Commercial Real Estate

Tower of Power

By Joe Follansbee January 9, 2012

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This article originally appeared in the February 2012 issue of Seattle magazine.

On one of the last warm summer days of 2011, a construction crew put up the black steel tower of a pile driver on the south side of King Street, just west of Seattles Amtrak station. Within days, reciprocating whams! bounced off the brick and sandstone walls of Pioneer Square, as if the workers were announcing a turnaround for the beleaguered neighborhood.

Thats how some residents and business owners interpreted the noise, seeing it as a resounding first step toward new respect for a part of town whose reputation, deservedly or not, skewed more toward handguns than nail guns.

The pile driving kicked off a long-anticipated, $250 million project officially called Stadium Place but more popularly known as the North Lot development because of its location in the parking lot just north of CenturyLink Field. The brochures and fact sheets produced by the local developers, Daniels Real Estatean affiliate of Nitze-Stagen & Co.and R.D. Merrill Company, and drawing from the management bullpen for projects such as Starbucks Center, Union Station and Merrill Place, have all the buzzwords and catchphrases Seattleites expect. The project improves density with more than 915,000 square feet of residential and commercial space in the vibrant Pioneer Square district, including 18,600 square feet of retail and commercial space on the ground floor, with some already set aside for a restaurant and a health club. It takes green design to a new level, pointing to a plan to generate electricity from wastewater and wind, as well as to grow vegetables in an on-site urban farm for use in the restaurant. And its the largest transit-oriented development on the West Coast, referring to the projects proximity to light rail, traditional rail, bus lines, the junction of Interstate routes 5 and 90, and all of these modes connections to Sea-Tac Airport. Theres even a nod to cars: Motorists will have 110 new parking spaces.

The first phase of the project, including a 25-story tower, is expected to be finished by September, with the last phase completed in late 2013 if market conditions are right. The contractor is JTM Construction. The architectural firm is Zimmer Gunsul Frasca.

But the fact that gets Pioneer Square boosters really excited is the 738 new housing units to be brought to the neighborhood512 apartments in the first phase and 226 apartments or condos in the second phase, almost doubling the total number of apartments or condos currently available there, according to the developer. Most will be market rate, meaning buyers and renters will pay the going price in the open market. But 30 apartments will be set aside as low-income artists studios to replace spaces lost when the 619 Western Building was condemned to make way for the State Route 99 tunnel. The project will also include 70 units of affordable housing constructed in the nearby International District. (Local housing officials define affordable as rents or mortgage payments that wont break the budgets of households with incomes at 80 percent of King Countys median income, or about $67,806 in 2009.)

Whatever the mix, its the added housing for middle- and upper-income people thats critical to the projects hoped-for positive impact on the neighborhood, says Jen Kelly, a Pioneer Square resident and activist who blogs at The New Pioneer Square (thenewpioneersquare.com). I know people who want to move to Pioneer Square but cant find market-rate housing, Kelly says. The biggest thing the neighborhood needs is new people that have a vested interest [in Pioneer Squares future]. The impact is likely to go far beyond Pioneer Square. King County Executive Dow Constantine and Sunny Speidel, owner of the Pioneer Square Underground Tour, believe Stadium Place will knit together the Pioneer Square and International District/Chinatown neighborhoods, according to an op-ed column they wrote for The Seattle Times.

People have always lived in Pioneer Square, which was the name given to the cobblestoned public plaza at the intersection of Yesler Way and First Avenue to honor the areas first white settlers of the 1850s. Without much planning, these early arrivals created a vibrant neighborhood, if not always in the way 21st-century, middle-class Americans define the term. Almost from day one, the area south of Yesler Way to the tide flats of Elliott Bay (now crowned by two stadiums) earned a reputation for catering to the base desires of young working men. More than one of the beautiful brick buildings in Pioneer Square today was a den of iniquity a century ago. Seattles oldest neighborhoodpurists dispute the claim, noting that Seattles founders spent a winter at Alki Beach before moving to the other side of Elliott Bayhas since been the frequent target of reformers, starting with prohibitionist religious leaders and politicians who saw the saloons and brothels as cankers on the otherwise fresh face of the city. Even as some vices faded, others appeared, particularly drug dealing, which was under full-scale assault by police as recently as 2010.

As Seattle prospered, the well heeled moved north and east, leaving behind a relatively poor enclave that attracted the down and out, a legacy with echoes to the present day: Social services such as Union Gospel Mission, which opened in 1932, and the Compass Center, a more recent arrival, are concentrated in Pioneer Square. Many of their clients live in the neighborhood, and almost 90 percent of the housing built there in the past few years is for low-income people. By the 1960s, the neighborhood was seen by property developers as ripe for urban renewal, a nationwide trend of bulldozing decrepit buildings in favor of revitalizationin Seattles case, into parking lots. But in 1970, activists in the relatively new cause of historic preservation, led by Seattle Mayor Wes Uhlman, got the neighborhood declared a national historic district. By that time, a thriving art scene had taken root, with dozens of galleries and studios and, eventually, the nations first art walk.

But the preservationists and their political supporters made a crucial error, says Kevin Daniels, president of Daniels Real Estate and a board member of the National Trust for Historic Preservation, the countrys leading preservation organization. Activists saw the neighborhood primarily as a commercial district for retailers and service businesses that would cater to downtown workers by day and tourists by night and on weekends, he explains. Pioneer Squares saviors played down the possibility that local people might want to live there. Thus, little housing for the middle class was planned or built.

