After a five-year wait, developers say they will break ground this fall on a 660-foot downtown office tower that would be the tallest building erected in Seattle in more than 20 years.
Daniels Real Estate of Seattle and equity partner Stockbridge Capital Partners of San Francisco obtained permits for the 43-story Fifth and Columbia Tower in early 2008.
But they put the asymmetrical, angular project on hold later that year when Washington Mutual collapsed and downtown offices began to empty.
Now the downtown market, driven by strong job growth, at last has recovered sufficiently to start building again — even without signed tenants, the companies’ leaders say.
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“We just really like Seattle as a market, today and for the long term,” said Stephen Pilch, Stockbridge’s chief operating officer.
One big change is likely for the project: A luxury hotel could occupy the skyscraper’s second through 15th floors. A permit application for the change was filed with city planners last week.
Daniels Real Estate President Kevin Daniels said he’s negotiating with a national hotel company he declined to identify, except to say the brand would be new to Seattle.
Daniels and Stockbridge agreed to buy the quarter-block site in 2007 as part of a complex transaction that also gave them ownership of the neighboring, century-old First United Methodist Church sanctuary and saved it from demolition.
The sanctuary, now a protected historic landmark leased to Mars Hill Church, could be incorporated into the tower development plan, Daniels said.
The planned rehabilitation of the old church will be expensive, he said, “and for that we need a market-driven solution.”
At 660 feet, Fifth and Columbia would be 55 feet taller than the Space Needle. Only Columbia Center, 1201 Third Avenue, Two Union Square and the Seattle Municipal Tower are taller.
The $400 million project is slated for completion in mid-2016.
Fifth and Columbia’s design, by ZGF Architects, attracted considerable attention when it was first unveiled more than five years ago.
The dimensions of each floor would be slightly different, larger in the middle than at the top and bottom. The tower also would extend in and out of the air space above the 1908 sanctuary and another historic neighbor, the 1904 Rainier Club.
Only minor modifications would be needed to accommodate a hotel, Kevin Daniels said.
The developers demolished the 1950 church annex that had occupied the skyscraper site in spring 2008, and planned to start excavating for the foundation that summer.
But previously unknown damage to the sanctuary, discovered when the annex was torn down, required repairs that delayed the construction start.
Meanwhile, the economy soured. And in September 2008 federal regulators seized Washington Mutual, downtown’s largest office user.
Daniels and Stockbridge put Fifth and Columbia on hold days later. “We were already nervous, and that did it,” Daniels said.
WaMu ultimately vacated more than 1.6 million square feet of downtown offices, helping drive greater downtown’s vacancy rate to record highs. But it has since fallen from its late-2009 peak.
A hotel on Fifth and Columbia’s lower floors, if it happens, would occupy about 175,000 square feet, leaving 524,000 square feet of office space for lease starting on the 16th floor.
Daniels said he’s involved in formal discussions with several prospective tenants and anticipates signing at least one before construction starts.
But that’s not a prerequisite, he added.
Fifth and Columbia is the second speculative Seattle project slated to break ground this year in which Stockbridge has a stake. The San Francisco company also is putting up most of the cash for Dexter Station, a 10-story South Lake Union office building scheduled to start construction Feb. 1.
“We’re very bullish on Seattle, “ Pilch said. “Markets go up and down, but Seattle is always one of the first to come back.”
He and Daniels pointed to the city’s recent job growth, particularly in tech and life sciences.
South Lake Union, home to booming Amazon.com, has been the focus of most recent developer interest. The office-vacancy rate there is less than half that of the downtown core to the south where Fifth and Columbia would be built, according to commercial real-estate database Office space.com.
But Daniels said the core’s empty offices don’t faze him. Companies looking for space are shying away from the core now because what’s available there doesn’t interest them, he said.
Almost all the office buildings there are more than 20 years old. Fifth and Columbia will offer energy-saving features and other amenities that many older buildings lack, Daniels said.
“Tenants really want to be in the newer buildings,” Pilch added. “It’s not just the tech companies — even the law firms want that space now.”
And most of the vacant space downtown is in smaller chunks, said Matt Christian, executive director at brokerage Cushman & Wakefield/Commerce.
“If you’re a larger tenant who needs 100,000 square feet or more, there really isn’t a lot out there,” he said.
Daniels Real Estate also is the master developer of Stadium Place, an ambitious residential, retail, hotel and office complex under construction in Pioneer Square in what was part of CenturyLink Field’s north parking lot.
Stockbridge’s 30 million-square-foot U.S. portfolio includes office buildings in Bothell and Seattle’s Queen Anne neighborhood.
Eric Pryne: email@example.com or 206-464-2231