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Mill Creek's East Village sees first building rise

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By Kurt Batdorf
HBJ Editor
Published: Thursday, June 13, 2013, 1:30 p.m.
  • Shannon O'Kelley, president of Integrated Rehabilitation Group, stands outside the new Gateway Building on 132nd Street SE. It's the first commercial ...

    Kurt Batdorf / HBJ

    Shannon O'Kelley, president of Integrated Rehabilitation Group, stands outside the new Gateway Building on 132nd Street SE. It's the first commercial building to open in Mill Creek's East Gateway Urban Village zone.

  • Mill Creek attorney Jeff Pratt joined forces with longtime friend Shannon O’Kelley of Integrated Rehabilitation Group to build the Gateway Build...

    Kurt Batdorf / HBJ

    Mill Creek attorney Jeff Pratt joined forces with longtime friend Shannon O’Kelley of Integrated Rehabilitation Group to build the Gateway Building at the northeast corner of Mill Creek in the city’s new East Gateway Urban Village. The businesses share space in the two-story building and will lease the remaining 8,500 square feet to other tenants.

MILL CREEK — It took eight years for Shannon O'Kelley and Jeff Pratt's partnership to complete their new offices, but Integrated Rehabilitation Group, Inc., and the law offices of Marsh Mundorf Pratt Sullivan + McKenzie are now moving into the Gateway Building on 132nd Street SE.
It's the first new commercial building to rise in Mill Creek's new East Gateway Urban Village zone.
O'Kelley and Pratt have been friends for 27 years, since O'Kelley opened a physical therapy office in Mill Creek and joined the local Rotary club where he met Pratt and eventually became his client. O'Kelley created IRG in 1997 and he now runs 31 outpatient physical and hand therapy clinics in Western Washington, Spokane and Orofino, Idaho.
O'Kelley and Pratt's friendship grew along with their businesses in Mill Creek. That led to talk of building their own office, and in 2005, they bought a vacant 3.4-acre lot on 132nd Street SE across from Archbishop Murphy High School and started evaluating its development potential.
But with property values at the time soaring, Pratt said developing their land for a commercial office "didn't pencil out." The numbers instead pointed to retail development. Pratt and O'Kelley said they had two different buyers under contract, but those sales fizzled before the economy tanked in 2008.
In something of a silver lining, Pratt said the recession reduced the value of the property to where it once again made sense for O'Kelley and him to dust off their building plans.
They started working with the City of Mill Creek, which had annexed their property a few months after their purchase in 2005. After a comprehensive land-use review, the city designated the annexed area the East Gateway Urban Village, with an eye toward mixed retail, office and high-density residential uses that would meld with the surrounding homes that sit south of 132nd Street SE. A new "spine road" south of 132nd Street SE will connect Seattle Hill Road to 39th Avenue SE, with a new signalized intersection at 132nd Street SE and 44th Avenue SE for a high-density residential development that Polygon Homes has started at the east end of the urban village.
After the city approved O'Kelley and Pratt's building plans, they had to wait for the post-recession credit market to thaw so they could line up financing. Mountain Pacific Bank of Everett backed their loan and they broke ground on the Gateway Building in August 2012.
Pratt and his partners and staff settled into their 5,000 square feet of second-story space in early June. O'Kelley expects his first-floor, 3,000-square-foot IRG clinic to open later this month along with IRG's administrative offices, which will occupy about 4,500 square feet on the second floor.
The Gateway Building features many energy-conserving elements of buildings certified by Leadership in Energy and Environmental Design such as motion-activated lights, but not enough to earn one of the several levels of LEED certification. Property acquisition and construction costs stand at $5.2 million, O'Kelley said.
"We're excited to be part of this southeast community," he said during a tour.
The Gateway Building has 24 covered tenant parking spaces in the basement and about 24,000 square feet of floor space on the two stories above. About 8,500 square feet is available to other tenants.
"I'm confident we'll get it leased out," O'Kelley said.
He's excited about the Gateway Building's location on 132nd Street SE and his newest clinic's daily exposure to thousands of passing drivers. He believes it's well positioned, sitting halfway between I-5 to the west and Highway 9 to the east, with several schools and hundreds of residences nearby.
The spine road, when it opens, will give the Gateway Building exposure on two streets, O'Kelley said.
"My business isn't as visibility dependent," Pratt said, "but we didn't want to move out of Mill Creek."
Outside the Gateway Building, some 4,000 plants are taking root in the carefully planned landscaping. Conduit was laid for eventual electric-vehicle recharging stations. Under the parking lot sits a storm-water reservoir with the capacity of an Olympic-sized pool.
While Pratt said he has represented many real-estate developers before, he got to experience their frustration himself "as a first-timer." But he said Mill Creek city officials were helpful, as were other parties in the development.
"Mark Duffy was great to work with," Tom Richardson, IRG's chief financial officer, said about Mountain Pacific Bank's CEO.
Pratt and O'Kelley also credited their contractor, Gaffney Construction, Inc., of Everett.
"It's been a good process," Pratt said. "Gaffney's been excellent to work with."
Kurt Batdorf: 425-339-3102; kbatdorf@heraldnet.com.

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