure in 1986. Cleanup costs pelling yet practical vision for over 20 western U.S. communi- tion, one of the region’s larg- assessment and cleanup activities. are estimated to be in the mil- future use of the landfill, as well ties secure and implement EPA est locally owned contractors, lions of dollars, and over $1 as a detailed strategy and “road brownfield grants. and leads the firm’s technology EPA and state programs million in back taxes are owed. map” to transform the vision into oversight committee. The devastating long-term effects of brownfields prompted the EPA to establish its national Brownfields Program in 1995 that provides funding and other forms of assistance to communi- CONSTRUCTION INDUSTRY TRAINING ties that are overburdened with brownfields. Since the program’s inception, COUNCIL OF WASHINGTON (CITC) the EPA has leveraged more than $24 billion in public-private partnerships to empower communities in their efforts to restore environmental and economic vitality Training is what we do through brownfield revitalization. Each fall, the EPA hosts a grant – success is what we deliver. competition encouraging eligible entities (typically state, local and tribal governments) to apply for brownfield assessment, cleanup Apprenticeship & Continuing and/or revolving loan fund (RLF) Construction Training: Education: grants ranging from $100,000 to $1 million. Carpentry Electrical Trainee The assessment grants estab- • • lish an inventory of brownfield • Electrical (01) • Electrical Journey-Level sites throughout the community. Electrical (02) Plumbing Trainee With an inventory in hand, com- • • munities work with property own- • Electrical (06) • Plumbing Journey-Level ers, developers and consultants to assess environmental condi- • Heavy Equipment tions and plan for cleanup and • HVAC Skills Assessments: redevelopment of publicly and pri- Laborers vately owned priority sites. These • Commercial grants also allow a portion of the Painting • • Industrial funds to be used for “area-wide” Plumbing • or site-specific cleanup and rede- • • Gas & Oil Pipeline velopment planning activities. • Sheet Metal The cleanup grants (also acces- • Supervisory sible to non-profits) and RLFs (also accessible to private developers) provide funding to implement cleanup and redevelopment activities. This year, the EPA anticipates awarding $54.5 million to over 200 communities Contact CITC today and begin building a better across the U.S. In addition, Washington has its own state funding and assistance future for yourself, your company, your industry. programs, including remedial action grants and loans administered by the Department of Ecolo- gy, and the Brownfields Revolving Toll-Free: (877) 428-0442 Web: www.citcwa.org Loan Fund program administered by the Department of Commerce Bellevue • Spokane • Vancouver (also accessible to non-profits

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 Page 12 REAL ESTATE MARKETPLACE NORTHWEST

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page 13xx Fighting blight? Condemnation may be the way to go Neglected commercial properties generally pay less property tax, but demand more costly attention from government.

ormer U.S. Supreme Court Justice Oliver Wendell F Holmes Jr. once famously said, “The right to swing my fist ends where the other man’s nose begins.” Like- wise, a property owner’s right to manage their real estate as they see fit ends when it adversely affects neighboring busi- By KINNON W. nesses and WILLIAMS community. The city of Bellingham condemned the Aloha Hotel, where several rooms had The 2016 been closed by health officials after hazardous levels of meth were found. Inslee, Best, presidential Doezie & Ryder campaign Postcard image has brought Neglected, vacant and aban- contaminating everything around politically charged problems of Samish neighborhood — was a renewed attention to eminent doned commercial properties it. urban blight. However, eminent chaotic, revolving crime scene. domain, most of it focused on are more than an eyesore. Rat Typically, property owners rely domain can and does play an According to court documents alleged abuses of condemnation infestations, illegal drug trade, on government to make sure important role in protecting our and media reports, between Jan. power to further private interests. prostitution, arson, assault their neighbors do not damage communities. 1, 2013, and Oct. 1, 2014, police Regardless of political rhetoric, and even murder come with local property values, public responded to 301 calls to the government’s right to take “blight- blighted properties. This kind safety or general quality of life. Goodbye Aloha Aloha. ed” commercial property is a of real estate generally pays Covenants, zoning, inspections Along with relatively run-of-the- last resort and strictly limited in less property tax but demands and building code enforcement Take for example the Aloha mill drunken fights and sex traf- most states, Washington includ- more costly attention from local are common tools used by gov- Motel, recently condemned by fic, one motel guest reportedly ed. Still eminent domain is, and government. ernment. But what if those are the city of Bellingham. Despite tried to plow people down in the will almost certainly remain, an In my law practice I’ve wit- not enough? the city’s best efforts, the Alo- parking lot with his minivan and important and legitimate method nessed the ill effects of blight. Condemnation is not a cure- ha — a deteriorating 28-room, of controlling real estate blight. It can spread like a toxic plume, all for the highly complex and mom-and-pop style motel in the BLIGHT — PAGE 15

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 Page 14 REAL ESTATE MARKETPLACE NORTHWEST 3 projects are putting a new face on the Denny Triangle Once synonymous for surface parking lots and low-rise buildings, the area is booming thanks to the tech industry.

