Harbor Properties Sells Interest in 223 Yale

SEATTLE-Harbor Properties has transferred its stake and lead developer status in 223 Yale to Vulcan Inc., one of its two joint venture partners in the 362,000-sf South lake Union area project slated to break ground this summer. Harbor Properties president Denny Onslow tells GlobeSt.com that the interest was sold so that his company could free up cash for its other projects.The project will consist of 180 apartment units complemented by retail and office space. Originally, the partners were Vulcan, Harbor and Pemco Insurance, with Vulcan and Pemco the land owners and Harbor Properties as equity investor and lead developer. Each owned a one-third interest in the project. With the sale, Vulcan now owns two thirds of the project and will take over lead developer status.”This is a large project and it really taps our resources–human, creative and financial–and we are trying to make sure we are diversified,” says Onslow. “If we had infinite resources, we would stay involved in the project.” Harbor Properties navigated the project through the design and permitting phases. Construction is scheduled to begin this summer and be completed in early 2006. NBBJ will be the project architect and its anchor office tenant, having committed to leasing 70,000 sf earlier this year.Onslow says a major reason why all parties signed off on the deal is that Vulcan has greatly expanded its in-house development services team to 25 real estate professionals in recent months and now has the capability to handle the lead developer role. “I hate to leave a good project, but with our need to diversify and Vulcan’s ability to pick up the slack, it seemed like a good time to do it,” says Onslow. “We’re trading one big project for the ability to do a couple of smaller ones.”The projects are two low- to mid-rise multifamily developments on First Hill and Capitol Hill. Onslow says he has a 75-unit project in its early stages along Pine Street on Capitol Hill, the second phase of the Press Apartments, for which he has started the permitting process. The other project, at 8th Avenue and Marion Street on First Hill, is still in the design stage. It also will be about 75 units. Both properties have existing structures that still have to be demolished. Onslow says he plans to incorporate an affordable component into the projects in order to take advantage of the city’s recent reinstatement of a special tax credit for real estate companies that develop apartments affordable to people making $35,000 to $40,000 a year.Meanwhile, Harbor Properties will remain in partnership with Vulcan on other joint South Lake Union development projects that are further along, including Alcyone, a 200,000-sf residential project located on Thomas Street and Minor Avenue North. The project, which will open in May, includes 162 apartments, ground-floor retail and underground parking. Harbor and Vulcan also partnered on the recently opened Seattle Biomedical Research Institute building located at 307 Westlake Avenue.As well as developing, Harbor Properties currently owns and manages several downtown real estate properties including Harbor Steps, Press Apartments, Site 17, and the Logan and 1411 office buildings, among others. All told, the company manages 300,000 sf of office, about 1,300 apartments and about 130,000 sf of retail within the Seattle city limits.