To have a healthy community, Daniels notes, you need to live, work and play in the neighborhood.

Thats not to say the late-20th-century vision for Pioneer Square failed; it may have simply played out like any of Seattles frequent booms and busts. In the 1990s, for example, high-tech startups such as RealNetworks were attracted to the neighborhood by low rents, and cutting-edge underground music clubs showcased grunge bands such as Nirvana, cementing Seattles status as a pop culture mecca. But in 2001, the one-two punch of the Mardi Gras riot and the Nisqually earthquake on consecutive days made many Seattleites think twice about a visit to the old quarter and its elderly brick structures. That led to another downward spiral, climaxing with the departure in 2010 of The Elliott Bay Book Company from its First Avenue location. When Elliott Bay Books left, Daniels says, that was the catalyst for the newest revitalization.

A rendering of Stadium Places first phase, viewed from King Street, right, and Second Avenue South.

Despite the setbacks, Pioneer Square continued to attract urban homesteaders, such as blogger Kelly, who was lured away from the new high-rises of the Denny Triangle to the more human scale of low-rise buildings that date back to the Great Seattle Fire of 1889. It has a small-town feel within a big city, she says. In addition, commercial rents as much as one-third less per square foot than in other parts of downtown and abundant vacancies have seduced new economy companies such as ShareBuilder, Isilon, Zynga and Onehub (from high-tech haven Bellevue), reminding Seattleites of Pioneer Squares historic role as an economic cradle. EMC Isilon reportedly added 450 employees to its Pioneer Square operation last fall. The city is catering to the settlers by letting Comcast put in new high-speed internet to the area through a city-owned conduit. And last spring, the Seattle City Council paved the way for packing in new residents by approving building-height changes that allow high-rises such as Stadium Place to go up next to older historic structures. (Once completed, the tallest of the three towers of Stadium Place will rise 240 feet, the maximum allowable under the new rules.)

Some preservationists complained, but residents and businesses are happy enough to make the tradeoff: more people and activity for a potential cost to the neighborhoods historic character.

Entrepreneurs in more commonplace businesses are also seeing new possibilities in Pioneer Square. Mike Klotz opened Delicatus, a delicatessen with a modern Northwest spin, about the same time The Elliott Bay Book Company departed. Klotzs current customer base is the traditional office and tourist crowd. He hopes Stadium Place will bring in yet another wave of urbanites who will see that Pioneer Square doesnt deserve its bad rap. For instance, The New Pioneer Square reports that the neighborhoods crime rate is on par with Fremonts and Wallingfords. And Klotz says he sees more police officers patrolling Belltown than Pioneer Square, a signal to Klotz that his neighborhood is comparatively safer. Pioneer Square has a reputation as the Bourbon Street of Seattle, Klotz says, but it is not as unsafe as people talk about.

As the saying goes, however, perception is reality. Developers such as Daniels understand that a gleaming new apartment tower on its own wont change Pioneer Squares image, no matter how stylish. And the ongoing debate over parking, in addition to the worsening traffic mayhem caused by the construction of the SR 99 tunnel, will only underline many Seattleites unease about visiting Pioneer Square.

Ironically, the construction madness may help the neighborhood paint a more positive picture of itself. Youll hear more about Pioneer Square in the next two years than youve ever heard before, Daniels predicts, noting that the state will blanket local media with come-hither messaging intended to reassure locals that Pioneer Square is still functioning, even as the biggest mechanical moles in history punch holes underfoot in the glacial till. The PR blitz began with the opening in December of the Milepost 31 information center near First and Yesler; some thought the $490,000 price tag excessive.

Fortunately, the neighborhood seems past the old squabbling that sometimes pitted new arrivals against advocates for the homeless, for example. Residents say theyve never seen the various Pioneer Square factions as united as they have for those in support of Stadium Place. The North Lot is a project universally supported in the neighborhood, says Leslie Smith, executive director of the Alliance for Pioneer Square, an advocacy group that includes a representative of Compass Center on its board. Daniels, who also sits on the alliances board, adds that social service providers are now seen as assets, not impediments, to the neighborhood. Were embracing them, he says. We want them to be a part of the community.

But Seattleites shouldnt read too much good news into this project. Charlie Wright, chairman of R.D. Merrill Company and the son of Space Needle-investor Bagley Wright, believes the real estate market will remain mixed at best, despite Stadium Place, one of Merrills most ambitious projects. Stadium Place is a key part of his companys focus on multifamily developments. We think that providing residential buildings close to the urban center is the right play, he says.

Daniels is more direct about his developments role in the current environment. Stadium Place is not an indicator of better things in the near future for commercial development, Daniels says, adding that the real estate market will remain slow until employment picks up. [Stadium Place] is a unique development that will help transform Pioneer Square. Still, Daniels worries that some Pioneer Square residents may be placing too much faith in Stadium Place as a turning point for the neighborhood. The project wont bring in families; no one is even discussing building a public school in Pioneer Square or adding kid-friendly improvements to the limited green spaces, such as Occidental Park, which would create an attractive intergenerational mosaic similar to Ballard or Columbia City. And apart from Uwajimaya in the International District and a few tiny corner markets, theres no place to pick up a loaf of bread or a gallon of milk. On the other hand, the sight of new housing slowly filling with people could give a Whole Foods or even a Safeway the confidence to invest in nearly unbroken ground.

Stadium Place is only a first step for the neighborhood, Daniels says. But its a big first step.

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