Avenue is AMLI Residential anticipating another hurdle later ence rooms, and a large rooftop planned for the 41st floor. Even and Mortenson Development’s this year: running out of access deck with grilling areas and views Fido has plenty to look forward 41-story apartment tower, AMLI to temporary power due to the of the Seattle skyline and Puget to: self-cleaning turf, a pet salon Arc, and the 11-story Tilt49 office area’s overtaxed electric grid. Sound. For residents who work and a pet play area. project developed by Touch- The current supply of temporary remotely, co-working space is AMLI Arc is targeting LEED gold stone and Principal Real Estate power, used to run the tower Investors. AMLI Residential is crane and personnel hoists, can a multifamily real estate firm only support building half of AMLI Hill7’s lobby doubles as a collaboration area. headquartered in Chicago and Arc. By the time the 20th floor is JESSE focuses on the development, complete, Mortenson will have By PHIL & construction and management installed transformers to tap into GREANY CANZLER of luxury apartment communities a permanent power source from Mortenson Construction throughout the country. Morten- Seattle City Light, enabling con- son Construction is building both struction of the remaining 21 projects on the same half-block floors. y way of dynamite, hydraulic where a tire shop once stood. The Denny Substation is expect- cannons and steam-pow- All three projects are redefin- ed to come online in 2017 to add B ered excavators, the level- ing Denny Triangle’s streetscape, capacity to the neighborhood. In ing of Seattle’s Denny Hill was and distinguishing it from those the interim, Seattle City Light is among the city’s most transfor- of downtown and South Lake relocating utilities in the area. mative undertakings. A 1910 Union. photograph familiar to many To that end, Hill7, Tilt49 and A new take on urban living offers an enduring image: its AMLI Arc have matching colon- remaining structures perched nades that line either side of Since 2010, Seattle has seen atop so-called “spite mounds.” Boren Avenue. Expanded side- a population surge unlike any in Backers of the Denny Regrade walks and transparent ground- the city’s history, with newcom- saw the hill as an impediment to floor facades activate the neigh- ers concentrating in South Lake growth north of downtown. With borhood at the pedestrian level. Union and the Denny Triangle. the excavation of 65 blocks and Another distinguishing feature at For these young, highly sought- millions of cubic yards of soil Tilt49 is the integration of pop- after workers, deciding where to came the flat Belltown street grid up spaces, intended to bring a live boils down to public spaces, we see today, improving access rotating selection of local and building amenities, and proxim- to nearby neighborhoods. seasonal programming to the ity to work, public transit, rec- Yet any hope for a flourish- area (e.g., hosting a flower shop reation, cultural events, dining ing downtown extension in the in the lead up to Valentine’s Day). and nightlife. AMLI Arc’s location, Denny Triangle would have to Touchstone’s relationship with between the South Lake Union wait. The economic woes of the Cornish College of the Arts may office hub and the nightlife of 1930s derailed the momentum, also bring student artwork to the Capitol Hill, and adjacent to the and the threading of Interstate neighborhood. central business district, will pro- 5 through Seattle in the 1960s vide residents just what they are severed it from Capitol Hill. Growing pains looking for. Today, the Denny Triangle of When completed in 2017, AMLI old — once defined by its surface Denny Triangle’s building boom Arc will have studio, one-, two- parking lots and low-rise build- poses unique coordination chal- and three-bedroom apartments ings — is undergoing a dramatic lenges for builders. With so much and penthouses with a range of revitalization, with the city’s tech activity and so few staging areas, finishes and amenities. The apart- sector setting the pace. Mortenson leaned heavily on pre- ment tower will have a private fabricated elements for Hill7’s party room with an outdoor dining Redefining a neighborhood building envelope, and will do area, chef’s kitchen for hosting so again for Tilt49 and AMLI Arc. larger parties, fitness center and Photo by Ben Benschneider On the seventh floor of one of Operating in close proximity yoga studio, media room, confer- Denny Triangle’s newest develop- can also be challenging. ments, the 11-story Hill7, office During last year’s excavation workers sit at the same elevation work for Tilt49 and AMLI Arc, Tilt49 was designed with pop-up spaces that could host as Denny Hill’s former summit, a mere 16 feet separated our temporary stores, such as a flower shop for Valentine’s Day. 240 feet above sea level. The 65-foot-deep excavation from name Hill7 is a nod to that since- that of a neighboring contractor’s departed seventh hill of Seattle, site, out of which another apart- as well as the visionaries who ment tower is rising. With only a actually managed to move a narrow band standing between mountain. the two sites, close collaboration Developed by Touchstone and with the same shoring-system built by Mortenson Construction, designer was needed. Hill7 is among the bevy of high- Another consideration is the profile office, residential, retail city’s developing street-use and hotel projects driving the policy, dictating how and when neighborhood’s revival. streets, sidewalks and bike Throughout the day, Hill7’s lanes can be closed for construc- lobby doubles as a lively col- tion. Adding to the complexity laboration area and “third place” for Tilt49 and AMLI Arc is that featuring homegrown favorites they border three main arterial Freshy’s (soups and sandwich- streets, with Stewart and Howell es) and Jars Juice bar. Expan- serving as key corridors in and sive floor plates cover 285,000 out of the city during peak com- square feet of office space on mutes. Proactive communication the floors above. The project with the city and neighboring includes the adjoining 222-room businesses has never been more Hilton Garden Inn. vital. Rising opposite Hill7 on Boren Mortenson Construction is Image from ZGF Architects

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page 15xx certification, a level rarely found in high-rise apartment projects in Seattle. One feature that Hill7 office workers and Hilton Garden Inn hotel guests are less likely to recognize is unique to the commercial building market in Seat- tle: a blue-roof system. During heavy downpours, rainwater will be temporarily stored in a rooftop retention vault; thereby helping to prevent the city’s combined sewers from being overwhelmed. The blue roof’s 1.5-inch-diameter openings — smaller than the standard 4-inch variety — slow the water’s release. In addition to its potential ecological benefits, the blue-roof system eliminates the need for water pumps and heavy equipment, cutting costs, long- term maintenance challenges and energy use. The system also boosts the building’s architectural appeal, improving the view for an ever- growing number of high-rise neighbors claiming Denny Trian- gle as their home. Phil Greany, construction executive, and Jesse Canzler, senior project manager, are with Morten- son Construction, the general contractor for Denny Triangle’s Hill7, Tilt49 and AMLI Arc projects.

