Marc Stiles Staff Writer-Puget Sound Business Journal
After years of mostly ignoring suburbs, Seattle-area commercial real estate developers are starting to show the suburbs some love.
Within the last 10 days, Goodman Real Estate announced plans to build a 176-unit apartment project with retail in downtown Kent; and the Kenmore City Council OK’d a deal with two companies — The Benaroya Co. and Real Property Investors — to build commercial space and a “town green” if the developers can find tenants.
For the first time since the market crash, developers are optimistic that they can make projects in the ’burbs pencil out. “For a long time that just wasn’t (financially) feasible,” said Goodman President and CEO George Petrie.
Besides Goodman’s Kent project, MainStreet Property Group LLC is planning to build at least 160 units in downtown Kenmore near the Benaroya project. And Legacy Partners Residential is pursuing a multifamily and retail project in downtown Burien.
Some of these companies are on the leading edge of development trends. Two and a half years ago, just as the in-city apartment building boom was beginning, Bellevue-based Benaroya financed construction of a large project in Seattle’s Wallingford area. Goodman built a big development in Pioneer Square. And Legacy completed a large project in West Seattle.
The common thread among the suburban projects is they’re planned in downtown areas near transit centers and retail. They tend to be smaller versions of the walkable areas in urban centers.
Goodman’s project “has some urban elements in a suburban market,” Petrie said, andKerry Nicholson, who heads Legacy’s Seattle-area office, said Burien has an “authentic, old-fashioned Main Street” feel.
In addition, the developers think there will be demand because few multifamily projects have been built in the suburbs in recent year. Developers have been focusing on urban areas where, in trendy neighborhoods, apartment rents are around $3 a foot. Suburban rents are less than half that.
Petrie said the question is whether suburban markets can support rents in the $1.80 a foot range. He thinks they will.
It helps that some developers are getting good deals, either price-wise or from the standpoint of risk.
Goodman, for instance, is buying the Kent site for $1.2 million, or just $6,820 per apartment. By contrast, a development site in Seattle’s red-hot South Lake Union area sold last month for $77,535 a unit.
Kenmore is selling part of the Kenmore Village Shopping Center to the Benaroya group for $1.8 million with $100,000 earnest money applied to the price. Benaroya plans 20,000 square feet of retail, medical office and regular office, but if the developers can’t find tenants within six months, the deal is off and they’ll get their money back. Larry Benaroyasaid they already have “one really good prospect.”