The landmark PacMed building dominates the northern tip of Beacon Hill. Photo by Wendi.
Eric Pryne of the Seattle Times reports that developer Wright Runstad has defaulted on their loan on the PacMed building at the north tip of Beacon Hill, and that the building is now in the beginning of foreclosure proceedings.
Most recently, the building was occupied by Amazon.com, whose lease expired this spring. Amazon has moved their operations to the South Lake Union neighborhood, and the PacMed building is currently mostly vacant.
The PacMed building was in the news last month when Wright Runstad proposed that the King County juvenile court and jail complex move into the building. However, county officials determined that the proposal wouldn’t meet affordability criteria, and so it was scrapped.
Pryne suggests that the default and threatened foreclosure could be “saber-rattling”:
“Owners of other financially troubled buildings, such as downtown Seattle’s Columbia Center, have engaged in ‘strategic defaults’ to prod lenders to modify their loans.
“And there’s no evidence so far of any foreclosure filing involving the PacMed building in King County court or property records—although the first step in foreclosure in Washington, a ‘notice of default’ from lender to borrower, generally isn’t recorded.”
Pryne also notes that an appraisal last year valued the building at $11.3 million, a little more than half of the $20.5 million Wright Runstad owes on the loan. Monthly payments are about $181,000.
The owners of the building are the Pacific Hospital Preservation and Development Authority, who negotiated a 99-year lease with Wright Runstad in 1998. Wright Runstad then subleased the the building to Amazon.
The Preservation and Development Authority is a non-profit quasi-public organization whose mission is to promote health care for the vulnerable and disadvantaged. Find out more about the PHPDA here.
It strikes me as so odd that this landmark building can’t keep a tenant!
It’s a really cool building, but as a vast amount of office space it’s in an utterly bizarre location. It’s not in the middle of a business ecosystem like buildings downtown or in South Lake Union, and it’s both too expensive to buy and not for sale in the first place, which means it has none of the physical asset appeal that leads companies to purchase land for sprawling campuses on the east side or the Kent Valley.
It’s an oddball building and it worked for an oddball company like Amazon for a while, but it’s going to be hard for Wright Runstad to find another tenant like that. If they are going to make any money on the deal they signed they are probably going to have to get creative, but that’s not their strong suit. So far the best they’ve come up with is chasing after government money with the juvie proposal, and that wasn’t very good.