At AMLI Arc, Mortenson expects to run out of temporary Hill7 was named after the seventh hill of Seattle power when construction reaches the 20th floor. It will tap that was removed during the Denny Regrade. into permanent power to build the remaining 21 floors. Photo by Ben Benschneider Image from ZGF Architects blight continued from page 13 another held a Yellow Cab driver ate a successful business … all is the use of eminent domain to the right to raze the motel. answer will be obvious. Busi- at knife point while demanding of the businesses on Samish combat blight. Eminent domain law requires nesses know the better man- money. Others at the Aloha sold Way are adversely impacted.” Under Washington state law, property owners be compensated aged the surrounding proper- heroin, crack and methamphet- Criminal activity at the Aloha before any property can be con- at fair market value, even blight- ties, the higher the property amine, even providing walk-up Motel spilled onto the public demned for creating blight it must ed property. This is done with values are likely to be, which service at their motel room win- sidewalks, threatening the safe- meet certain tests. Specifically, taxpayer dollars. Government can generally translates to better dows. ty of school children and their Chapter 35.80A of the Revised then keep or sell the property. If rents, better sales and a greater At least 10 of the Aloha’s parents as they waited for the Code of Washington requires gov- the property is sold, Washington return on investment. rooms were closed by county bus. After consulting with police, ernment prove at least two of law allows counties, cities and The National Vacant Properties health officials after hazardous the Bellingham School District three conditions exist: towns to restrict in perpetuity how Campaign reports the cost of levels of meth were found; prop- moved the bus stop. 1. The property has not been the property is used to protect the blight to local governments and erty owners refused to allow the The city of Bellingham, with lawfully occupied for a year or community’s interest and prevent taxpayers across the country to remainder of the rooms to be support from Whatcom County, more. reoccurring blight. be in the hundreds of millions of tested. Drug overdose, armed repeatedly sought the coopera- 2. The property constitutes a Just this month, the Belling- dollars. Washington lawmakers robbery and assault calls were tion of the Aloha’s managers and threat to public health, safety ham City Council approved a who wrote, and later amended, not unusual. A man found beat- property owners but got nowhere, or welfare. plan by the Bellingham Housing this state’s eminent domain en unconscious at the motel according to court documents. 3. There has been illegal drug Authority to build approximately statute recognized that blighted later died in hospital. In yet Finally, in October 2014, the city activity associated with the prop- 154 mixed-income apartments, properties strain the business another instance, police found a council officially declared the erty in the 12 months prior to offices and commercial spaces community, destroy commercial “rotting body” left in a room for Aloha a blight on the community proposed condemnation. on the site of the former Aloha centers and place economic and six days — with management’s and directed staff to begin con- Motel. Phase one of the project social costs on everyone. knowledge. demnation proceedings. It is not enough for the property calls for residential units to be We should not be afraid of our Surrounding businesses to be an eyesore, as shown by built for homeless people with government exercising eminent complained of used needles, 3 tests for blight the case of the Aloha Motel. disabilities. domain, but rather demand it condoms and other garbage In February 2015, a Whatcom use that power judiciously and being dumped on their prop- The Fifth Amendment of the County Superior Court judge Right to fight blight responsibly for the good of our erty. Worse, business owners U.S. Constitution grants indi- approved condemnation of the communities. said, Aloha guests repeatedly vidual states the right to take Aloha, giving the city of Belling- Ask any business owner harassed and threatened cus- private property for public use, ham the legal right to take the whether they would prefer to Kinnon W. Williams is a part- tomers, scaring off even long- with compensation. Common property under the public use operate in a safe and secure ner in the Bellevue-based law time clientele. Said the owner examples are road widening and necessity requirements in area or next to rundown build- firm Inslee, Best, Doezie & of a nearby auto mechanic shop, projects or utility corridors. Less state law. In July 2015, the city ings used for drug dealing and Ryder. His practice focuses on “Without customers, I can’t oper- common and more controversial agreed to pay $1.58 million for other illegal activities and the eminent domain.

