Schnitzer West revives plan for 36-story office tower downtown
After a long, recession-driven lull in new high-rise construction in downtown Seattle, one developer is again seeking permits for a 36-story office tower.
Seattle Times business reporter
It's been nearly five years since anyone broke ground on a high-rise office building in or near downtown Seattle, and no one's planning to start building a new tower anytime soon.
But the downtown office market has recovered sufficiently for one prominent developer to dust off plans for a project it shelved during the recession's depths.
Seattle-based Schnitzer West applied for building permits earlier this month for a 36-story, 750,000-square-foot office tower, dubbed the M5 Commerce Centre for its location at Fifth Avenue and Madison Street. Dan Ivanoff, Schnitzer's founder and managing investment partner, said the company hopes to have permits in hand by the end of the year.
It won't start construction until much of the building is preleased — a likely prerequisite for obtaining financing, Ivanoff said: "We're not going to build a building on spec (speculation)."
But the office-vacancy rate is falling, he noted, and rents are expected to rise.
"It's trending in the right direction," Ivanoff said of the market, "and this is an opportunity for us to be in first position" with a project that is ready to break ground before any prospective competitors.
M5 was about 85 percent designed when Schnitzer put it on hold in 2008, Ivanoff said. That was the year Washington Mutual — downtown's biggest office tenant — collapsed, helping to push the vacancy rate to record highs.
Schnitzer went ahead and obtained a land-use permit from city planners in early 2009, but it stopped pursuing building permits and put the site up for sale.
Schnitzer revived the project and started talking to city officials about permits and design in January, said Steve Cook, the Schnitzer senior investment manager in charge of the project.
Recent demand for office space has been greatest in neighborhoods just north of downtown such as South Lake Union and the Denny Triangle, and some brokers say the central business district has fallen out of favor with fast-growing tech companies.
But Ivanoff said recent decisions by two big law firms to remain downtown show the neighborhood still has pull. In addition to accommodating growth, M5 could appeal to traditional downtown tenants looking to move into newer digs, he said — most of downtown's top-end towers south of Stewart Street date back to the 1980s.
Over the past two years Schnitzer West has sold most of the projects it built in the Seattle area during the past decade, grossing more than $1.3 billion.
Eric Pryne: 206-464-2231 or firstname.lastname@example.org