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Mercer Island store sold for $8.6M

MERCER ISLAND — The New Seasons grocery store property at 2755 77th Ave. S.E. has sold for $8.6 million, according to King County, which recorded the sale in late October.

The sellers were Fab Five LLC and a family trust, which had owned the property for several decades.

The buyer was Graham RE1 LLC, which is associated with Mercer Island investor Justin Graham.

The store was developed in 1977 on 2.7 acres, and has about 37,000 square feet, plus a large parking lot. It was remodeled last year, after New Seasons acquired the ground lease and store—but not the land—from Albertsons. It was during that same period in 2015 when Albertsons and Safeway merged, and Haggen took over several locations from the combined grocery chain.

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Legacy sells Hadley on Mercer Island to California firm SyRES for $95.7M

The new Hadley Apartments, at 2601 76th Ave. S.E. on Mercer Island, have sold for $95.7 million, according to King County records.

The seller was Legacy Partners, which paid $8.6 million in 2014 for a ground lease on the almost 1.9-acre site.

Legacy’s equity partner on the project was Resmark Apartment Living.

The buyer was SyRES Properties of San Rafael, California. Both parties used LLCs in the transaction.

Corey Marx and David Young of Jones Lang LaSalle brokered the deal, which Legacy confirmed in a press release.

Legacy will continue to manage the apartments, which it says are 90 percent leased.

The sale was only for the 160,000-square-foot building, and not the land, which is leased from Keeler Investments of Mercer Island. That lease runs through 2086, with a 15-year option to extend.

Located in downtown Mercer Island, the Hadley was designed by VIA Architecture and built by Chinn Construction.

The six-story building has 209 luxury units, ranging from studios to two-bedroom apartments.

When it opened last fall, Legacy said that rents would range from $1,004 to $2,500. Amenities include a theater room, charging stations for electric vehicles, bike room, roof deck and barbecue area, conference room and fitness center.

There are 227 parking spaces at and below grade. Retail tenants in the 9,200 square feet of commercial space include Freshy’s Local Market, Mioposto Pizzeria and Orange Theory Fitness.

The site was previously home to the Islander Restaurant and True Value Hardware.

In a statement, Legacy’s Kerry Nicholson said, “The very strong interest in the property, which is situated on a ground lease, represents the high quality of the asset and the fact that the island’s extremely high barriers to entry result in no other projects coming up behind us — a rarity in any submarket.”

The Hadley is in an area that the city has targeted for more density and mixed-use development, close to the Island Crest Way exit from Interstate 90. It’s a 10-minute walk to the Park & Ride, and the site of the light-rail station scheduled to open in 2023.

The complex was named for Homer Hadley (1885-1967), who first proposed the idea of a floating bridge across Lake Washington in 1921.

The Lacey V. Murrow Memorial Bridge was finally built in 1940, connecting Mercer Island and Bellevue to Seattle. It was the first floating bridge in the world, and used Hadley’s signature concrete pontoons. The structure has since been rebuilt, after the 1990 storm that sank some sections of the bridge.

A second companion bridge was added in 1989. That north span is officially called the Homer M. Hadley Memorial Bridge. Construction is now underway there to add flexing tracks for the world’s first light rail line to run on a floating bridge.

The recently founded SyRES Properties is a real estate arm of privately held Syufy Enterprises, an entity of the Syufy family. Beginning in the 1940s, that family expanded its Century Theatres chain into retail development, golf courses and other businesses. The family sold the theaters to Cinemark in 2006 for an undisclosed amount.

The SyRES website says it now has 500 units under ownership, and over 1,000 units in various stages of development in California, Oregon and Washington. The Hadley is the firm’s first local investment.

Legacy is based in the Bay Area, and has over 2,000 units under management locally. It most recently completed the 278-unit Bowman, in Wallingford, which is 95 percent leased.

Nationally, Legacy manages a $2 billion portfolio with over 60 multifamily communities and more than 14,000 units.

By: Brian Miller


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$82M in public benefits for WSCC expansion

As part of the planned expansion of the Washington State Convention Center, the city and county have announced the terms for “a suite of benefits” worth some $82 million.

The WSCC expansion will replace the county-owned four-acre Convention Place Station, which is now the last northbound bus stop for the transit tunnel. The $1.6 billion project will add about 1.4 million square feet to the nearby existing facility.

King County Council voted in June to sell the property to the WSCC. That deal will be worth about $275 million over 31 years.

