Smith Tower shows signs of life with new owner; McKinstry expands; Yahoo CEO's F5 flap
Historic Smith Tower's gaining tenants under new owner. Also, McKinstry expands its business incubator here, elsewhere; Yahoo CEO's résumé was not embellished at F5.
It's probably a stretch to say the Smith Tower is filling up. But the new owners of Seattle's first skyscraper have leased about 10 percent of the building since they took possession at a foreclosure auction six weeks ago.
Before the new deals, the much-loved tower's vacancy rate was 81 percent — and climbing.
Brokers at CBRE, the building's new marketing representative, announced this past week that they've inked leases with five new office tenants for a total of 25,000 square feet.
The biggest deal was with Portent, an Internet marketing company that's been based in Tukwila for nearly a decade. It signed a five-year lease for the entire 17th floor, about 11,000 square feet.
The Smith Tower wasn't on the company's radar when it started looking for new digs, says President Steve Gahler.
But when Portent officials toured the 98-year-old tower, "It just screamed, 'This is it.' It took our breath away, quite frankly.
"If it isn't the most iconic building in Seattle, I don't know what is."
There haven't been many kind words, or much good news, for the Smith Tower in the past few years. Former owner Walton Street Capital's plan to convert the Pioneer Square building to condos collapsed when the economy tanked, and office tenants fled the 42-story landmark.
Rents couldn't cover expenses. Maintenance was neglected.
Walton defaulted on its loan a year ago. The holders of the note — affiliates of CBRE — got a judge to appoint a receiver to manage the tower while they pursued foreclosure, finally taking the building back March 23.
The receiver, Goodman Real Estate, remains the Smith Tower's manager. It's been fixing up the building for several months now, and expressing confidence that the tower's views and charm would lure new tenants.
In addition to Portent, the first batch includes marketing consultant Aukema & Associates, graphic-design firm Push Design, and Rialto Communications, a marketing and public-relations company.
Portent's Gahler says his company, with more than 30 employees, is growing fast, and "it was time for us to grow into the next level as a company."
That included increased visibility, he says, and the Smith Tower fit the bill. What's more, Goodman and CBRE offered rates that were competitive with other buildings Portent was considering in Pioneer Square, Sodo and Georgetown.
The 17th floor, formerly leased by Disney, already is wired to Portent's specifications, Gahler says, so tenant improvements should take only a few weeks.
He expects to move in June 1.
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McKinstry is doubling down on its business-incubator program, adding space to the Innovation Center at its Georgetown headquarters in Seattle and starting work on another in Spokane.
Later this year McKinstry also plans to launch one in Portland, says Vice President Tony Stewart. And longer term, "Our strategy is to bring an innovation center into every market that we are serving."
The Seattle incubator's first tenants, water-turbine developer HydroVolts and fuel-from-grease producer General Biodiesel, moved in two years ago. They've been joined by early stage firms and nonprofits ranging from Everest Sciences, which develops turbine generator inlet cooling products, to Teach for America, which sends college grads into underserved schools.
"It's working out quite well," Stewart says.
The value, he says, is not so much the rent paid by the startups but the atmosphere of problem-solving and entrepreneurship they help create for McKinstry, which designs, builds and runs the energy and mechanical systems that make buildings function.
"It's a much richer environment," Stewart says. "We think it's healthy for our people."
McKinstry, which has 1,600 employees and about $400 million in annual revenue, also sees potential business synergies with some of the startups.
Stewart says McKinstry's machine shop has helped HydroVolts fine-tune its turbine design, and the firms have discussed how McKinstry could play a role in manufacturing the products.
The Seattle incubator is being expanded from 20,000 square feet to 38,000. This past week McKinstry started construction on its 38,000-square-foot Spokane incubator, which is already 25 percent pre-leased, Stewart says.
had résumé right
at F5 Networks
Recently hired Yahoo CEO Scott Thompson, who is also a director at F5 Networks in Seattle, is in hot water over a résumé that claimed he had a degree in accounting and computer science from a Massachusetts college.
Turns out the degree is only in accounting, a discrepancy that firebrand hedge-fund manager Daniel Loeb seized on this past week to question Thompson's character and the Yahoo board's competence. The résumé was reportedly posted on Yahoo's website, and the claim of dual degrees was included in Yahoo's April 27 proxy statement.
But if Thompson was deliberately inflating his credentials, he hasn't done a very good job.
F5's proxy materials from as far back as 2008 simply say that "Mr. Thompson holds a B.S. in Accounting from Stonehill College."
Likewise for proxies filed from 2005 on by eBay, where Thompson was senior vice president and chief technology officer of its PayPal unit.
And just a week before the Yahoo filing that's causing the current ruckus, IPO papers for Splunk, another technology company where Thompson is a director, also said his degree was in accounting.
Those filings lend credence to Yahoo's assertion that the exaggerated degree claim was "an inadvertent error," though it has yet to explain how it happened.
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