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 Page 16 REAL ESTATE MARKETPLACE NORTHWEST surveys

Most of the concerns voiced are centered around providing local retail services in the build- Lake Union Partners ings that the neighborhood wants and needs, offering affordable Specialty: Developing neigh- housing, along with a unit mix borhood mixed-use multifamily, Q: Whose design-review and that includes some larger units office and hotel projects in core permitting process do you pre- to accommodate more families. areas of Seattle and Portland fer, Portland’s or Seattle’s? It’s difficult to capture everything Management: Patrick Foley, Joe A: I’m not sure we have a but we do our best. Ferguson, Scott Roberts, Tyson preference. I think Portland and Feaster Seattle are equally rigorous and Q: You have office and hotel Founded: 2009 challenging but they have their projects underway. Is this an Headquarters: Seattle differences. effort to diversify from residen- Projects: The Central, a 92-unit In both cities, design review tial? mixed-use building in Seattle’s is very subjective, and we’ve A: Yes, we are diversifying for Central District; Rooster, a 197- noticed that city planners have numerous reasons. We will always unit mixed-use building in Seat- been taking more of an active have mixed-use, urban multifam- The Central, a 92-unit mixed-use building, is one of several projects tle’s Roosevelt neighborhood; role in wanting to influence or ily projects as our core business Lake Union Partners is developing in Seattle’s Central District. The Standard, a 33,000-square- shape the design of projects. because people always need a foot office and retail renovation Some developers and their place to live, and the urban cores Image by Studio 216 in downtown Seattle design teams are OK with that, of our cities will continue to grow and others don’t really appreci- given the diverse economy and fortunately we have an excellent given the growth of commer- Principal Patrick Foley respond- ate it. overall desirability of Seattle and partner in Columbia Hospitality. cial retail businesses along East ed to questions about his firm’s Portland. We want to grow the hotel devel- Union Street, such as Chuck’s activities in Seattle and Portland. Q: You’re working on sever- We like office and hotel as an opment side of our business and Hop Shop, The Neighbor Lady al big projects near 23rd and asset class, but outside of our will continue to look for other and Uncle Ike’s. Q: As the economy cools, are Union. What’s your role in the creative office project The Stan- opportunities in Seattle, Portland Our Addy project in Northwest there enough newcomers to evolution of this long-troubled dard at First and Spring, and and other cities. Portland was less risky given the keep the multifamily market at corner? (820) Roy Street, a large mid-rise location between the Pearl Dis- a boil here? A: We see it as a huge respon- office project where we are part- Q: Do any up-and-coming trict and Northwest 23rd Street, A: Yes, the evidence of positive sibility to play a role in improving nering with Talon Private Capital, neighborhoods remain in Seat- but our Cook Street project in in-migration is still pretty strong. the perception of that intersec- we don’t have any other office tle? North Williams (east Portland) It won’t continue at the current tion. It’s really important to not projects in the works. A: Sure, there are other neighbor- on the bakery block was once pace forever but that’s OK. We be arrogant, listen to the neigh- We are really excited about pre- hoods we like and are looking at viewed as a neighborhood with are experiencing stronger than borhood’s concerns, and do your serving the Eitel building at Sec- with a contrarian perspective, but many challenges to overcome, we expected leasing velocity at best to build quality projects that ond and Pike Street as an inde- I won’t say where we are focusing. but today it is a thriving desti- our Rooster project at 65th and are timeless and authentic in pendent hotel. We are competent We were early in the Central nation neighborhood with good Roosevelt, where approximately design (whether contemporary at preservation/reuse develop- District and a lot of people doubt- independent local restaurants, 40 percent of our tenants recent- or traditional), with good local, ment but hotel operations and ed the wisdom of taking risk bars, grocery markets and cloth- ly migrated to Seattle. eclectic retail. marketing are not our strength, so there, but now it seems obvious ing boutiques.

