The Seattle Condo Blog

The Department of Planning and Development recently ruled that short term rentals are considered commercial activity, and therefore, prohibited from multifamily zoned structures, i.e., condos.

According to the Daily Journal of Commerce, a group of unit owners at the Elektra Condominium requested interpretation of the code after the city began enforcing the code against owners who rented their units for less than 30 days periods. Though, the code does not specifically state a minimum length of stay for a occupancy usage to be considered commercial.

This ruling may be applicable to the 1 Hotel project, in which case, 1 Hotel’s hybrid condotel units will be a thing of the past. It’ll also affect owners in the handful of downtown area condominiums that don’t have restrictions on rental length.

Just some observations…

• Spoke with King5’s Bernard Choy today about some major price decreases, namely Madison Lofts and Cosmo. Check out unit #210 at Madison Lofts, SW corner unit – was $549,000 now $429,950. In his report, Bernard stated ML is taking some pretty steep decreases, up to $200,000.

• Pre-sale investors are jumping ship. I’m hearing more and more cases where pre-sale buyers aren’t going to be able to close on their purchases. Already, people have foregone their huge deposits at Washington Square in order to get out of their contracts. Now, I’m hearing the same with Gallery and 1521. Gallery, at least, unofficially, is letting buyers assign their contracts rather than default on the purchase. Makes sense…with rising inventory developers don’t want to be stuck with unsold units. Heard that Vulcan may do the same with one of its projects.

• Noticed R/UC/WOS has significantly decreased its advertising in the Sunday Seattle Times. Just a few months ago they had two full-color pages…now they’re down to a 1/2 page.

• The rumor that won’t go way – the big hole on 2nd between Stewart and Pine might be there a little while longer. Update: It was announced on 6/24 that Starwood has acquired Avalon’s share of the project.

On the other hand, there’s activity at Insignia Towers – additional materials have been delivered and Insignia’s signage is now up.

1 Hotel announced they are delaying start of the project again, this time for another 6 months due to a second redesign of the project, according to the DJC.

The redesign will add traditional hotel rooms and reduce the number of the City Suites. The plan now calls for 51 traditional condos, 44 City Suites and 192 hotel rooms.

Back in September when they announced the first delay and redesign they increased the number of City Suites from 110 to 176 because they had reservations on 100 City Suites. Now, they’re dropping that number down to 44 with only 20 firm contracts. What happened to the other 80 reservations?

As for the redesign,

Paul Brenneke, president of Portland-based Avalon has said the issue stems from concerns raised recently over how the hybrid hotel-condo units would be viewed by the city — as commercial or residential. Additionally, the developers were concerned about how a drastic slowdown in the condo-hotel market nationally would affect sales, and hence the potential to get a construction loan.

“We haven’t even attempted to get one at this point,” he said.

[1 Hotel] was approved in March 2006 under commercial rules for 88 hotel rooms, and under residential rules for 105 multifamily units. When 1 Hotel was approved the city was unaware it contained the condo-hotel units.

Brenneke said that Starwood became “nervous” last fall as the redesign was under way because the city’s land-use code “doesn’t really address” condo-hotels. Other developers were interested in building those type of units as residential rather than commercial to get more square footage, he said. This could have “opened a floodgate,” with the city perhaps coming back and deeming 1 Hotel’s condo-hotel units commercial, he said. In that case, owners would be precluded from living in them.

Me thinks they should have considered this before they started sales and construction.

The Seattle Times also reported on the subject and also indicated issues with construction financing:

A year ago, lenders were asking condo-hotel developers to presell 30 percent of their units to qualify for construction financing, he said. Now they have upped that requirement to 50 or 60 percent — difficult to achieve because prospective buyers also are having more trouble getting financing.

Seneca Towers
The DJC reported that Laconia Development (formerly Levin Menzies) plans to start work on Seneca Towers this summer and anticipates completion in the summer of 2010. Seneca Towers, located at 8th & Seneca, will consist of 294 units in two towers.

Icon Tower
The other project Laconia is developing in Seattle is the sleek & slender Icon Tower at 6th & Wall. Laconia expects to start construction in August. Completion is slated for the first half of 2011.

Insignia Towers
Work on Insignia Towers (5th between Bell & Battery) may begin as soon as next month according to the developer, Embassy Development, as mentioned in a recent DJC article. That is, of course, dependent on the market showing signs of improvement. The 643-unit project will be constructed in phases with each tower taking up to 37 months to complete.

1 Hotel & Residences
1 Hotel recently announced they’ve completed commercial leasing for the one-block project. Retail tenants will include Equinox Fitness, 1 Spa, the Ocean Restaurant by B.R. Guest who’ll also operate the urban grocer market, and a new retailer for the adjoining Macy’s garage. Completion is anticipated for early 2010.

AVA
AVA noted that they will begin private previews in their new sales center starting in March. The sales center will include a scale-model of the tower, kitchen and bath vignettes, floor plans, representative views and finishes. AVA is one of the few new condo projects to offer homes starting below $400,000. The project recently obtained its master use development permit with groundbreaking scheduled for later this year. Completion is slated for 2011.

114 Pike
There are some new renderings floating around for this project. Though, sources indicate that this project is being placed on hold. I believe occupancy for this project had changed from office/condo to office/apartment.

7th & Westlake
The latest casualty in the condo market shakeup is the office/condo project at 7th & Westlake, confirmed by a principal with Murray Franklyn.

Gallery Belltown
Buyers speak with their pocketbooks. And, apparently buyers spoke loudly at Belltown’s Gallery Condominium project. When the Gallery project first came online it was touting its SkyLofts concept, true two-level loft homes with 18′ ceiling heights located on the upper floors that offered spectacular city and sound views. But, it seems buyers just weren’t ponying up the big bucks for these units and most of them are now history, replaced with 600 sq ft one-bedroom flats.

