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Seattle Area News Highlights
November 9, 2012
Headlines:
 Joshua Green partners with Urban Renaissance
 City looks at rehab or replacement for Yesler Way
bridge over Fourth
 More apartments for Avalon Way
 Peter Chee’s Thinkspace turns a profit by getting
tenants to work together, literally
 Cray buys Appro for $25M
 Wallingford group appeals permit for office building
 Despite its billionaire origins, EMP pitches for break on
rent
November 9, 2012
Joshua Green partners with Urban Renaissance
By NAT LEVY
Journal Staff Reporter
Photo courtesy of Charlie Schuck Photography [enlarge]
Officials from both firms said the success of redeveloping the Joshua Green Building led to a new
partnership with the Seattle real estate firm URG.
It all started with a century-old building.
In 2007, Joshua Green Corp. was looking for a firm to redevelop its historic downtown Seattle
building and partnered with Urban Renaissance Group, which at that time was just one year old.
The project was a success, and the building was fully leased within 18 months, despite the
economic downturn. The two companies teamed up again earlier this year to purchase Plaza 600
in downtown Seattle.
Those deals laid the foundation for a new partnership that could make URG a bigger player in
the Seattle real estate market.
Joshua Green Corp. said it will merge its $150 million real estate portfolio with URG, and make
an additional $50 million investment in the company. This will give Joshua Green Corp. real
estate asset expertise, and allow URG to build a coinvestment fund and partner with institutional
buyers on large transactions.
Patrick Callahan, CEO of URG, said the fund can be leveraged for coinvestments of as much as
$1 billion.
Joshua Green Corp. has invested in different companies in the past and will continue to do so.
URG focuses on development, property management, construction management, acquisitions
and asset management. The partnership with Joshua Green Corp. will allow it to increase its
presence in Seattle. It has projects in Portland and Denver, and plans to enter the San Francisco
market in the future.
Callahan
McCammon
Seattle-based Heartland, LLC, and Heartland Capital Advisors, LLC, advised Joshua Green Corp.
in creating the partnership. Heartland has a long-term relationship with both companies.
The move by Joshua Green Corp. represents a change in philosophy over the last few years.
Stanley B. McCammon, president and chief executive officer, said the company has invested in a
number of properties throughout this area. He said he is interested in investing in people who
understand real estate, rather than investing in assets.
“We really wanted to put a firm foundation under a real estate operating business such that we
can weather cycles and identify new trends, and invest in them as they evolve,” he said.
URG has grown to more than 50 employees since it was founded. Callahan said creative deals
and a breadth of services have helped it grow despite its launch just before the recession started.
He points to a deal in 2010 for a vacant new building at Seventh and Madison as one of his
proudest moments. HAL Real Estate Investments bought the building and teamed up with URG
to lease the space to The Polyclinic. URG's focus on renovating older buildings has been another
key to its success, Callahan said.
URG now has a property management portfolio of more than six million square feet. The firm's
senior leadership — which includes Chief Investment Officer John Bliss, Chief Operating
Officer Kimberly Fuller and Vice President of Development and Construction Vince Sheridan —
will continue in their roles. Two employees of Joshua Green Corp. will join URG, Callahan said.
Joshua Green Corp owns the Joshua Green Building at 1425 Fourth Ave., and the Office Depot
Building next door. The company has retail and office holdings in Des Moines, Bainbridge
Island, Shoreline, Lynnwood, Kirkland, Newcastle and Spokane.
The investment company's Seattle roots go back to the 1800s.
November 9, 2012
City looks at rehab or replacement for Yesler Way bridge
over Fourth
Photo by Jon Silver [enlarge]
A century-old bridge that carries Yesler Way over Fourth Avenue in downtown Seattle could be
rehabilitated or replaced in the coming years.
Kit Loo, a project manager for the Seattle Department of Transportation, said the bridge is
structurally vulnerable and its steep slope over Fourth leaves a low 14-foot-3-inch clearance on
the western side. The city would prefer a 16-foot clearance height.
Whether the bridge is rehabilitated or replaced, the city will aim to retain its historic character,
Loo said.
The four-lane, 78-foot-long steel bridge includes intricate handrails and old-fashioned street
lamps, but it is not eligible for the National Register of Historic Places.
The city has presented its concerns about the bridge to the Pioneer Square Preservation Board,
and will meet with the International Special Review District Board next week. The meeting is at
4:30 p.m. Nov. 13 at the Bush Asia Center at 409 Maynard Ave. S.
Loo said the city is seeking consensus from the boards about its plans.
A formal approval process won't get under way until the project enters the design phase in 2013.
Construction could begin in 2014, depending on funding.
The ballpark budget is $23 million to $26 million.
The project could also include improvements to the intersections at Third and Prefontaine, and at
Terrace Street.
HDR Engineering is working as a consultant on the project for the city.
November 9, 2012
More apartments for Avalon Way
By JOURNAL STAFF
SEATTLE — An entity associated with Ebenal General in Bellingham filed plans with the city
to build a seven-story apartment building at 3062 S.W. Avalon Way in West Seattle.