projects. All the projects will Businesses which locate in open collaborative work environ- have exciting street level retail progressive, iconic and space- ments are the norm. opportunities. This equates to efficient buildings, can quickly Tenants want healthy build- Urban Visions 4,000-plus new residents, office attract better employees, who ings that have a coolness factor workers and tourists living, visit- will be healthier, happier, more so they can do creative, collab- Specialty: Developing unique replicate the marquee that was ing and shopping in the neigh- creative and collaborative — and orative, productive work. and transformational real estate once there. The interior is 35 borhood. stay longer. in the greater Seattle area feet tall, and we will demolish The developments, along with That lowers their employee Q: Where will real estate Management: Greg Smith, presi- the drop ceiling to expose the efforts by the Downtown Seattle cost per square foot. We believe growth come from locally in dent and CEO; Broderick Smith, amazing volume and character Association, the city of Seattle they can save at least 1 percent the next few years? vice president; Luis Adan, senior of the building. and King County, are chang- or $13.50 per square foot per A: Seattle never ceases to development manager; Salone We want to create a bar/perfor- ing this once-dilapidated area employee a year — and likely amaze me. It generates disrup- Habibuddin, senior project man- mance venue that reflects and to a successful link of the Pike much more — by picking the right tive thinkers in music, science, ager; Michael Aguero, controller; supports Seattle’s creativity and Pine Corridor and a new, vibrant building. healthcare, sports, businesses, Kara Kesler, property manager talent. This is a work in progress, and exciting bridge between the Rent is a small fraction of total tech, manufacturing — in every- Founded: 2003 but the bones are there. We think Pike Place Market and the retail employee cost, maybe 4 percent. thing. Perhaps it’s something in Headquarters: Seattle we can make this a destination core. Those efforts include repro- So while the rent per square foot our water. No wonder young and Projects: 200 Occidental, Wey- for urban residents and tourists gramming Westlake Park, the may be higher to get the right old want to move here. erhaeuser’s new Seattle head- alike. Third Avenue streetscape, new building, doing so can mean Some 67 percent of the city is quarters; S, a 7-acre urban green Stay tuned as this historic icon bus stops and increased police overall savings. zoned for single-family neighbor- campus containing seven build- is brought back to life. patrols. hoods. So I expect major real ings with retail and office space Q: What do tenants want now estate development to continue totaling about 1.2 million square Q: Any ideas of how to make Q: What are the biggest trends versus 5 or 10 years ago? to be focused where it belongs: feet, Seattle Third Avenue more appealing? in your industry locally? A: The workplace culture has in the urban core, from Safeco A: It’s happening now! Histori- A: Developers, brokers and ten- dramatically changed over the Field to the University District/ Greg Smith, president and CEO cally the area between Pike and ants have historically thought last 10 years. Before the Cloud, Fremont, the Waterfront to Capi- of Urban Visions, answered ques- Virginia and Second and Third about buildings on a rent per traditional high-rises with large tol Hill. tions from the DJC about his firm avenues has been an underde- square foot basis, but many busi- artificially illuminated floor Those employers and employ- and the industry. veloped zone containing park- nesses today use a more sophis- plates that housed expansive ees want nearby housing, and ing lots and run-down or vacant ticated approach. back-of-house functions, such easy access to public transit Q: What are your plans for the buildings. Today, four city blocks In today’s competitive market as storage, files and libraries, and highways — and will so even Aaron Brothers building? starting from Second/Third and for employee talent, it’s about were most in demand. Large more as congestion grows. A: The building at 1513 Third Pike and running north up to understanding employee cost offices for people in suits and In recent years, most of the Ave. in Seattle was constructed Second/Third and Virginia are per square foot, which for the ties lined the perimeter, walling city’s growth has been focused in 1920 as the Winter Garden experiencing major redevelop- technology industry is around off natural light to most of the on the amazingly successful Theatre, and we intend to bring ment. $200,000 all-in. That’s around workforce. South Lake Union neighbor- back its grandeur after the Aaron These new developments will $1,350 per square foot, given The Cloud now stores most hood. But businesses are now Brothers Art & Framing business have 1,300 housing units in six that the average tech employee back-of-house functions. Gone considering other submarkets leaves there in May. towers, five hotels containing uses 130 to 150 square feet of are perimeter offices and drop that were once overlooked as Our plans are to renovate the 500-plus rooms and meeting space (compared to 200 to 250 ceilings. Natural light is a must, traffic becomes more of an exterior facade and hopefully spaces, and three new office square feet 10 years ago). suits and ties are passe and issue.

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Schnitzer West’s Centre 425 office building in Bellevue Schnitzer West will have a rooftop deck and conference center. Specialty: Development and need for office space. Schnitzer redevelopment of innovative West is well positioned to provide environments that fuel tenant best-in-class workspace for these success types of companies. Management: Pam Hirsch, managing partner, investment and Q: What is innovative about development your projects? Founded: 1997 A: Schnitzer West has always Headquarters: Bellevue used in-depth research and Projects: Centre 425, Bellev- market feedback to advance its ue; Madison Centre, downtown mission to create innovative envi- Seattle; Urban Union, South Lake ronments that inspire tenants Union and support their success. This investment in research enables Pam Hirsch, managing partner at our team to understand the Schnitzer West, answered ques- changing needs of the modern tions about Schnitzer West’s workforce and address those projects and if the firm has any needs by providing solutions expansion plans. which in turn provide benefit to the tenant through recruiting and Q: Are you still fairly bullish on retaining employees, increased Image courtesy of Schnitzer West the near future? brand awareness and occupancy A: Schnitzer West has three sig- efficiencies. opportunities throughout the include a rooftop feature. Madi- materials are you planning nificant projects under develop- western region of the U.S. son Centre (Seattle CBD) will to use? ment in the Puget Sound region Q: Are you looking to expand have a rooftop deck, and Cen- A: Schnitzer West has consis- and remains confident in the geographically? Q: Which recent project best tre 425 (Bellevue) and Urban tently incorporated innovative Puget Sound economy over 2016 A: Schnitzer West continuously symbolizes Schnitzer West? Union (Lake Union) each have new systems into its building and 2017. The regional economy looks for opportunities to enter A: Our research indicated a rooftop deck and conference design to provide efficient and continues to outpace the rest markets with strong economic that today’s workforce wants center. This amenity is avail- sustainable value to tenants. As of the U.S. due to its strong fundamentals and growth driv- to take advantage of all out- able for all of the office tenants building systems and technol- mix of world class, innovative ers. This has resulted in our door space — and in an urban in the building to use in com- ogy advance we have and will companies, exceptional work- entrance into the Denver market environment, that leaves really mon — a one-of-a-kind amongst continue to incorporate items force and desirable quality of where we have recently begun only the rooftop. Therefore we the competitive set. into our design that improve life. These factors will continue to a new office development. We have designed all three of our the tenant experience and also drive strong employment and the will continue to look for similar current office developments to Q: What new systems or provide sustainable benefits.

