Smith Tower Foreclosed

In case you missed it Friday, the Smith Tower was sold (back to the bank) at foreclosure auction. Here’s KING 5’s report: Historic Smith Tower sold for $36.9 million

That’s what happens when you make a big public announcement about intentions to convert to condos, scaring away all your good tenants, then fail to follow through because you stupidly kicked off your plan just as the housing bubble was beginning to deflate.

From Eric Pryne’s write-up over at the Seattle Times:

The buildings’ previous owner, Walton Street Capital, of Chicago, bought them in 2006 for $44 million, and at first pursued a plan to convert Smith Tower to condos.

The housing crisis killed that proposal; meanwhile, office tenants fled the historic tower, which opened in 1914.

It’s now more than 80 percent vacant, according to court records, and monthly rents don’t cover the building’s operating expenses.

Walton Street defaulted on the mortgage last year, and CBRE began pursuing foreclosure shortly after it acquired the debt in September.

At CBRE’s request, a King County superior-court judge in December appointed a receiver, Goodman Real Estate, of Seattle, to take over management of the tower.

According to Goodman’s latest report to the court, another CBRE affiliate has begun marketing the building to prospective tenants. There’s interest in two complete lower floors and suites on three other floors, the report says.

Goodman representatives have told him they expect to have the tower at least 50 percent occupied by the end of the year.

So it sounds like the dream of the Smith Tower Condos is dead.

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

34 comments:

  1. 1
    Feedback says:

    God, what idiots. I’m so glad people like us exist, Tim.

    Rate this comment: Thumb up 0

  2. 2
    Pegasus says:

    I think if they refit the building with bars on the windows and high security steel doors they could use it to house all of the bankers they are prosecuting……the bars and doors would keep the riffraff out.

    Rate this comment: Thumb up 0

  3. 3

    A Historic Seattle Sky Scraper Like the Smith Tower

    Should be a museum, not a condo.

    Rate this comment: Thumb up 0

  4. 4

    RE: softwarengineer @ 3 – A museum of what? And how would it be financially viable?

    I think it already is a historic landmark. It probably should become office space again.

    Rate this comment: Thumb up 0

  5. 5

    But even before the dream to create condos, there was an apartment at the top of the Smith Tower. There was an article about it in the Times years ago. I wonder if it’s still occupied.

    Rate this comment: Thumb up 0

  6. 6
    MacroInvestor says:

    Turn it into a gigantic haunted house, and charge admission to touristas. Complete with overpriced restaurants and night clubs in that theme.

    Rate this comment: Thumb up 0

  7. 7
    Blurtman says:

    Boy, that deadbeat Walton Street corporation is toast. Unable to borrow money for seven years until they repair their credit rating.

    /snark/

    Rate this comment: Thumb up 0

  8. 8
  9. 9
    The Tim says:

    RE: Ira Sacharoff @ 5As of last December the lady who turned the top into an apartment was still living there, and had another 7 years left on her 20-year lease.

    Rate this comment: Thumb up 0

  10. 10

    RE: The Tim @ 9 – Lucky for her the lease predates the mortgage.

    Rate this comment: Thumb up 0

  11. 11
    John Bailo says:

    Sounds like dream of urbism is dead!!

    The high density crowd has been moving through Seattle like locusts…every time they get tired of their “toys” they move on and destroy another area. Downtown didn’t work so they try South Lake Union. The gangbangers comes to the clubs, and so they move to Northgate.

    What never happens is one of these “master plans” ever working out.

    Based on the density, the amount of “transit” and all the miracle projects like the stadiums, the tunnels and whatnot, the Smith Tower should be the equivalent of the Upper East of Manhattan by now — and instead it’s 80 percent vacant!!

    Can someone please put a halt to the densifiers before they destroy the thing that people moved here to avoided — a dense “real city” !!

    Rate this comment: Thumb up 0

  12. 12

    RE: John Bailo @ 11 – I wouldn’t make that conclusion based on one property.

    Rate this comment: Thumb up 0

  13. 13
    Sweet Pea says:

    RE: John Bailo @ 11

    The execution of urban density here has been a joke because the development has catered to the luxury end of the market. I have not seen a lot in the way of new reasonably priced, reasonably appointed apartments and condos in city density projects (I’m talking actual density, like Seattle or even parts of Bellevue). The builders don’t want the middle class dollars, they want the upper class dollars that are willing to pay a premium and provide higher margins. It’s all got to be granite, concierges, opulent common areas, blah blah blah.

