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    Bellevue's high-end development sold to NYC investors

    Despite opening in a tough economy less than years ago, The Shops at Bravern have done well. Now, the complex has attracted a buyer who already boasts such iconic spots as Boston's Faneuil Hall Marketplace and Washington's Union Station.

    An entrance handy to Neiman Marcus at The Shops at the Bravern features valet parking.

    An entrance handy to Neiman Marcus at The Shops at the Bravern features valet parking. Ronald Holden

    It's a 300,000-square-foot complex of restaurants, high-end boutiques like Hermès, Louis Vuitton, and the only Neiman Marcus in the Pacific Northwest. The developer, Schnitzer West, sent a team of architects to a dozen city center shopping plazas in Europe for inspiration in the design of an "upscale urban mall" concept. It's glitzy shopping without any rough edges, and (unless you're used to shopping in southern California or Arizona) it feels a bit artificial, a bit like Las Vegas.

    Schnitzer has just sold The Shops at the Bravern to a buyer with a record of managing showcase properties around the country and will continue to manage the complex.

    The Shops at the Bravern opened in September 2009, just off Interstate 405 in Bellevue, probably not the most opportune moment for a luxury retail development. The four residential towers were quickly converted from condos to rentals; Microsoft immediately filled of two them. But with Neiman as the anchor, the Jimmy Choos and Ferragamos lined up for space. Not all would be successful. The most notable failure was Terrance Brennan, who arrived from New York with his Artisanal Brasserie concept as well, built a handsome space on the mezzanine level for 300 diners and drinkers, and collapsed within nine months.

    Occupancy rates were acceptable, around 85 percent, though that left a dozen or so storefronts empty. Still, Schnitzer West decided to sell off the retail development, and went looking for an investor with a national profile and experience managing a Neiman connection. That ruled out local, Carhartt-Pendleton-Eddie Bauer types.

    Understandable. When I toured the Bravern three years ago, then-under construction, I was probably guilty of fashion provincialism myself: images of Cadillacs with steer-horn hood ornaments, women with beehive hair, men with giant belt buckles. But Dallas, after all, is home to the nation's most prestigious department store with literally hundreds of elegant designers from Armani and Balenciaga to Versace and Zasha.

    Two quick asides: high fashion, regardless of its cost, never seems to go out of fashion. Also: Seattle's where Nordstrom started, and Nordstrom has plenty of designer labels, too, but lacks the ooh-la-la factor of Neiman's.

    The gent who brought Neimans to Seattle is its senior VP for properties and store development, Wayne Hussey, who toured the unfinished space in a well-cut dark blue suit by Zegna, wide-stripe light blue shirt, elegant rep tie (more blue), old-fashioned analog watch. No doubt he reports to an even more senior exec in Dallas, who reports to a chief exec and a board of directors. It was comforting to know that he prefers Jaeger LeCoultre to Rolex.

    The assumption was that wealthy Eastside shoppers would flock to the Bravern, drawn by the elegant fashions, the easy access, valet parking, and the fact that it was clearly more upmarket than busy, bland Bellevue Square, all of three blocks to the west. The recession put a damper on those projections, to be sure, but Schnitzer says the Bravern's chain stores are doing very well indeed compared to other markets.

    The buyer is a private equity outfit in New York called Ashkenazy Acquisition Corp. that manages showcase properties in New York (650 Madison Avenue), Boston (Faneuil Hall Marketplace), Chicago (700 North Michigan Avenue), and Washington, D.C. (Union Station). The sales price was $79 million, which works out to about $250 a square foot. That's a premium number, but then rents in the Bravern are in the neighborhood of $50 a foot, so the price seems fair. Schnitzer VP Tom Woolworth called it "right in line" with expectations. And Schnitzer will continue its role as day-to-day manager of the properties.

    One sad note regionally:The sale of the Shops at the Bravern hit the news the same day that Seattle's iconic Smith Tower was sold at a bankruptcy auction. The 38-story, virtually empty "skyscraper" went for $37 million. 

    Ronald Holden is a regular Crosscut contributor. His new book, published this month, is titled “HOME GROWN Seattle: 101 True Tales of Local Food & Drink." (Belltown Media. $17.95).

