By Jack Stubbs
A little more than a year ago, in February 2017, Seattle’s U-District was one of several neighborhoods in the city to be up-zoned in a process that began in early 2017 as a way for the region to meet its housing and development needs. And this week, an 8-parcel property located just three blocks from the University of Washington—and slated for redevelopment—came to the market, offering an opportunity for the new owners to transform a part of the city brimming with activity.
On Monday, April 9th, the 8-parcel property totaling 41,200 square feet, called Campus Station—located at 4202-4238 12th Ave NE—was listed by Colliers Seattle’s Multifamily Property Advisors team. According to Tim McKay, who listed the property along with partners Dan Chhan and Sam Wayne, there has already been a significant amount of interest shown in the property. “We’ve only been out for one full day, we’ve had a lot of interest. We’ve had a couple of calls from Canada, and people representing buyers in Asia.”
According to Colliers, Campus Station is the largest single-fee assemblage brought to the market since the U-District was rezoned last year. In terms of potential development opportunities on the site—which is currently occupied by a couple of apartment buildings that contain approximately 60 units—the area can accommodate either 549 market-rate units or 372 units of student housing (1,114 beds), as well as 348 parking stalls. The site also allows potential hotel and office uses.
The project is three blocks from the University of Washington and just half a block from the in-the-works U-District Light Rail Station, which is set to be completed in 2019 and open for service in 2021. Once the station is operational, riders will be able to get to Capitol Hill and Downtown Seattle in less than ten minutes and SeaTac Airport in under an hour.
The property’s proximate location to the University of Washington—which has 72,500 students and faculty—and the future Light Rail Station make it an appealing proposition for prospective buyers, even in relation to the more established submarkets to the south, according to McKay. “While this location isn’t the same as downtown or South Lake Union, there’s a transit play here that probably makes [the property] more attractive than Belltown probably in terms of being able to get on the train and get to all the major hubs so quickly.”
There is no listing price yet for the property—the Colliers team is set to make call-for-offers sometime in mid-May 2018—but McKay thinks that Campus Station could potentially fetch somewhere near $1,000 per square foot, based on past precedents in other neighborhoods. If that price point is met, the sales price would come to $41.2 million. “The best way to put it is that we’ve seen properties zoned to go up 25 stories in Belltown and Downtown trade for over $1,000 per square foot. We don’t think we’re at that mark, [but] there’s an argument to be made that [the sales price] could be somewhere close to that,” he said.
According to McKay, the up zoning changes made in the U-District early last year had a substantial impact on the redevelopment potential for the site. “[The up zoning changes] made a huge difference. There are at least two parcels on this block that would not have been worth more as land had the zoning change not gone through,” he said. McKay also hopes that the property serves as an example of how the upzoning changes throughout Seattle can positively benefit the city in the longer-term.
Under the city’s Mandatory Housing Affordability (MHA) initiative, building heights and potential development capacity of projects is increased—and in exchange, developers have to either include affordable housing in their projects or contribute to a fund for affordable housing. “I think this is a perfect example of how the up zone is going to positively affect the city of Seattle, where you’re taking 60 units and creating potentially 1,100 new beds for students,” McKay said. “And while the argument can be made that it’s going to be expensive housing, more housing is going to do the most to ease price restrictions and cost for people.”
Seattle is actively working on finding ways to make housing more affordable throughout the city. In line with that goal, the City Council in 2017 also adopted rezones to establish new MHA affordability requirements in South Lake Union, Downtown, International District, Uptown and parts of the Central District, along with the U-District.
Along with the latest redevelopment opportunity, activity in the U-District shows no signs of slowing, either. In early April, a 24-story, 227-unit project developed by California-based student housing developer Eran Fields located three blocks from Campus Station was approved by the northeast review board to proceed in the city’s Design Review Process. The project was the first high-rise tower to be approved for development since the U-District up-zoning changes were enacted last year.