While the housing market has entered a soft spell in many parts of the country, the rush to live downtown continues in some of the nation’s cities, including Everett.
Don’t expect the move to slowdown anytime soon. A recent front-page story in USA Today detailed that the U.S. population will grow from 300 million to 400 million by the year 2040 and many people will live within the urban core. Seattle’s comprehensive plan forecasts an additional 84,000 jobs and 47,000 household in the city through 2024.
While much has been written – and promoted – about empty nesters and young professionals wanting the cultural amenities that come with downtown living (approximately 8,000 condo units are expected to open in the next three years in Seattle) the interest is neither restricted to expensive high-rise condominium projects nor to individual consumers.
Sales representatives report that small business owners and operators from nearby counties such as Snohomish, Kitsap, Island, Skagit, Pierce and Thurston are taking space downtown to accommodate in-town client schedules for their employees. A three- to five-night stay in a downtown hotel often compares to a monthly mortgage payment for a studio condo or a month’s lease in an in-city apartment.
“We are finding that company employees prefer the accommodations over staying in a hotel, so they actually end up spending more nights downtown than they normally would,” said Dale Sperling, president of Unico Properties Inc., the group that owns the newly renovated Cobb Building at Fourth Avenue and University Street in Seattle.
The 97-year-old Cobb, the latest in a string of distinctive office buildings transformed into downtown housing since 2000, has been converted into 91 rental units that feature high ceilings, large operable windows and quality cabinets and appliances.
The Capital Grille, a fashionable Atlanta-based steakhouse chain, will make its Northwest debut in the Cobb’s Fourth Avenue retail space (once occupied by Alaska Airlines and a bank) while an upscale grocery will move in to the retail spot bordering University Street.
Demand for the building has been surprising: Only one penthouse remains available, and the waiting list of more than a dozen renters grows longer nearly every day.
“We knew people were paying pay top dollar for condominiums downtown, but we were holding our breath when we opened because we were asking premium rent,” Sperling said.
After the first day, Sperling was breathing easier. The first eight customers in the door signed leasing agreements. When the Cobb started its leasing presentations in July, premium rent was $217 a square foot, $10 more than the spiffy Metropolitan Tower on Westlake. Now, the Cobb rents’ average about $250 a square foot with two-bedroom, two-bath units averaging slightly more than $3,000 a month.
“I think people want to live here because of the location and how the renovation was done,” Sperling said. “In 1982, the Four Seasons spent $110,000 per room on its hotel renovation and the company did it right. That’s what we are hearing from our tenants they like the effort we went through to do it right and it gives them a similar feeling as the Four Seasons.”
The restoration of the Cobb, listed on the National Register of Historic Places and originally built to accommodate medical and dental offices, included the careful refurbishing of the terra-cotta Indians gazing down from the beaux-arts facade on Fourth Avenue and the building’s art-deco elevators, complete with brass doors. The building also received rebuilt interiors with intimate, staggered hallways; a new heating system and new plumbing and wiring.
The most difficult task, however, was solving the aging building’s need for a seismic upgrade. The reinforced-concrete structure survived a number of earthquakes, but the L-shaped structure clearly required additional strength.
One option, called X-bracing, involved inserting a series of steel beams inside the walls. However, the pattern altered the interior look and blocked views from many of the 462 original windows.
“We wanted to keep the views and the feel,” Sperling said. “So we decided on a separate reinforced tower that will fit inside the L-shape. It provided the reinforcement we needed and also gave us room for an additional apartment on each floor.”
Last year, the median price per square foot for condos in King County was $211. If you adjust the price upward to account for a prime downtown location, the monthly cost would be about the same as it would be to rent a tasteful downtown apartment. Given the chance for future appreciation, why would anybody rent?
“If you are strictly looking for an equity fix, there are definitely other options,” Sperling said. “However, remember people who buy expensive condos have to commit a significant amount of money for the down payment, plus their taxes and condominium association fees.
“People live here and rent because it’s simply a personal preference. They know the furnishings, location and environment that they want – and we have it.”
Tom Kelly’s new book “Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border” was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com.
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