The public-benefits agreement essentially sweetens that deal. With WSCC payments phased over several years to both the city and county, it includes:

• $29 million for affordable housing

• $20 million for improvements to the Pike-Pine corridor (including bike lanes)

• $10 million for improvements to Freeway Park

• $6 million for bike lanes on Eighth Avenue

• $4 million for improvements to Terry Avenue

• $1.9 million for public art

• $1.5 million for a study on lidding Interstate 5

Beyond that $82 million, the WSCC expansion will add about $10 million in zoning and affordable housing fees.

The agreement comes after 10 months of talks between the WSCC and the Community Package Coalition, with discussions beginning at $61 million. The CPC includes Capitol Hill Housing, Cascade Bicycle Club, Central Seattle Greenways, First Hill Improvement Association, Housing Development Consortium, Freeway Park Association, Lid I-5 and Seattle Neighborhood Greenways.

In a statement, Mayor Tim Burgess said, “This historic agreement will expand Seattle’s wildly successful convention center while creating more open spaces in the surrounding neighborhood, safer routes for pedestrians and bicyclists, and more affordable housing.

“Thousands of hospitality industry jobs are likely to be created as a result of this project, and so our partners in labor are also launching a training program to help workers prepare for these coming jobs.”

King County Executive Dow Constantine said, “For Metro, the sale of Convention Place Station means a total of $275 million for expanded bus service, as well as funding for affordable housing and public art. With today’s announcement, we take a big step toward of our goal of creating jobs while keeping the region moving.”

Seattle City Council will vote on the public-benefits agreement early next year.

Pine Street Group is managing the WSCC expansion. LMN is the architect. Clark Construction of Maryland and Lease Crutcher Lewis are the contractors.

Construction is expected to begin in early 2019, with completion expected in 2021.

Bus service will move to Third Avenue in late 2018, and the tunnel will be used only for light rail. Westlake Station will become the last northbound stop in the tunnel.

The main site for the expansion project is bounded by Olive Way, Pine Street, and Ninth and Boren Avenues.

The new 11-story facility will have underground parking for 742 vehicles. There will be about 250,000 square feet of new exhibition space, 120,000 square feet of meeting rooms, 60,000 square feet of ballroom space, a 150,000-square-foot underground exhibition hall and 20 loading bays.

The expansion will roughly double the size of the existing center, which was built in 1985-88 and expanded in 1999 and 2010.

Pine Street is also planning two related projects on nearby properties owned by WSCC: a 29-story apartment tower at 920 Olive Way with 409 units; and a 16-story office tower at 1711 Boren Ave. with 500,000 square feet. LMN is also the architect for both.

WSCC will sell both those projects.

By: Brian Miller

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Local group pays $15.85M for part of the Seaboard Building

Photo by Brian Miller [enlarge]

The sale does not affect 24 residential condos on floors seven through 11.

Local firm Trinity Real Estate announced that it and an unnamed local partner have acquired the lower six floors and basement of the landmarked Seaboard Building, at 1500 Fourth Ave., on the southwest corner of Fourth and Pike Street.

The price was $15.85 million.

The sale does not affect the residential portion of the building, which has 24 condominium units on floors seven through 11.

The seller was Matt Griffin’s Pine Street Associates II LLC, which bought and redeveloped the building almost 20 years ago. The buyer was Seattle 1500 Fourth LLC, which is associated with Trinity Real Estate and Keeler Investments of Mercer Island.

The sale was recorded by King County in July, during a period when the transition to new software made public records inaccessible.

The trapezoidal Seaboard Building was built in 1910, and shares the block with Westlake Park. It was designated a city landmark in 1989.

The building sits on 10,120 square feet of land.

Floors two through six are each about 9,500 square feet. Current tenants include the outdoor retailer Arc’teryx, Bank of America, BlackWing Creative, Collabera, Pine Street Group and several law firms.

The Seaboard Building was originally called the Northern Bank and Trust Building. That bank failed in 1919, and Seaboard Bank took over the building in 1922. It was later used for Nordstrom’s corporate offices.

Griffin and partners acquired the structure in 1996 as part of a larger deal worth $400 million, which involved three blocks including the then-vacant Frederick & Nelson building (which Nordstrom took over), the old Nordstrom store and the future Pacific Place. PSBJ reports that Griffin’s partners in that overall project included Jeff Rhodes; the Behnke and Howard S. Wright families; John McCaw; and Howard Schultz.

Pine Street renovated the Seaboard Building, and added new residential and office space. NBBJ was the architect, and Lease Crutcher Lewis was the general contractor.

Griffin bought one of the penthouse units following the renovation.

The building was also declared a National Historic Landmark after it opened in 2001.