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walking around and shopping at different times of day. Increas- ing employment — and daytime Touchstone population — in Fremont helps with that. It also seems like many Specialty: Development of think that even if we see some of the companies that locate in office, hotel, retail and residen- national economic contraction Fremont self-select for that envi- tial projects in the coming years, Seattle will ronment. Their employees value Management: Pat Callahan, remain a relatively better place to those neighborhood amenities CEO; A-P Hurd, president be. This should lead to continu- and patronize them. Founded: 1982, acquired by ing in-migration and demand for While it’s hard to build new Urban Renaissance Group in housing. office markets without some criti- 2014 On the business side, many of cal mass, I actually think it would Headquarters: Seattle our companies are growing not pri- be good to see more of this in Projects: Troy Block, Seattle; Tilt marily due to national GDP growth, some of our other urban villages, 49, Seattle; NorthEdge, Seat- but rather by gaining significant provided that the urban villages tle; Everett Marriott Courtyard; market share or creating disrup- can be accessible enough that Issaquah Springhill Suites tions within their markets. Again, not everyone has to get there by that should make our employment car. We have a long way to go on Touchstone had a good year growth relatively resilient, even if inter-neighborhood transit. in 2015. Shortly after being the national economy as a whole acquired by Urban Renaissance takes a stumble. Q: What kinds of opportunities Group, it landed leases with Ama- and challenges do projects with zon.com and Tableau Software, Q: What are the biggest chal- a hotel and offices, or with offic- two of the most sought-after lenges facing Seattle real es and residential units, create? tenants in the region. estate? A: The things that made us look Touchstone President A-P Hurd, A: Probably the biggest chal- hard at mixed-use projects are the Touchstone recently opened Hill7, which has who wrote “The Carbon Efficient lenge we face right now is that opportunities for shared parking 285,000 square feet of technology office space. City” and is also a faculty mem- growth in recent years has led to for uses that have complemen- ber and Runstad Fellow in the a lot of change, and that’s hard tary demand profiles (e.g. hotels Photo by Ben Benschneider College of Built Environments to digest. In addition, a lot of the need parking evenings and week- at the University of Washington, solutions to that change are not ends, while offices need parking mixed-use projects, we have to uses, historically don’t share lob- discussed her firm’s projects and obvious. weekdays daytime), and the way tee up all the capital at the same bies or elevator banks. development trends. For instance, many of my neigh- the Seattle zoning works — com- time, and create risk manage- When you get right down to it, bors in Ballard are convinced mercial uses consume FAR (floor ment structures that make all the there’s not a real reason that this Q: Which sustainable trends that new development is causing area ratio) and residential uses parties feel OK about inhabiting can’t happen, but no one wants do you appreciate and which do housing prices to go up, because don’t. These kinds of things are the same space or structure. to be the first one to break the you disagree with? they see cranes at the same pretty powerful economic levers. Also, there are a lot of tradi- rules on a big project. It’s like A: Putting housing and work- time as rents are rising. The two What’s funny is that even tions in real estate about how wearing a tie that’s six inches places near transit is the num- are correlated, but the cause is though many architects love the different uses don’t share space. shorter than standard; since ties ber one thing we can do in backwards — people are develop- story about “mixing uses,” it can Some of these may get easier to don’t really serve a function any Seattle, from an economic and ing more units in Ballard because be pretty complicated in practice. manage with time, but for now more, it probably wouldn’t make environmental perspective. Our rents are rising, not the other way For one thing, institutional capital breaking the rules creates a lot a difference, but would you want roads are pretty much maxed out around. is often only available for single of risk. For example, office and to bet $100 million on it? Prob- at peak demand times, so it’s Also, many of my neighbors uses, so when we’ve created residential, or office and hotel ably not. critical to make sure that people feel like if newcomers would have transit as a mobility alter- just move to another part of the native. That means putting new region (and not to Seattle), it buildings in areas well-served by would improve the traffic situ- a variety of reasons. The green- transit. ation for them. But for anyone est building will always be the In addition, more than 60 per- using arterials, turning people one that exists today. Can’t and cent of carbon pollution in the away from urban development Daniels Real Estate shouldn’t save all buildings, but Puget Sound area comes from actually makes the traffic worse: city officials must recognize that vehicular trips. While it’s good if someone moves to Ballard, Specialty: Commercial real that the finished product is their most vital neighborhoods to have energy efficient build- they have a 50-50 chance of estate some place that people want are those with historic assets and ings, the opportunity for greatest needing a car, but if they move to Management: Kevin Daniels, to live or work in, and I have revise building codes to incentiv- impact is matching up our land Auburn and work in the city then president concerns about the impact on ize reusing those buildings. use plans and our transit system. they have a 100 percent chance Headquarters: Seattle quality of life with recent energy Lastly, having more of our built of