Stewart | Minor
The lack of loft living enthusiasts at Gallery hasn’t deterred the developers of the Stewart | Minor high-rise loft project in Denny Triangle. But, Stewart | Minor is somewhat unique. The concept is based on 600 sq ft cube units that’ll offer owners the opportunity to add a mezzanine/loft level, increasing livable space by nearly 50%. The homes feature 18′ ceiling heights that’ll provide ample head room on the mezzanine level, which buyers can add at the time of purchase or at a later date.

The idea behind these convertible homes is Move Up or Move Out. The most common reason people move is because they’ve outgrown their current space. When considering the cost of moving (selling costs, moving costs, time, etc) an average person might spend around $40,000. Stewart | Minor offers the option to finish the mezzanine level for about the same price. Though, to built-out the upper level fully (sleeping area, master bath and closet) may cost up to $100,000.

Unlike Gallery, Stewart | Minor is striving to offer a more affordable price point (starting at $400,000) and has been gaging interests and opinions through a series of design preview events. Construction is expected to begin late 2008/early 2009 with pre-sales beginning next Spring/Summer and occupancy in 2011.

1 Hotel & Residences
The Seattle Times report that New York-based Equinox Fitness will occupy 35,000 square feet of space at 1 Hotel & Residences. Equinox is an upscale fitness center known for its celebrity clientele. Monthly dues will likely start around $130, a premium compared to dues at nearby gyms. The gym, as well as the 5,000 square foot spa managed by Equinox, will occupy the 7th & 8th floors.

Last week the 1 Hotel & Residences project held a private soiree for the launching of the “1″ brand. While I wasn’t there, urbnlivn.com’s Matt was. Here’s his impression of the 1 Hotel project.

Work on 1 Hotel & Residences (website) has been delayed till early 2008 prompted by a design change and a city moratorium on heavy concrete work during the holidays.

Boosted by considerable interest in the City Suites, individually-owned condo units available for rental through the hotel, the developer is reconfiguring the design by replacing three floors of traditional condo units with City Suites. As a result, there will only be 51 traditional condo units, a reduction of 47 units. The developer feels there is a demand for these unique homes as 100 of the 110 available City Suites have been reserved so far, ranging from $500,000 to $1.4 million. (Update: with the reconfiguration there will be 176 City Suites on floors 9 through 16).

Other changes include relocating a two-level restaurant to the SW corner at Second Ave & Pine St. The new Stephen Hansen restaurant will feature seafood and organic fare from local sustainable farms.

Today must be project update / press release day. Here’s a round-up:

First Church – Capitol Hill

Postponing development to allow for a major motion picture to be filmed in the building. If you want a chance to be in the movie, there will be an open casting call on February 13th at the church from 3:00 PM to 8:00 PM. The address is 1519 E. Denny Way (E. Denny & 16th Ave). Info on the movie.

Additionally, pre-sale pricing is available for those interested in purchasing a unit.

Lumen – Queen Anne

The glass curtain wall is nearly complete and work is continuing on the balconies and siding. In March, the Lumen will host a Modern Home Tour in conjunction with Seattle Metropolitan Magazine and Roche Bobois.

The Parc – Belltown

The Parc is 75% sold and owner occupancy is expected for late Spring.

Gallery – Belltown

Gallery reports that hundreds of buyers have visited their Presentation Center, though homes are still available including the two-story SkyLofts.

Escala – Midtown district

Escala was the highlight project at this year’s Downtown Seattle Association’s State of Downtown Economic Forum held this morning (I’ll report about it later). Soon after which the Escala ground breaking took place. The 12,000 sq ft Presentation Center will open to reservation holders in March.

1 Hotel & Residences – Downtown

Homes will be released for pre-sale to reservation holders in May.

Equinox – Eastlake

Over 2,300 people have registered online for the 204 unit project. Ground breaking is slated for Spring and registered buyers will be contacted this month to confirm their interest.

2nd + Pine recently announced a name change to 1 Hotel & Residences (website). The 5000 sq ft sales center is expected to open this Spring that will feature a fully furnished model, several vignettes, a design studio and interior design visions. It will be located on the 8th Floor of the Olympic Tower Building at 217 Pine Street.

Currently, 1 Hotel & Residences is taking priority pre-sale reservations and will be introducing new floor plans shortly. Until the opening of the sales center interested buyers may schedule a private appointment with the developer to preview finishes, review home plans and to make a reservation. Your buyer’s agent can assist with this process.

HomeStone Mortgage has been selected as the preferred lender.

The Second + Pine project (website) will be instrumental in the rejuvenation of the Market District in Downtown by bridging the area between the Westlake retail district and the Pike Place Market.

The development will include a world-class hotel brand called “1″ by the Starwood Capital, considerable retail space and several residential tiers appealing to a variety of buyers. Other amenities will include an urban grocer, health club and a day spa. Steve Hanson’s B.R. Guest restaurant and NY-based gym, Equinox Fitness, will anchor the project. Equinox will occupy approximately 35,000 sq ft with monthly dues around $140.

Located between floors 9 to 16 will be 176 “City Suites”, a combination condo and hotel room, ranging from 700 sq ft to more than 1,200 sq ft. These homes will be fully furnished, including two flat-screen TVs, linens and artwork. Owners have the option of renting the rooms to the hotel for hotel guest when not in use. City Suites start at around $560,000.

Above the hotel/City Suites are 51 full condominium homes which will range in size from 1,200 to 6,800 square feet. These exclusive homes are being offered from $1 million to $11 million.

Occupancy is scheduled for 2009/2010.

The sales center is located at 217 Pine Street. Reservations are currently being accepted by appointment.