Trinity Real Estate is led by Richard Leider and Pete Stone. In a statement, Stone said, “The Seaboard Building is an iconic property in a terrific location. The fundamentals of the Seattle real estate market continue to be excellent, particularly in core urban neighborhoods, which we believe will position the property to perform well over time and meet our partner’s long-term investment objectives.”

Trinity Real Estate is privately held, and says it has $300 million in assets under management.

Pinnacle will manage the commercial space at the Seaboard Building, and Broderick Group will be the leasing agent for the approximately 58,000 square feet of retail and commercial space.

The Keeler family started Overall Laundry Services in the 1920s in Everett, and sold it to Aramark in 2006 for $80 million. In May, a Keeler LLC bought the Elliott Bay Book Co. building on Capitol Hill for $14 million.

By: Brian Miller

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Homebuilders are nervous about Mercer Island’s impending restrictions

Taking aim at mega-mansions, the Mercer Island City Council is poised to vote whether to implement the Puget Sound region’s tightest controls on homebuilding Tuesday.

Builders are anxious about the new residential design standards, which would limit the bulk and scale of both new homes and the size of expansions on all of the the nearly 6,950 single-family lots on the island.

The city council is expected to reduce the “gross floor area” of new houses from the current base of 45 percent of a lot to 40 percent. Medina’s base is 45 percent and Bellevue’s is 50 percent.

There are other updated standards as well as a new rule to protect “exceptional” or mature trees greater than 2 feet in diameter. The rules would take effect in about a month.

The new standards will have a huge impact, said City Councilmember Wendy Welker, who earlier this month cast the lone vote against moving the standards to a final vote.

“A lot of the revised code changes are overly restrictive and complicated and worse when you add in the new tree ordinance,” said Welker, who – like some builders – thinks the city is ramming the legislation through without comprehensive public outreach.

Builders say this is the council’s latest anti-development move. Last year the council approved new development standards for the town center, which is next to a future light-rail station. The center is where the city is funneling most of its growth, yet only one project, a 209-unit luxury apartment building, has gone up in recent years.

Now come the new design standards, which the Master Builders Association of King and Snohomish Counties says this will drive builders’ customers to places like Bellevue.

“At what point does it stop?” said David Hoffman, a government affairs staff member for the association. “At what point does leadership on Mercer Island have a wake-up call that they need to slow down and be deliberate and listen to larger voices at the regional level?”

Mercer Island Development Services Director Scott Greenberg disagrees the new standards will make it tougher to build.

“It just means the maximum size of the house you could build in the past, you may not be able to build in the future,” he said.

No single mega-mansion spurred the new residential standards. The standards were driven by citizens who worried about the size and scale of new homes in general, said Greenberg, who added that Mercer Island is not adverse to growth.

The city’s population grew from around 22,000 in 2000 to just over 25,000 last year, or 13.6 percent. During the same period, King County’s population increased nearly 21.2 percent.

Greenberg said Mercer Island has had a comprehensive public outreach about the new standards, including two public hearings and other public meetings. The city has placed ads and notices in local media and city mailings.

Hoffman said the city rolled out the new standards in bits and pieces, not as one comprehensive package, and that sometimes the debate occurred at the end of council meetings late at night.

One island building company, JayMarc Homes, hired a land-use attorney and architects to come up with what the company said would be a more reasonable approach. It was presented to the council this summer. JayMarc President Marc Rousso said members briefly discussed it one night at 11 o’clock, and took a pass on the proposal.

The kicker, according to builders, is the updated standards will not actually address concerns about bulk and scale.

“You’ll be able to build a 30-foot tall box that maxes out your (40 percent) gross floor area, and it will drive the neighbors just as crazy as it does today,” Hoffman said.

Marc Stiles covers real estate for the Puget Sound Business Journal.

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Grocery industry reacting to Amazon

AP Business Writer

NEW YORK — Donna Brown visited a Whole Foods for the first time in at least five months with one goal: see how much Amazon had cut prices. She did buy almond milk, yogurt and lunch meat, but doesn’t plan to quit her usual grocers, Walmart and HEB, where she says she finds bigger selections and lower prices.

“I am a comparison shopper,” says Brown, a part-time administrative assistant in Austin, Texas.

Amazon made a splash right away as the new owner of Whole Foods, slashing prices quickly on baby kale, avocados and ground beef. That attracted some customers, but whether shoppers who’ve found cheaper alternatives will come back, or those who never visited will give Whole Foods a try, may help determine what kind of effect the blockbuster deal has on how people get their groceries.