The proposal is for 107 units with parking for 80 vehicles underground. A duplex and a six-unit
apartment building would be demolished.
Caron Architecture is the architect.
A Seattle design review board will hold an early design guidance meeting at 6:30 p.m. Nov. 29 at
the West Seattle Senior Center, at 4217 S.W. Oregon St.
The project would join several other apartment buildings that have been proposed or are under
way on Avalon Way. A 120-unit building is under construction at 3261 S.W. Avalon Way, and
the 60-unit Residences at 3295 — a former Mastro Properties project — is nearing completion.
Two more projects, a 114-unit building at 3078 S.W. Avalon Way and a 14-unit boarding house
at 3050 S.W. Avalon Way, have also been proposed.
Peter Chee’s Thinkspace turns a profit by getting tenants to work
together, literally
Premium content from Puget Sound Business Journal by Marc Stiles, Staff Writer
Date: Friday, November 9, 2012, 3:00am PST
View photo gallery (4 photos)
BUSINESS JOURNAL PHOTO | Marcus R. Donner
Peter Chee, CEO of Thinkspace, relaxes in the co-working area. The company offers space to
280 member businesses.
Eastside office landlord Peter Chee found himself at a metaphorical fork in the road.
He could continue renting out space in his downtown Redmond office building to a handful of
big tenants on a long-term basis, or he could go a more unconventional route and lease the space
to hundreds of companies for terms as short as one day.
He opted for the latter, and launched a company called Thinkspace. That was six or seven years
ago, just before the start of the Great Recession. But despite the timing, Thinkspace has thrived.
Revenues grew 37 percent over three years to more than $1.3 million last year, and Chee
forecasts that revenues for the seven-employee company will top $1.4 million in 2012.
“At the beginning of the recession, I was actually a little nervous, a little scared, quite honestly,
about where things were going,” said Chee. “I didn’t know how far down it was going to go.”
He faced a dilemma: Either lower prices, “or make sure I create a remarkable project” and
maintain prices. He chose the second route, and the gamble paid off. Today all of the company’s
space is occupied, and there’s a waiting list of customers wanting to get in.
Thinkspace and its 280 member businesses occupy 70 percent of the 40,000-square-foot building
that Chee developed in 2001 at 8201 164th Ave. N.E. Traditional office users occupy the rest.
Chee, whose background is in tech as well as real estate, exudes an entrepreneurial spirit. You
hear it when he talks about small businesses that are Thinkspace customers “creating connections”
among themselves.
“The thing that people crave is being social, being around other people,” Chee said. “Being in a
place like this is something that is great for them because they get to be around all different types
of people.” Forty percent of the companies in Thinkspace are tech companies. The rest are more
traditional business owners and service providers — accountants, counselors, attorneys and the
like.
“It’s kind of an entire ecosystem of customers,” said Chee.
The collaboration happens in Thinkspace’s co-working space, in other parts of the LEEDcertified building and at events that Thinkspace hosts. These include events following the
nonprofit TED model, which brings together people to share ideas on technology, entertainment
and design.
“I feel like we have awesome karma inside this building,” Chee said, sitting in a small office just
off the co-working room, which features a minimalist design and splashes of bright colors.
He ticks off the list of companies that started at Thinkspace and sold for big bucks. Exhibit A is
tech company Starent Networks, which Cisco bought in 2009 for $2.9 billion. Chee smiles
widely, remembering the day he learned of the deal.
“That was pretty fun. I was sitting there talking with the guys in the office here and said, ‘What
does it feel like to be part of an acquisition of $2.9 billion?’” he said. “It’s hard to even
comprehend what that means. How does that change a person’s life when they’ve sold for so
much money?”
Chee worked for Paul Allen’s company, Starwave, in the late 1990s. He said working in that
environment is what inspired him to start Thinkspace, which brings together “passionate, really
smart people.” They can rent private offices as well as co-working space.
Russ Oja of Apple Crate Marketing was working in that space on a recent afternoon when he
talked about how he came to Thinkspace while looking for reasonably priced office space. “I
fell in love with it,” he said. “Everybody talks to everybody here. That’s the great thing about it.”
He also appreciates the clerical support of Thinkspace’s staff.
The cost to lease a co-working space at Thinkspace ranges from $30 for a day to $575 a month
for a dedicated desk that a customer can use 24/7.
Despite being full, space-wise, Chee continues to grow the company by offering “virtual offices”
and “registered agent” services. In Washington, every company that is formed needs to list a
registered agent, which Thinkspace does.
Virtual office customers have Thinkspace employees answer their business phones and transfer
calls to their home offices. The Thinkspace building is listed as the clients’ address, so when
prospective customers of Thinkspace clients Google that business, they see a three-story
professional office building not, say, an apartment building in the boonies.
“That just provides some confidence to do business with you,” Chee said.
So palpable is Chee’s passion for the business that you’d think he would be eager to expand to
other buildings. He’s looking for just the right landlord, both regionally and farther afield. But he
said it would have to be someone he could build a solid business relationship with, someone who
believes in the concept as strongly as he does.