    Rate this comment: Thumb up 0

  14. 14
    Peter Witting says:

    Thanks for this post, I was hoping for one on this topic and read the comments.

    Condos? Puh-leeze. That seems to be the developer’s answer to any project. When will the infatuation with condos finally run out of juice?

    Rate this comment: Thumb up 0

  15. 15
    ARDELL says:

    RE: Sweet Pea @ 13

    Can you put a number on “reasonably priced”? Say new construction on a 5,000 sf lot in Seattle or new condo of 950 sf 2 bedroom; 2 bath on one level?

    Rate this comment: Thumb up 0

  16. 16
    No Name Guy says:

    RE: Sweet Pea @ 13

    Developers have no choice but to cater to the high end. Thank’s to the schizophrenia of the typical politician, they want “impact fees”, vast tracts of park space, all kinds of public amenities paid for, street improvements, sewer impact fees, school impact fees, city impact fees, 30% of units set aside for sub market rates and all the rest. Then they want environmental impact statements, back side kissing to the neighborhood associations to ward off the NIMBY-isms, and drag their feet on building permits for 24 months. Projects simply can not be profitable if you build to the middle or lower end of the market.

    If you want stuff for the middle and lower end of the market, get the city, county and state off the back of folks who want to build on their land. Only then will it be profitable to do so.

    Rate this comment: Thumb up 0

  17. 17
    John Bailo says:

    By Sweet Pea @ 13:

    RE: John Bailo @ 11
    The execution of urban density here has been a joke because the development has catered to the luxury end of the market.

    Right…move the goal posts.

    First it’s “so valuable” that it should be high priced.

    Now, the reason no one wants it is that it’s too high priced.

    Make up your minds?!?!

    Rate this comment: Thumb up 0

  18. 18
    Hugh Dominic says:

    RE: Sweet Pea @ 13 – We don’t want low-to-mid-range housing in Seattle. Our in-city property values are only allowed to go up.

    That’s why we built a train to Kent, and that’s why I-90 has ramps that go south as well as north.

    Rate this comment: Thumb up 0

  19. 19
    ARDELL says:

    RE: Hugh Dominic @ 18

    The most recent I have seen were new homes, modern design, 2,400 sf on 5,000 sf lots vs townhome lots. They sold quickly for $650,000. Two of them back to back. That’s the lowest I have seen on a full sized lots, North Seattle.

    I have this “Not Grandma’s House” at a low price per square foot given it backs to 15th Ave and is on a 4,000 sf vs 5,000 sf lot.

    http://www.redfin.com/WA/Seattle/8532-16th-Ave-NW-98117/home/12300621

    Just wondering if Sweet Pea is thinking of something in between these prices and the standard townhome price, for a single family home.

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  20. 20
    David Losh says:

    RE: Sweet Pea @ 13

    Well we had a building moratorium from developers in down town. The heighth restrictions curtailed many profitable projects. That ended about the time the market crashed.

    The second part is down town does want to clean up. Kind of what no name guy is saying is true. The down town associations would like to see Park Avenue, but we are a working class city.

    I think things will shake out in the next ten years, and you will see more of a mix down town. Ballard is a good example of what could be a Pioneer Square, and Belltown.

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  21. 21
    Scotsman says:

    Once the gangs really get a hold on the areas just north and south of downtown prices will crash hard. Who wants to live where you can’t walk out your door without kevlar and a CC permit? Isn’t that the final step in modern “urbanization”?

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  22. 22
    Sweet Pea says:

    By ARDELL @ 15:

    RE: Sweet Pea @ 13

    Can you put a number on “reasonably priced”? Say new construction on a 5,000 sf lot in Seattle or new condo of 950 sf 2 bedroom; 2 bath on one level?

    I’m talking about dense multi-family buildings. How about new-ish construction in a medium to high-rise-ish building downtown, 1,000 square feet (1-2 bedroom) for less than $1.5K – $1.7K per month (rental or whatever the comparable monthly payment on a condo would be). There are a few of these but they seem to be the exception, while the rule in that size is $2K+.