driving a car and clogging up Founded: 2007 code changes. I would like to Q: What is your take on all environment within range of fast our roads. Projects: Stadium Place Phase see a broader, more creative the office development in south and reliable transit makes the Again, it’s not intuitive; a lot of III, Seattle; Gridiron, Seattle; 800 and less prescriptive approach downtown? region more affordable for every- people are tired of growth and Columbia, downtown Seattle; The to allow the market to meet A: The midtown office market one. Since car ownership is esti- want it to go “away,” only prob- Mirador, downtown Bellevue; The goals rather than continuing to is far and away the largest office mated to cost north of $6,000 lem is that putting it out of sight Mark, downtown Seattle tighten various energy codes submarket in the region. As per year (factoring in gas, parking could make our infrastructure without thinking through all of such it will remain the choice and insurance), having a great problems even worse. Kevin Daniels is one of the bus- its impacts. of most office tenants for years mobility system is a huge, though iest developers in Seattle. He has to come because of that sup- often overlooked, part of keeping Q: How does Fremont rec- played an important role in the Q: What in the Seattle market ply alone. Like in past cycles if our region affordable. oncile its status as the quirky resurgence of Pioneer Square, worries you, or is there no end everything that is proposed is Obviously, our transit system “Center of the Universe” with and he is working on projects in in sight to the boom? built, then it will be a tenant’s needs to provide a time-compet- its rapid job growth? Bellevue and on First Hill. He sat A: It has been the best cycle in market and those who are late itive commute, which is why I’m A: To put it in context, that down with the DJC to discuss his my career, but everything must to the market will suffer when so excited about our Bus Rapid micro-market has about 1.5 views on development in Seattle, end. Without a stronger job mar- the cycle ends. Transit investments with dedicat- million square feet of office, trends in sustainability and other ket in Seattle, many of the apart- ed lanes and the light rail expan- and recent projects are adding topics. ments being built in downtown Q: What does Pioneer Square sions taking place this spring and about another 500,000 square may struggle to meet their lofty need to keep the positive over the coming years. of office. So, it’s a big jump over Q: What trends in sustainable financial projections. momentum rolling? a five-year period, but it shouldn’t design do you like and dislike? A: No question its biggest need Q: Which real estate sectors be overstated. A: I see a lot of focus on tech- Q: What are the challenges of is for-sale housing, and the city are you most excited about? I think it’s really good for the nology and energy code tight- preserving historic structures in needs to recognize that fact and A: Right now, I’m pretty bullish neighborhood’s small business- ening, but not a lot of creative new projects? help modify laws in Olympia to on all real estate “food groups” es, as one of the challenges thinking at the moment. The A: Even those in sustainability make it happen. A neighborhood across Seattle. I realize there are in residential communities is movement needs more vision- have trouble understanding that that only has transitory housing market cycles, so I’m not totally keeping small businesses thriv- aries who push creativity and sustainability needs to include will not be healthy in the long- Pollyannaish about it, but I do ing and having lots of people ingenuity. I think it is important preserving select buildings for term.

SEATTLE DAILY JOURNAL OF COMMERCE • THURSDAY, FEBRUARY 25, 2016 REAL ESTATE MARKETPLACE NORTHWEST Page 19xx surveys Low Income Housing Institute Specialty: Nonprofit developer income housing developers and manager of affordable hous- building on the light rail line ing; provides services to increase locally? people’s self sufficiency A: LIHI plans to start construc- Management: Sharon Lee, exec- tion in summer 2018 on two proj- utive director; Lynne Behar, CFO; ects on land it recently bought Robin Amadon, housing develop- near Othello Light Rail Station. LIHI wants to develop apartments on this site near Othello ment director; John Syverson, One project called Othello Station in south Seattle. The building has space for the facilities director Court will be at 7544 Martin Rainier Valley Food Bank on the bottom floor. Founded: 1991 Luther King Jr. Way S. It will Headquarters: Seattle have about 150 apartments and Image courtesy of Runberg Architecture Group Projects: Cheryl Chow Court, retail. The other project will be at 50 affordable apartments for 7357 43rd Ave. S., across from In Seattle, we have the voter- increasing cost of land? in your industry? seniors near Ballard Library; Othello Park. It will have about approved Housing Levy. We also A: Of course high-rise concrete A: Nonprofit housing organiza- August Wilson Place, 57 low- 100 apartments. LIHI hopes to have Mayor Murray and the and steel construction will cost tions serve people the market income apartments in down- put a preschool on the first floor Seattle City Council jumping up more than the wood-frame build- does not serve. Nobody else town Bellevue; Gossett Place, of that project, and include some and down on various housing ings we typically develop. Yes it is going to deliver apartments 63 apartments for the homeless apartments for immigrant fami- solutions. is time to build high-rises that that rent for hundreds of dollars in Seattle’s University District lies served by Refugee Women’s But outside Seattle, King Coun- serve low-income people. below market. Alliance. Runberg Architecture ty and the suburban cities pro- I just toured a low-income tax Sometimes we get a bad rap Sharon Lee, LIHI’s executive Group is designing the projects. vide little money for low-income credit financed tower in Hono- because we have