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From todays DJC.
January 30, 2013
Triad says south downtown market coming back, and so is Civic Square
By NAT LEVY
Journal Staff Reporter
Construction is going to start on one prime downtown site — Fifth and Columbia — and another may not be far behind.
Daniels Real Estate just announced plans to begin the Fifth and Columbia tower this year, but what about Civic Square just a few blocks south?
The block bounded by Cherry, James, Third and Fourth is the site for project, a $350 million public-private development by Triad Development, an affiliate of Triad Capital Partners, and the city. Triad had planned a 1.1 million-square-foot, 42-story tower with office space, up to 138 housing units and a 37,000-square-foot public plaza.
But like many projects conceived in the mid 2000s, Civic Square was a victim of the downturn.
Brett Allen, senior vice president at Triad, said his company has hired the real estate services firm CBRE to look for equity partners, tenants or companies that want to buy or build a headquarters, as Amazon.com did across town.
Allen said this week that he hopes to make an announcement about the site by the second quarter.
“There's too much momentum down here for it not to happen,” he said.
Triad assembled an international team for the project. London architect Foster+Partners, which has designed airports in the United Kingdom and yacht clubs in Monaco, designed the project with Seattle-based GGLO. Atelier Dreiseitl is designing the public plaza and Arup is the engineer. Skanska USA has been doing predevelopment work.
Triad has a master use permit for the site, and Allen said the office portion could be completed in 20 months. Tenants could start moving in while Triad finishes the housing, which will be on the top 17 floors. He said if a tenant needs the space by 2015, his company could pull that off.
Civic Square is the last piece of the city's 1999 civic center master plan, which was the impetus for the construction of City Hall and the Justice Center, and the remodel of Seattle Municipal Tower. Triad was selected to develop the site after a request for proposals in 2006.
The city will transfer the land, which formerly housed the Public Safety Building, to Triad. The public plaza will be owned by the city.
“The city doesn't expect to make a lot of money out of the deal, but we expect to create this public space that connects to City Hall,” said Chris Potter, director of facility operations for the city's Department of Finance and Administrative Services.
Allen said Triad agreed to spend no less than $25 million on the plaza, and the amount increases annually based on the consumer price index. Triad will also pay the annual operations and maintenance costs. Allen estimates the value of the deal between $40 million and $50 million.
Civic Square's plaza will be one of the focal points, with restaurants, shops and gathering areas. There will be space for concerts, speeches or even a victory party.
“We always envisioned if the Seahawks won the Superbowl or the Mariners won the World Series or the Sounders won the MLS Cup there would be a big celebration there,” said Sean Canady, principal at GGLO.
Canady said the plaza will have a water wall connected to water features in the Justice Center and Seattle City Hall.
When finished, Civic Square will be part of a stair-step look on the skyline from the city's tallest building — Columbia Center — to the waterfront.
The office space will be designed for a variety of tenants. Floorplates average about 20,000 square feet and can have offices around the perimeter or the open floor plan that tech companies like. Columns were arranged for more flexibility in layout.
The underground garage will have 601 spaces, bike storage and showers for commuters.
Allen said he wants Civic Square to be part of south downtown's revival. For the last few years, the area has been overlooked as neighborhoods like South Lake Union and downtown Bellevue exploded. But he said developers and investors, both local and national, are looking for the next hot spot.
The neighborhood is a public transit hub and many tech companies are moving into nearby Pioneer Square.
Allen said Vulcan Real Estate's recent moves are a sign of things to come, calling it a “seller in South Lake Union and a buyer in south downtown.”
Vulcan's team was recently chosen as master development partner for Yesler Terrace. The 30-acre site could get as many as 5,000 housing units and more than 900,000 square feet of office space.
Add in a possible third stadium and construction on the North Lot of Century Link Field, and south downtown could be the next big thing, Allen said. He predicts over the next 10 years, there will be five or six new towers south of Seneca Street.
“While South Lake Union is the hot investment market, south downtown is the future,” Allen said.
Kevin Daniels, president of Daniels Real Estate, said his decision to go ahead was more about overall job growth here, not just the strength of south downtown. He said he doesn't expect as much growth as Allen does, but he says the neighborhood needs new space. Daniels said most downtown tenants don't want to leave the area, and there is only so much room in South Lake Union. When those tenants come looking, he wants to be ready.
Daniels thinks he will hit the market first, and have a higher quality building than his competitors.
“It's about how and when you hit the market that determines whether you do well,” he said.
Allen said Triad too will have a jump on its older competitors with new space.
But before work can begin, Triad has to find the money. As it was going through the permitting process, Triad flirted with a number of investors, including AIG and Lehman Brothers. Triad had several opportunities to secure funding for the project, but wanted to get through the process first. Then the economy collapsed as the team was completing design review, and the plans have sat on the shelf ever since.
Because of the project's scale and the partnership with the city, Allen said Triad wants to make sure it finds the right financial partner before starting work.