Lake Union Partners thinks it can convert outdated offices in Seattle’s Pioneer Square into more than 2,000 homes — if it can buy the buildings and if the city slashes developer fees.
The locally based developer is bullish about turning the offices within the historic district into homes, but only if the city passes legislation to create “broad and comprehensive exemptions” to barriers for conversion projects, the Puget Sound Business Journal reported.
If successful, Lake Union would turn Seattle’s first settlement into a mostly residential neighborhood.
“We think that in a seven- to 10-year period, we can bring 2,000 units to Pioneer Square, which means roughly 3,000 people,” Patrick Foley, managing partner for Lake Union, told a City Council committee.
The developer doesn’t own any of the building targets, but is working on it, Foley said. Pioneer Square is “the most exciting, best place to do office-to-residential conversions because … the (smaller) floor plates are actually laid out just right for that,” he added.
Seattle Mayor Bruce Harrell has proposed a Downtown Activation Plan, or citywide land-use code change for offices and retail by creating “broad and comprehensive exemptions” to barriers to conversions, according to the Office of Planning and Community Development.
Conversions are costly and the legislation takes aim at reducing fees. Conversions can cost twice as much as new construction, Foley told the Business Journal. He said the proposed legislation is “absolutely critical” to making office-to-home conversions feasible.
“It’s going to be a heavy lift, and it can’t just be our company doing it,” Foley said.
Under the proposal, conversions would be exempt from the city’s Mandatory Housing Affordability fees, which developers pay in exchange for being allowed to build bigger projects with more rentable space.
“(It’s) one tangible way you can bring the cost down to be competitive so we do have some conversions,” Geoff Wentlandt, manager of the planning office, told the committee.
The Office of Planning and developers are enthusiastic about conversions, which the mayor’s office sees as a way to bring people Downtown to fill a gap left by office workers working from home. The two sides have been working on the legislation.
But such conversions raised concerns on the committee. Councilwoman Cathy Moore asked who would be able to afford to live in converted units.
“It seems to me, it’s going to be high-end earners, and that’s not really the population that we so desperately need to be focusing our city subsidies and resources on,” Moore said.
Wentlandt, however, pointed to data Seattle collected last year in a city contest for office-to-home proposals.
The winner, by Hybrid Architecture and developer Great Expectations, was a plan to turn the century-old Mutual Life Building at 605 First Avenue in Pioneer Square into single-room occupancy housing. Owner Diamond Parking is not planning a conversion.
Target rents included in the contest entries ranged from the $950 range for small efficiencies with shared common areas for cooking and laundry, to one-bedrooms in the $2,000 range, which the planning manager said was in step with the middle-income market rents.
Lake Union Partners, founded in 2009 by Foley, Joe Ferguson and Tyson Feaster, has developed commercial properties in Seattle, Portland, Salt Lake City and Denver, with a focus on multifamily, historic preservation, creative office and hotels, according to its LinkedIn page.
— Dana Bartholomew
Read more
Commercial
National
Carmel Partners drops $97M on Seattle apartments
Residential
Seattle
Joint venture looks at Seattle’s first office-home conversion since pandemic
Residential
Seattle
Denver, Seattle lead race to build homes in US downtowns