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    Posted Mon, Mar 26, 9:23 a.m. Inappropriate

    "The sales price was $79 million, which works out to about $250 a square foot. That's a premium number, but then rents in the Bravern are in the neighborhood of $50 a foot, so the price seems fair. Schnitzer VP Tom Woolworth called it "right in line" with expectations."


    "Right in line" with expectations?

    The not-so-upscale Canyon Park Place in Bothell with not-quite-luxury retailers QFC and Bartell Drug just sold for $268/sf. Considering what the Bravern cost to build, I'm guessing Schnitzer is actually pretty disappointed.


    Posted Mon, Mar 26, 10:46 a.m. Inappropriate

    There were three property owners in downtown Bellevue looking to make a killing off of Sound Transit’s East Link: Kemper Development, Whitehall Street, and Schnitzer West. Putting in a light rail line does little or nothing for a metro area’s overall economy (and when it’s financed in the aberrant, abusive manner Sound Transit’s managers chose it’s a guaranteed losing proposition). Commercial property developers though gain big from getting light rail stations near their properties, and those three were standing to gain huge value if East Link gets built out.

    It may be that the market believes East Link will not be built. Freeman is busy trying to get courts to place Sound Transit above the law by raising ridiculous sure-loser claims in various courts. He’s hardly exuding confidence. Whitehall Street soon may walk away from its big (and highly leveraged) investments near the proposed Bellevue (and existing downtown Seattle) light rail stations:

    A Goldman Sachs affiliate that owns one of the biggest collections of office buildings in the Seattle area is weeks from defaulting on the 5-year-old loan it took out to buy the 2.6 million-square-foot portfolio, according to two industry reports.

    Whitehall Street, a Goldman Sachs real-estate investment arm, paid close to $1 billion for the 11 Seattle and Eastside buildings in April 2007, near the market's peak.

    The portfolio — which includes Seattle's 34-story 1111 Third Avenue and downtown Bellevue's 25-story Symetra Financial Center and 21-story One Bellevue Center — was 96 percent occupied then.


    The boys at Goldman know what’s up with Sound Transit – the money-sucking vampire squid is behind the staggeringly abusive debt-heavy financing plan. And now we have Schnitzer West bailing from that location at a bargain price. What it got in this sale does not reflect any kind of premium of the type one would expect to see for a marquee property near a soon-to-be operational light rail station.

    I’m well outside the silo of Sound Transit, unlike a number of the posters here. I would be loath to put odds on the chances of East Link proceeding beyond the drawing board. Hey Crosscut readers, help me out: are we seeing the commercial property market discounting the grand promises surrounding the plan for “light rail to the Eastside”?


    Posted Mon, Mar 26, 3:26 p.m. Inappropriate

    "high fashion, regardless of its cost, never seems to go out of fashion." Maybe the fashion isn't out of style, but stores that cater to a smaller and smaller market often to go out of business.

    As for why they sold this property at a discount, more likely they have other properties which are not at 85% capacity and need the cash to keep those loans afloat.

    Light Rail is years away from arriving in Bellevue, Commercial investors right now are looking for discounted properties that have cash flow, not necessarily looking for future increases in the rents.


    Posted Tue, Mar 27, 5:02 p.m. Inappropriate

    No other takers?

    -- As for why they sold this property at a discount . . ..

    That is my point . . . it sold at a discount. If the market saw this property as one that was going to get a nearby light rail station the seller would not have unloaded it at a discount; Schnitzer would have sold at a premium.

    Let's discuss what's going on around the other planned East Link stations, beyond downtown Bellevue. Out on the Bel-Red road there's been upzoning. Have any deals gone down at premium prices recently, which might indicate the belief that those planned stations will become a reality? Has Wallace Properties (for example) begun redeveloping its properties out there near where the planned stations are located? I don't get over there often . . . Wright Runsted hasn't torn down the old Coca Cola facility to start work on the planned 6,000 unit TOD project, right? I'm trying to get a handle on whether there's any evidence of private investors risking money on East Link becoming a reality . . . anyone have any information on that?


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