    Rate this comment: Thumb up 0

  23. 23
    Sweet Pea says:

    RE: No Name Guy @ 16

    Hmm, maybe. I don’t know of too many large-scale developers that are in the poor-house, though, as long as they didn’t over-leverage themselves in the bubble. And the developer I spoke with a few years ago, who was salivating over a few acres left as-yet undeveloped in a booming area where new development was mostly middle-ish priced townhomes, was not the only one to cold call the current owner when the land wasn’t even for sale.

    They also are continuing to tear down trees on the eastside at their usual speedy pace in order to build more suburban “density” (and by density I mean cheap-looking 2,000 square foot+ boxes crammed in 8 feet away from each other).

    Rate this comment: Thumb up 0

  24. 24
    Sweet Pea says:

    By Sweet Pea @ 22:

    By ARDELL @ 15:
    RE: Sweet Pea @ 13

    Can you put a number on “reasonably priced”? Say new construction on a 5,000 sf lot in Seattle or new condo of 950 sf 2 bedroom; 2 bath on one level?

    I’m talking about dense multi-family buildings. How about new-ish construction in a medium to high-rise-ish building downtown, 1,000 square feet (1-2 bedroom) for less than $1.5K – $1.7K per month (rental or whatever the comparable monthly payment on a condo would be). There are a few of these but they seem to be the exception, while the rule in that size is $2K+.

    Sorry, didn’t mean to say “less than”.

    Rate this comment: Thumb up 0

  25. 25

    RE: John Bailo @ 11

    Better Wear Your Tin Hat

    Many of the Gen X never had overpopulation education in their public schools like the Baby Boomers. They’ve been brainwashed by slavelord corporations into believing lower waged increased population density makes the economy boom, it goes boom alright :-)

    Rate this comment: Thumb up 0

  26. 26

    RE: Kary L. Krismer @ 12

    Kary

    He was referring to the whole city in general. He’s right too.

    Rate this comment: Thumb up 0

  27. 27

    RE: Sweet Pea @ 13

    And We’ll get a Bunch of “Dumbed Down” Down Thumbs

    If we mention lack of parking or grocery stores.

    Rate this comment: Thumb up 0

  28. 28

    By softwarengineer @ 26:

    RE: Kary L. Krismer @ 12

    Kary

    He was referring to the whole city in general. He’s right too.

    He referenced the Smith Tower being 80% vacant, which is due to the circumstances of that building. It’s 80% vacant because it never was converted to residential, and they apparently weren’t renting office space.

    I’m actually surprised how well the downtown core has absorbed all of the new residential construction. The condo market is actually fairly tight, although that’s also presumably because of people not wanting to sell at the prices allowed today. The rental market is apparently very tight. There are a lot of residential buildings in Seattle between 520 to the north and 90 to the south which are less than 10 years old, and they’re seemingly full.

    Rate this comment: Thumb up 0

  29. 29

    RE: Scotsman @ 21

    Now Now Scotsman

    We must focus on the poor gang related politics, rather than the giganic Iran, Afghanistan and Syria fiascos, lately….pay your $4.17/gal at the pump and zip your mouth.

    Rate this comment: Thumb up 0

  30. 30

    RE: Sweet Pea @ 13 – There are still tax incentives for building units that are for lower income people, and there have been a few of those built in Seattle.

    Rate this comment: Thumb up 0

  31. 31

    RE: Kary L. Krismer @ 28

    Is That By Choice or Are They Horrifyingly Underwater?

    And the sellers couldn’t sell if they wanted to?

    Rate this comment: Thumb up 0

  32. 32

    RE: Kary L. Krismer @ 30

    True Kary

    Albeit, if I knew a single tennant [no gypsie hoard please] on SSI and he/she was a clean good citizen….a landlord paying income tax on another job could use the Washington State low income tax credit and pay no income tax housing this individual…..with little fear the place will get trashed.

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  33. 33

    By softwarengineer @ 31:

    RE: Kary L. Krismer @ 28

    Is That By Choice or Are They Horrifyingly Underwater?

    And the sellers couldn’t sell if they wanted to?

    I referenced that in my answer.

    Rate this comment: Thumb up 0

  34. 34
    Sweet Pea says:

    By Kary L. Krismer @ 30:

    RE: Sweet Pea @ 13 – There are still tax incentives for building units that are for lower income people, and there have been a few of those built in Seattle.

    That covers low income, and high income is already covered pretty well. It’s the middle of the market that seems neglected in these projects, and the middle market renters/buyers will still tend to be pushed out into sprawl.

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