Shoppers who talked with The Associated Press this week say what they want most of all is lower prices and one-stop shopping.

Stores are competing fiercely to attract them. Traditional supermarket chain Kroger stressed earlier this year that it does not plan to “lose on price.” Target is spending billions to remodel its stores and highlight its grocery section. Newer entrants from Europe, such as discounters Aldi and Lidl, are opening more U.S. stores. And Walmart, the country’s largest grocer, is making it easier for customers to order groceries online and pick them up at the store.

Some shoppers say they’re concerned with Amazon’s growing power, while others said the nearest Whole Foods was too far away to be a frequent stop. And while other supermarkets have added aisles of organic and natural products to mimic Whole Foods, the chain still doesn’t sell some consumer favorites like Diet Coke, Bounty towels or other brands people want.

Brown said the “chichi organic stuff” at Whole Foods can’t replace her Clairol hair color or allergy medicine.

“I’m going to gravitate to Walmart,” she said.

Gail Johnson, a pharmacy technician from Cleveland, has never been to a Whole Foods and doesn’t plan to, even after hearing about the price cuts.

“Organic food is real high expensive, but here there’s regular food,” Johnson said while browsing a movie rental kiosk near the Walmart entrance. “They’ve got movies, liquor, beer, ice cream; anything you want.”

Analysts at Citi and JPMorgan Chase say they do expect the price cuts at Whole Foods to make the chain more competitive with rivals and attract more shoppers. And Amazon said the moves last week were just the beginning. It expects to lower prices on more items and will offer discounts to members of its $99-a-year Prime program. More price cuts may also help shake the grocer’s “Whole Paycheck” image.

Knocking a few cents off some items won’t attract new customers since Whole Foods is known to be expensive, said Carol Major, a retired dental assistant who was sitting outside a Trader Joe’s in Philadelphia with two shopping bags.

She likes both stores, but “people who shop (at Whole Foods) aren’t too worried about prices,” she said.

Rachel Manders, a stay-at-home mom who was at a Whole Foods in University Heights, Ohio, likes to stock up on produce there but goes elsewhere for other goods.

“I didn’t see everything discounted,” Manders said. “I got avocados, tomatoes, at a substantial cheaper price than yesterday, so I was happy.”

Some Whole Foods fans were worried about Amazon’s growing influence in their lives.

“It’s going to make me want to go to Whole Foods less because they’re already a corporation, but now they’re part of Amazon, which already owns so many other things,” said Hillary Minor, who recently moved to Seattle, where Inc. is based. “It just seems like it’s taking over.”

U.S. regulators didn’t have a problem with the Amazon and Whole Foods deal, giving the e-commerce giant the go-head last week to acquire Whole Foods for nearly $14 billion. Whole Foods has about 460 stores in the U.S., far fewer than Kroger Co.’s 2,800 locations and Wal-Mart Stores Inc.’s more than 4,000.

Joshua Cano of Seattle said he’ll stick to Quality Food Centers, a supermarket chain owned by Kroger, even though he says Whole Foods has high-quality food.

“I can come here,” he said, “and spend half the cost and get twice as much food.”

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Federal Reserve finalizes rules to help unwind big banks

WASHINGTON (Reuters) – The Federal Reserve on Friday finalized a new rule that should make it easier to wind down systematically important U.S. banks by creating a safe harbor for financial contracts after a firm defaults.

The decision, unanimously approved by Fed board members, forms part of global post-crisis efforts to end ‘too big to fail’ institutions that are so large and complex they could endanger the entire financial system if they fall into bankruptcy.

The rule requires global systematically important banks (GSIBs) to amend the language in common financial contracts so they cannot be immediately canceled if the firm enters bankruptcy.

By imposing new legal protections, regulators aim to prevent a run on a GSIB’s subsidiaries that could be triggered if a large number of counterparties rush to terminate their contracts, as occurred in the case of Lehman Brothers in 2008.

The new rules would apply to eight GSIBs, including JPMorgan Chase (JPM.N), Goldman Sachs (GS.N), and Citigroup (C.N).

As GSIBs sign a huge number of such deals, typically worth hundreds of billions of dollars, a market panic to terminate them could potentially drag down other institutions.

“The financial crisis showed that when a large financial institution gets into trouble, its failure can destabilize other firms and the broader financial system,” Fed Chair Janet Yellen said in prepared remarks at an open hearing on Friday.

“This requirement will help manage the risk to the financial system when a GSIB fails.”

The rule applies to a range of products, including derivatives, securities lending deals, and short-term funding agreements, that are privately negotiated rather than processed through a central clearing house.