“I’m always talking to people that own real estate,” Chee said. “These conversations happen
every other week. One of these days a great conversation will happen, and the new location will
happen, but I’m not pushing it. I don’t feel like I have to.”
Cray buys Appro for $25M
Puget Sound Business Journal
Date: Friday, November 9, 2012, 5:19am PST
Cray Inc. is buying Appro International Inc. for about $25 million.
The Seattle supercomputer company (NASDAQ: CRAY) said Milpitas, Calif.-based Appro
builds high performance computing solutions (HPC) and employs 90 people.
"Appro is one of the market leaders in HPC cluster solutions, and this acquisition is another step
forward as we continue to transform Cray into a company that provides world-class offerings to
customers across all segments of the supercomputing market," said Peter Ungaro, president and
CEO of Cray, in a statement.
After the deal closes, Daniel Kim, current Appro CEO, will become leader of Cray's new Cluster
Solutions business.
Wallingford group appeals permit for office building
The Wallingford Community Council has appealed city planners’ approval of Skanska USA’s
proposed “deep green” office building at Stone Way North and North 34th Street.
The Wallingford Community Council has appealed city planners’ approval of Skanska USA’s
proposed “deep green” office building at Stone Way North and North 34th Street.
Opponents contend the controversial five-story project -- approved under a city program to
encourage greener commercial buildings -- is too big for the neighborhood.
A city hearing examiner is scheduled to hear the appeal Dec. 4.
Despite its billionaire origins, EMP pitches for break on rent
Premium content from Puget Sound Business Journal by Valerie Bauman, Staff Writer
Date: Friday, November 9, 2012, 3:00am PST
EMP museum’s long-term sustainability depends in part on getting a rent break from the city of
Seattle and becoming financially independent of its billionaire founder, but the rent negotiations
show no sign of progress.
The rock and sci- fi museum is burdened with higher rent than its Seattle Center neighbors, EMP
officials say.
“If we don’t get the rent parity that we’re seeking, the organization may be at risk,” said Traci
Carman, the museum’s chief financial officer, in EMP’s first public comments on the issue.
Under its flamboyant, Frank Gehry-designed exterior — and despite its origins as the brainchild
of Microsoft co-founder Paul Allen — EMP bases its case on its role as a nonprofit community
asset that provides cultural education and free access to thousands of local schoolchildren.
Museum officials say it should get the same treatment as other Seattle Center tenants.
A report exploring EMP’s future obtained through a city records request says that “without
sustainability, including rent parity, EMP’s long-term survival will be in doubt.”
City officials point out that EMP agreed to the lease terms, with rent increases kicking in every
five years, when the rock museum opened in 2000.
“Rent agreements are not an ongoing process,” said Seattle Center spokeswoman Deborah
Daoust.
As to the museum’s financial health, Anita Woo, a spokeswoman, said that EMP needs to
become self-sustaining.
“We’re operating like a nonprofit, we’re trying to raise money like a nonprofit,” she said. “Paul
Allen is great, but we can’t count on him forever.”
A representative for Allen said the billionaire could taper down his support.
“Paul (Allen) loves EMP ... However, Paul does not see himself continuing to contribute at his
current level indefinitely,” said Christina Siderius, a spokeswoman for Allen’s Vulcan Real
Estate, in a statement.
Between 2006 and 2010, according to the most recent records available, EMP’s revenue from
programs was between $5.6 million and $7 million. Expenses ranged from $20 million to $24
million. However, EMP officials point out that those expenses include annual depreciation on the
building, which adds between $6.5 million and $7 million to the reported expense totals but
doesn’t reflect a cash loss.
EMP pays $443,088 in annual rent, said Seattle Center’s Daoust. That’s the equivalent of $6.46
per square foot. The Seattle Children’s Museum pays $5.85 per square foot; Chihuly Garden and
Glass $3.41 and Seattle Public Schools $6.09, Daoust said.
EMP has leverage in seeking a discount: The museum has an exclusive liquor license that
prevents most new potential bars and restaurants on the Seattle Center campus from serving
spirits.
Earlier this year, the museum turned down a city offer to relinquish that liquor exclusivity in
exchange for an annual break in rent of $100,000 a year for 10 years. EMP contends that the
exclusivity has a value of $835,000 to $1.1 million per year for the city, which might attract new
dining establishments to Seattle Center if liquor licenses were available.
“What we’re looking for is something that is going to be mutually beneficial for us and Seattle
Center,” said Pattie Isacson Sabee, EMP’s deputy director of external relations and advancement.
She will also be the acting CEO starting in December, when the current CEO, Christina OrrCahall, is planning to leave the organization.
EMP isn’t betting its future entirely on rent breaks and ticket sales. Carman said the museum has
been working on developing new partnerships and projects to boost its bottom line and bring in
new exhibits.
For example, the museum has partnered with museums around the country to put EMP exhibits
on the road. The effort exposes more people to EMP’s exhibitions and brings in more money.
EMP has also worked to bring educational programming to new audiences. In one instance, the
organization partnered with School of Rock.
EMP provided the venue, operations staff and infrastructure for a show, and the School of Rock
provided performers and covered other costs.