A year later, condos at Northgate are still all unsold; also, WaMu shares vs. Star Wars action figures.
The reports are mixed from Thornton Place, the landmark residential and commercial development built on what once was Northgate Mall’s sprawling south parking lot.
Apartments: Get ’em while you can.
Retail: Doing OK, considering.
Condos: Snakebit. Just when one problem gets resolved, it seems, another one surfaces.
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No units have sold despite more than a year of marketing. A month ago developers Stellar Holdings and Lorig Associates suspended sales efforts indefinitely.
Thornton Place was built on one of the Seattle’s most contentious chunks of land. City officials and developers viewed the underutilized 5 acres of asphalt as an opportunity for big mixed-use, transit-oriented development. Neighbors wanted the south fork of Thornton Creek, which had been diverted for years into a pipe under the parking lot, brought back to the surface.
They resolved their differences in 2004. Today the restored creek burbles past 109 condos, 278 apartments, 50,000 square feet of retail space and a 14-screen cinema, all completed last year.
Since then 94 percent of the apartments have been leased, says Tim Ainge, Stellar’s vice president for real-estate operations. Just 16 units remain. Rents start at $1,150 a month.
Five restaurants have opened in the complex, and a vitamin store is scheduled to move in soon. While together those businesses occupy only about one-quarter of the noncinema retail space, Ainge says the restaurants are doing well. So is the movie complex, says Alison Jeffries, in charge of marketing for Thornton Place.
But the condos, which start in the low $200s, are another story.
Stellar and Lorig had the misfortune to bring them to market in the midst of the worst housing downturn in decades. Even a much-publicized layoff-protection offer a year ago — you lose your job, we’ll pay your mortgage — didn’t attract any buyers.
So Stellar and Lorig cut prices, and by late last year they had 18 of 34 condos in the project’s first phase under contract — just enough to meet the Federal Housing Administration’s requirement that 50 percent of a project be presold before the agency will insure buyers’ mortgages.
FHA approval is almost a prerequisite for sales in this tough market.
But in mid-December, Ainge says, he noticed a suspicious half-inch gap between the wallboard and flooring in one unit. That touched off a chain of events that led engineers to conclude by mid-January that part of the project had a settling problem.
It afflicts 20 of the 109 units, Ainge says. They share a concrete base with Thornton Place’s parking garage, and apparently December’s cold snap caused the concrete to contract, leaving cracks and gaps in spots.
The developers notified the 18 first-phase buyers of the problem Jan. 26, Ainge says. Then, three days later, they learned the FHA had denied Thornton Place’s application for approval, concerned the project had more nonresidential space than agency rules allow.
After that one-two punch, Ainge says, the developers decided to give the buyers the opportunity to back out of their contracts. The FHA reversed itself and approved the project a few weeks later, but by then most of the buyers had rescinded their offers, Ainge says.
He doesn’t know when sales will resume. First the settling problem must be fixed, he says, and he’s not sure how long that will take.
Is litigation a possibility? “I can’t answer that,” Ainge said.
— Eric Pryne
WaMu shares vs. Star Wars toys
Along with about 200 form letters to the Delaware bankruptcy court from Washington Mutual shareholders protesting the company’s proposed liquidation plan, there’s one message that’s original and heartfelt.
It’s written in longhand, addressed to “Dear Judge Mary,” and signed “Love, Jake.”
The letter is from a kid named Jake Barrett in Palm Bay, Fla., who’s evidently learned some hard lessons about finance.
“I earned money washing cars and cutting lawns,” Jake writes to Judge Mary Walrath. “I wanted to buy Star Wars toys, but my Dad told me to save it.”
Good advice. Yet somehow Jake and his father made the leap from saving to buying stock: “I invested in WaMu shares.”
Now he asks the judge to “help me get a fair price for my shares of WaMu Bank.”
“My Dad said to write to you and to Jamie Dimon, because I care. So I did.”
The letter to the chairman and CEO of JPMorgan Chase, which acquired WaMu’s banking operations on the cheap after they were seized by federal regulators in 2008, is not included.
But Jake — who apparently is on a first-name basis with the man WaMu shareholders consider the Darth Vader of modern American banking — sums it up for Judge Walrath: “Why doesn’t Jamie want to give me a fair price for my WaMu shares? I asked him.”
Jake is just one of many WaMu investors who believe Dimon’s bank should compensate them for their losses.
Stockholders are pressing the bankruptcy court to order WaMu to hold an annual shareholder meeting.
Their strategy is to elect a new board of directors and then continue litigation against JPMorgan and others, rather than accept last month’s global settlement that leaves nothing for shareholders.
As for Jake — who could not be reached for comment — apparently the whole experience has put him off the stock market.
“I don’t think I’ll buy any more (stock) and just keep my money in the bank, because I might lose it all,” he writes.
And he regrets his WaMu investment: “I think I would rather have Star Wars action figures Clone Troopers.”
Sounds like it’s time for a talk with Dad.
— Rami Grunbaum
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