October 10, 2002

Real Estate Buzz: United Way completes half its deal

United Way closed on buying the 205 Columbia Building north of Pioneer Square in downtown Seattle from a Martin Smith Inc. partnership for $5.88 million.

The charity will move its local offices into the handsome low-rise from the 10-story Lowman Building two blocks away. But United Way doesn't expect to finish selling the Lowman Building to housing developer Security Properties for a couple of months.

The Martin Smith partnership sold for 17 percent below what it paid for the 55,000-square-foot structure less than three years ago. King County property records show the partnership paid $7.1 million for the 81-year-old structure at Second Avenue and Columbia Street in January 2000.

Principal Greg Smith said he sold at a loss in part for tax planning and in part because the market has dropped considerably. January 2000 was close to the market's peak, and the city department that occupied most of 205 has moved out, leaving Martin Smith's small headquarters as the lone occupant.

Tax planning can include matching a loss on one property with a gain on the sale of another to reduce taxes paid on that gain. It can also include contributing to the charity. Martin Smith partnerships have landed huge gains on some of their deals during the past few years.

205 Columbia

"You know, United Way is a good buyer, and the market has changed since we bought," Smith said. "205 and Lenora Square (which Martin Smith recently sold to Cornish College) both had significant vacancies, so we eliminated those vacancies from our portfolio."

Martin Smith will move its offices into Millennium Tower, an office-and-condo building across Second from the 205 building that a Martin Smith partnership developed a couple of years ago. But the firm hasn't decided which floor it will move onto, Smith said.

United Way, which has owned and occupied the attractive, 94-year-old Lowman Building since the 1950s, launched the search for a new building, which it insisted on owning, after the February 2001 earthquake left the charity facing the possibility of paying $3 million for seismic upgrades.

United Way asked $5 million for the Lowman, and what Security plans to pay hasn't been disclosed. Seattle-based Security is a long-time apartment and town home developer that plans to convert the Lowman's 45,000 square feet of usable office space into some form of housing. Property records place the Lowman at a total of 62,271 square feet. The Lowman has no parking.

Broker Larry Almelah of Washington Partners represented Martin Smith in selling 205. CB Richard Ellis' Jane Blair and Roy Mann represented United Way in the purchase and are working the Lowman sale.

Par-tay at Millennium

Speaking of Millennium Tower, Martin Smith last month sold the third of Millennium's 19 luxury condos, which lost their market of high-end buyers in the dot-com meltdown and subsequent recession.

Greg Smith has scheduled a major party in the dazzling, unsold, 10,000-square-foot penthouse unit. He said it's really a party put on with his wife, Patty, not a marketing event nor a celebration of that long-in-coming third sale.

Smith said that at an auction to support Zion Prep Academy he bought performances by local jazz singer Ernestine Anderson and comedian David Stanford. What better place to share those performances, he said, than in the 20th-floor penthouse, with its sunset view over Elliott Bay and the downtown cityscape?

"Let's hope there's a sunset that day," said Smith, whose home is in Issaquah, where the Smiths are raising two teenagers. "It's just a party (black tie optional). I would love to live there, but this is about as close as I'm going to get to that, so why not?"

The penthouse is a shell, as are 10 of the remaining 16 condos that haven't been sold. Martin Smith is building out the interiors of five of the unsold ones to see how that affects the selling.

2nd & Lenora: offices out, parking in

The condo tower proposed for Second and Lenora in Belltown would contain five above-ground floors of parking, along with two underground parking levels, now that the developer has removed 60,000 square feet of offices from the proposal.

The Sept. 26 Buzz reported deletion of the offices and said some parking would move above-ground but didn't give the amount.

That item also identified Tom Nickerson as among the developers. Nickerson was in the project early on, but isn't now, said project architect Blaine Weber of Weber + Thompson. The development group, called Crystal Pool Inc., includes some principals of Murray Franklyn Family of Companies.

The 23-story condo tower would replace the site's former natatorium called Crystal Pool, but the new structure won't be called Crystal Pool, Weber said. The leading candidate for the name is Crystalla, he said.

Changes stemming from removal of the offices include reducing the parking from 331 spaces to 238. The number of condos has progressively scaled down to a current proposal of 193. The developer expects to receive a master-use permit soon.

Aerojet buys GenDyn building for $17M

Aerojet General Corp. paid General Dynamics $17.2 million for a 130,000-square-foot, high tech-flex building on 25.4 acres in Redmond's Willows area, King County property records show.

The property was built in 1969 at 11441 Willows Rd.

In late August, Virginia-based General Dynamics said it agreed to sell its Redmond-based space and missile propulsion business to Sacramento-based Aerojet, which is a subsidiary of GenCorp Inc., for about $90 million in cash.

The Redmond operation is called Ordnance and Tactical Systems Space Propulsion and Fire Suppression. It employs about 300 people and is expected to generate about $60 million in sales for this year. Aerojet said the facility will continue operating largely as is.

GenCorp. CEO Terry Hall said "this acquisition is key to our stated strategic objective of doubling the size of Aerojet within the next three years." General Dynamics president Mike Wilson said "Aerojet is a long-time leader in the propulsion industry, and this is a perfect fit. We are sure that these businesses will grow and thrive under Aerojet's leadership."

Conservancy ends NW Trek's long quest

The Cascade Land Conservancy completed its purchase of 100 acres of forest lands adjacent to the Northwest Trek Wilderness Park in east Pierce County.

The conservancy stepped in to help Pierce County, which will buy the land from the non-profit group when the county can line up the funds. The conservancy paid $1.125 million.

The land, which had been subdivided into 17 lots for future development, will remain wild as an expansion of the 615-acre wilderness park, which identified the acreage as a high priority in its 1987 master plan.

"This is an important piece of a long-term effort to protect and enhance the valuable asset that we have in Northwest Trek," said Metro Parks Tacoma executive Jack Wilson. "We have tried to acquire this property for more than a decade, and it took the conservancy's participation to make it a reality."

Previous columns:

• Real Estate Buzz: Local Lowe execs form new company, 10-03-2002
• Real Estate Buzz: Murray Franklyn sinks Second & Lenora offices, 09-26-2002
• Real Estate Buzz: Guinchers control Le Chateau again, 09-19-2002
• Real Estate Buzz: Workers may return to Tech Tower site, 09-12-2002
• Real Estate Buzz: Bellevue on a Qwest for new City Hall, 09-05-2002
• Real Estate Buzz: Johnson Underwood sells Walgreens structure, 08-29-2002
• Real Estate Buzz: More Fisher property sales to come, 08-22-2002
• Real Estate Buzz: Unico turns an eye toward the future, 08-15-2002