For the better part of the past decade, Seattle’s South Lake Union neighborhood has surged with development with the likes of online-retail giant Amazon.com’s campus, various Vulcan Real Estate projects and life-science centers.
Now the submarket is hitting another gear with a recent wave of major commercial and residential concepts, plans and construction—including H5 Capital’s vision for a twin-tower development at the former Seattle Times site at 121 Boren Ave. North.
Amazon helped show “the promise of what could be done” in South Lake Union, said Greg Inglin, Seattle-based senior vice president for commercial real estate services firm Colliers International. “Now there’s retail and multifamily. It’s a place people want to be, and other tenants are looking there.”
The latest ambitious proposal for the neighborhood comes from H5, a Beverly Hills, Calif.-based developer that bought the 248,000-square-foot Times building several years ago for $36 million.
The firm aims to build two 42-story residential towers each with 420 units, according to a brief online description from the City of Seattle’s Design Review Program, which is scheduled Oct. 7 to take up the proposal.
The project would also include 3,500 square feet of street-level retail space at one tower and underground parking for 350 vehicles at each high rise, according to the description. The existing Times building would remain while a single-story structure housing the 13 Coins Restaurant would be razed.
The H5 project would just add to a neighborhood already brimming with development activity and interest.
Among the projects just in the immediate vicinity of the H5 site include Los Angeles-based Mack Urban’s 40-story housing high rise and Seattle-based Vulcan Real Estate’s 400,000-square-foot office building, 28,000-square-foot commercial structure and 41-story residential tower.
Elsewhere in South Lake Union, Charleston, S.C.-based Greystar is planning a mid-rise and high-rise apartment complex while Los Angeles-based Kilroy Realty Corp. is pursuing a 700,000-square-foot office development.
Inglin also noted Amazon’s plans to add about 3 million square feet of offices for itself. “A lot is going on,” he said, “and I do see more coming.”
Part of South Lake Union’s draw is that “it fits the profile for a live-work-play lifestyle” with a flat topography making “it easy to get around” and a lake nearby, he said.
Vulcan, which has worked on Amazon projects over the years, recognized South Lake Union’s potential early on. “The area had great proximity to downtown, and the lake was a unique amenity,” said Lori Mason Curran, investment strategy director at Vulcan. “In 2004, the neighborhood was designated an urban center, and we knew it was poised to accept a large amount of employees and residents in the future. We envisioned an area where biotech, tech and creative class workers could collaborate and foster innovation,” she said. “The entrepreneurial spirit present today harkens back to the neighborhood’s history: Bill Boeing test flew planes off the lake, and Henry Ford had a Model T assembly plant there in the early part of the 20th century.”
The overall employment growth in the city center also is fueling the neighborhood’s boom, said Don Blakeney, vice president of advocacy and economic development for the Downtown Seattle Association. Those workers “have to go somewhere, so there’s demand for offices and residences.”
According to research that the association helped compile, South Lake Union’s population grew 25 percent and employment increased 42 percent between 2009 and 2013. “These new tenants supported a 38 percent increase in the number of street-level service businesses (such as salons, spas, restaurants and fitness centers),” the research also said.
South Lake Union is now transforming into a “mixed-use employment base,” Blakeney said. “You have office development but also residential. It’s becoming a 24-hour neighborhood where you can walk to work.”
The cultural vibe has also picked up in the neighborhood with several restaurant openings, a large street food festival and a new farmer’s market, he said. The district is also home to the Cornish College of the Arts, which has built a new 20-story residence hall, and the Museum of History & Industry, which moved into a revamped center in 2012 after decades in the Montlake neighborhood.
But with all the growth in South Lake Union, Inglin and Blakeney agree that transit issues remain a critical concern even as development puts housing close to the workplace.
“The biggest challenge is congestion—how to deal with the increase in cars on surface streets,” Inglin said.
Blakeney pointed out that transportation solutions are being pursued. Those include possibly extending the city’s rapid-bus transit system into South Lake Union and a proposed regional light-rail expansion.
The hustle and bustle of today’s South Lake Union is in marked contrast to its past. Some 20 years ago, Inglin said, the neighborhood was a gritty, warehousing district.
Eventually, it morphed into a biotech hub with the growing presence of such organizations as Seattle Children’s hospital, University of Washington School of Medicine and the Center for Infectious Disease Research.
Then office development took off around 2006 with Vulcan leading the charge, Inglin said. But by no means is the life-sciences industry getting pushed out as biotech developers such as Pasadena, Calif.-based Alexandria Real Estate and San Diego-based BioMed Realty remain active in South Lake Union.
“Life-science companies are a strong part of the fabric of South Lake Union—which is the reason BioMed Realty has chosen to invest in building its Seattle portfolio in South Lake Union since 2006,” company spokesman Rick Howe said. “The area is home to tremendous growth, especially in the biotech sector. We’ve witnessed biotech flourish in South Lake Union because of the connectivity and collaboration opportunities the area provides.”
Howe noted some key BioMed developments in the neighborhood—its research center at 500 Fairview Ave.; the 530 Fairview building, which houses Novo Nordisk, NanoString Technologies and Presage Biosciences; and 307 Westlake Ave., the site of the Seattle Biomedical Research Institution.
Still, Inglin said, the high-tech industry is becoming the big office user in South Lake Union. “It’s tech central,” he said.
Besides the neighborhood anchor tenant Amazon, cloud-computing company Salesforce.com and social-media firm Facebook—tech giants both based in the San Francisco Bay Area—have opened up offices in South Lake Union. Also, Minnesota-based consumer-electronics provider Best Buy announced earlier in the year that it was planning to open a tech-development center in the Times building owned by H5.
The building bonanza and tech infusion in South Lake Union are similar to what has been happening to San Francisco’s South of Market neighborhood—which also has risen from an economically depressed, run-down past, Inglin said. “These two are among the hottest markets in the country.”
Curran sees the development surge just continuing in South Lake Union, especially when building height limits have been increased.
“There has been a tremendous amount of commercial development, and we are now seeing residential development start to catch up,” she said. “With the rezone that was implemented in May 2013, the neighborhood can now be built with taller, denser buildings. So I anticipate that the future will bring more high-rise development to the neighborhood, including residential high rises. Many are already planned by Vulcan and other developers.”