But in a nod to the efforts of U.S. President Donald Trump’s administration to ease the regulatory load, the final rule gives banks more time to comply, and also reduces the numbers of contracts covered by the rule.

“We looked for opportunities to reflect common sense changes to the proposed rule without sacrificing our goal to improve financial stability,” said Fed Governor Jerome Powell.

The Fed first proposed the rule in May 2016, and finalized it on Friday.

“Today’s rulemaking is an important step towards ensuring the orderly resolution of U.S. GSIBs and thus protecting the U.S. financial system,” said Ann Battle, assistant general counsel at trade group the International Swaps and Derivatives Association (ISDA). The group has been working with regulators to help banks amend their contracts in line with the rule.

“We look forward to working with all market participants to develop a solution for compliance with the rule that both meets their needs and satisfies the Federal Reserve Board’s policy objectives.”

Reporting by Pete Schroeder; Editing by Bernadette Baum

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Yarrow Bay Marina sells for $10.8M

KIRKLAND — The Yarrow Bay Marina, at 5207 Lake Washington Blvd. N.E., has sold for $10.8 million, according to King County records. The seller was Yarrow Bay Yacht Basin and Marina LLC, which has owned the property for decades. The business was founded in 1967.

The buyer was FAE Holdings 481843R LLC, a title exchange agent in Salt Lake City.

The four-acre property was redeveloped in 2008 to add a new 5,850-square-foot office/industrial building. It has 128 boat slips (45 covered), fuel dock and marine-repair business. The property has 225 feet of lineal waterfront. The marina is immediately south of Carillon Point.

The sale comes with a covenant with the state for environmental remediation. That agreement was signed last fall.

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Yellen: reforms have made finance safer

LONDON — Federal Reserve Chair Janet Yellen relayed her hope that another repeat of the financial crisis will not occur “in our lifetimes.”

Addressing an audience at the British Academy in London on Tuesday, Yellen said the banking reforms put in place in recent years have made the financial system safer, and that the world should be able to avoid the type of devastating crisis that struck the global economy in 2008.

Yellen said that the changes implemented since 2008 have made the “system much safer and much sounder,” with banking regulators doing a better job searching for risks to financial stability, especially within unregulated sectors.

While not going so far as ruling another crisis out, she did lay out her hope that the next one “hopefully, it won’t be in our lifetimes.”

One growing concern among some in the financial markets is that some asset prices, such as stocks and housing, are beginning to look a bit overpriced — in the way that they did before the financial crisis struck.

But Yellen said the system is better able to handle any shocks that might occur if investors began dumping assets out of concerns about a future financial threat — the scenario that effectively pushed the global economy off a cliff in 2008.

“I think we have a strong banking sector that’s well capitalized and has a lot of liquidity,” she said.

Yellen said the U.S. unemployment rate, which stands at a 16-year low of 4.3 percent, is “below the level that most of my colleagues believe is sustainable in the long run.”

Yellen said that most policymakers believe that as unemployment falls, it will begin pushing up wages and that will result in higher levels of inflation. The Fed has hiked its Fed funds rate by a quarter point on three occasions since December, most recently this month, to a range of 1 to 1.25 percent, partly because of this concern.

Yellen declined to comment on her relationship with President Donald Trump but noted that it has been a long tradition in the United States for the Fed to have a close working relationship with the administration in power. Yellen was responding to a question her relationship with the president, who had attacked her handling of the Fed policies as “shameful” during last year’s campaign.

She said she was continuing that tradition with current Treasury Secretary Steven Mnuchin, with the two conferring often on various issues affecting the economy and financial regulation.

“I would say that I have got a good working relationship,” Yellen said, adding that the administration has respect for the independence of the Fed.

Yellen also conceded that Britain’s upcoming exit from the European Union would likely impact the British economy.

“I believe there are very deep ties between Britain and the European Union, and there will be a desire to make sure that the economic value of that remains to the maximum extent possible,” she said. “I’m sure there will be a period here of uncertainty about how this will unfold that will affect households and business decisions as it unfolds.”

One decision that could be affected, she said, was location.

Many businesses are worried about the possibility of a “hard” Brexit, whereby Britain fails to strike a deal with the remaining 27 nations of the EU before the formal departure date of March 2019. In that case, the country would see tariffs slapped on its exports to the bloc, its biggest trading partner. Many fear that could do untold harm to the British economy. Some businesses, including some from the financial sector, are mulling the possibility of leaving Britain for the EU.

By: Pan Pylas and Martin Crutsinger
Associated Press