The UW-owned Rainier Tower dominates the view from the IBM building plaza on Fith Avenue and University Street downtown.
Last month the Board of Regents approved a new committee to assist in handling a large chunk of UW-owned, downtown Seattle real estate. The structural change to its land management is expected to bring in more revenue to the university.
The UW Advisory Committee on Real Estate, or “ACRE”, will provide the university with advice on the real estate market, performance goals, governance structure and strategy and implementation.
The 11-acre piece of downtown, which was the former location of the UW, now houses The Fairmont Olympic Hotel and six other businesses. As student enrollment increased and the city grew, the small site proved to be insufficient for the school’s needs, and the campus was relocated to its Montlake location in 1895.
Now that small piece of downtown land has been deemed the Metropolitan Tract, and it serves as one of the most significant revenue sources for UW.
The Metropolitan Tract Web site states that according to the 2005 Resolve Real Estate Appraisal, the tract “contains over 1,500,000 rentable square feet of office space, over 200,000 rentable square feet of commercial retail space, some 450 hotel rooms, 92 residential units and over 1,600 parking spaces.”
The Tract is managed by long-term leases with Legacy Hotels (for the Fairmont Olympic Hotel and garage), and Unico Properties, Inc. for six other buildings: the Cobb Buildings, the IBM Building, the Financial Center, Puget Sound Plaza, the Skinner Building and Rainier Tower and Rainier Square. Last year, through Tract revenue, $8 million was distributed into the UW building account. This money is used for the upkeep of existing campus buildings.
Until recently, the UW has remained a relatively passive landowner because Unico has been handling the major responsibilities for the Tract. However, Unico’s master lease expires in 2014 and will not be renewed.
“For the first time in 75 years we will be responsible for figuring out how to manage the buildings on the Tract and have responsibility for at least understanding the development possibilities,” said Jeff Brotman, the chair of the Special Committee on the Future of the Metropolitan Tract.
“This committee was not formed with any pre-determined goals; it is a chance to plan and adapt to changing market conditions,” Student Regent Ben Golden said.
Brotman was authorized to recruit committee members and hopes to have at least four or five by the end of the week. President Emmert and other regents will serve on ACRE, but Brotman is also looking for outside professionals who have expertise in this area.
Jeanette Henderson, UW director of real estate, says this is an ideal time to start planning for the transition in management. The buildings on the Tract are about 90 percent occupied, which is nearly 10 percent higher than the vacancy rate for the rest of the downtown market.
Henderson believes the best chance for increasing revenue will be through the expiration of the Unico master lease. Through this avenue she estimates the UW may be able to make an additional $5 to 10 million per year.
“With respect to future development potential, once the market improves there will be opportunity to add additional space, whether office, residential or hotel depending on market conditions, which will continue to enhance the value of the UW’s interest in the Metropolitan Tract,” she said.
Reach reporter Katie McVicker at email@example.com.
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