to follow strict director, answered questions We are purchasing a parcel at housing. Unfortunately even the lulu, where land costs are at government wage rate require- from the DJC about her organi- 8620 Nesbit Ave. N.E. on the wealthy cities, such as Bellevue, a premium. This high-rise was ments, green building practices, zation and trends and issues in Rapid Ride bus line in north Redmond, Issaquah and Kirk- made possible because public and our cost per unit is typically the industry. Seattle near Greenwood. This is land, have not prioritized invest- land was conveyed at nominal higher than the private sector. an up-and-coming area with new ments in affordable housing. cost. I think it was $1. And it is But if a city wants a healthy mix Q: How can we get more low- market-rate projects happening This is sad as the people clean- right next door to transit. of incomes and we want vulner- income/affordable housing in all around. When you build up, ing office buildings, serving food, Portland has some nice exam- able people cared for (and not Seattle and Bellevue? there are some great views of the working in child care and staffing ples of mid-rise buildings that on the streets), it is important to A: On any given night there downtown skyline. hotels cannot afford the ever- are affordable. I hope we can get invest resources so that nonprof- are 500 homeless families with We acquired a terrific site at rising market rents and must access to low-cost city, county its can double or triple their pro- children sleeping on the streets 1253 S. Jackson St. in Little move or commute long distanc- or state land, especially around duction of affordable housing. or in their cars. A few nights ago Saigon, with the new First Hill es. What would it take to get transit stations. The expensive At the state level, we have we moved a veteran family of six Streetcar stop right in front. We elected officials in the suburbs per unit cost of mid- and high- over 35,000 homeless school- who had been living in their van like walkable neighborhoods with to give a damn about affordable rise construction can be par- age children. What kind of future into one of our three-bedroom lots of amenities. We try to be housing? tially offset by having public land do they have? We need our apartments. They were lucky, but near transit, parks, shopping and which is donated. state legislators to increase the what about the rest? schools. Q: Will we see high-rise low- Washington Housing Trust Fund We need more apartments that income projects, given the Q: What are the biggest issues to $300 million per biennium. rent from $200 to $600 per Q: Is LIHI considering micro- month to get homeless people unit projects? off the streets. Even with a min- A: We are about to open a imum-wage job you can’t stop building in the University District being homeless if there’s only near 50th and Roosevelt Way apartments renting for $1,800 Northeast. We have 49 studios American Life per month. that average 350 square feet. LIHI owns 1,800 low-income We figure it is better to include Specialty: Finances, develops and manages prop- apartments, but we have to wait a bathroom and kitchen in each erties across key markets in the United States for someone to leave before we unit. We also have lots of shared Management: Henry Liebman, CEO can move in a new family. common space, including a com- Founded: 1996 It is outrageous for wealthy cit- munity kitchen. One floor is for Headquarters: Seattle ies such as Seattle and Bellevue homeless young adults and two Projects: Homeplate Center, Seattle; Courtyard to have so many people who are floors are for low-wage workers. Marriott, Seattle homeless or at-risk of becoming The new home of the University so. Rents are out of control — District Food Bank is on the first Henry Liebman, American Life CEO, answered and as they go up homelessness floor, and we will have a wonder- questions about his company and where the increases. The January 2016 ful green roof with vegetables economy is headed. One Night Count showed 4,505 and herbs. people sleeping unsheltered on Q: Do you see signs of an American recession the streets of King County — a Q: Does LIHI have projects for in 2016 or 2017? 19 percent increase from 2015. suburban King County? A: The recession already started. It won’t be Mayor Murray proposed a A: We are proposing to con- reported until there’s pain on the streets. We will larger Seattle Housing Levy for struct an attractive new apart- wait for a compelling deal, otherwise we sit on the the ballot this fall. If it passes, ment building in downtown Rent- sidelines. American Life developed Home Plate Center, it will help tremendously. We on for low-income households. where KING 5 TV recently moved its operations should also do what Portland We will set aside some apart- Q: What project types does American Life like into three floors. did: tax Airbnb units and put the ments for homeless families with to manage? funds towards low-income hous- children and also for veterans. A: You could say our hotels, but going forward Photo courtesy of Freiheit & Ho Architects ing. Also, Seattle and Bellevue South King County is showing a that might not work. Close-in industrial may work. should dedicate a portion of their significant increase in the num- buildings versus building new? general fund or issue bonds for bers of homeless people. Q: Any slowdowns in your EB-5 business? Which A: In most cases, no benefit. It’s a labor of love. affordable housing. We have 1 We would love to bring more country does most of that? percent for the arts, but we don’t affordable housing online in Bel- A: There’s a slow down. China was the biggest, Q: Any new regions that look attractive for even have 1 percent for housing. levue and the Eastside. It is but not now. development? difficult to develop housing in A: We’re still focused on Sodo. Not much to buy Q: Why aren’t more low- King County outside of Seattle. Q: What are the benefits of remodeling older now, but that could change.

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