About a year and a half ago, all eyes in Seattle were on real-estate mogul Al Clise. In June 2007, he announced that he wanted to sell a 13-acre, seven-block swath of commercial property in Denny Triangle.
However, by April 2008, the chairman and CEO of Clise Properties took the lots off the market without accepting a buyer. This summer, Clise, a victim of the ever-worsening credit crisis that has stifled most new construction, said he would take over the expired leases for The Sixth Avenue Inn and Days Inn motels, which are located on the parcel, and would renovate these facilities starting in September.
So, in today’s appalling real estate market, why go into the hotel management business? Why not sell portions of the vast property piece by piece? For Al Clise, that’s simply not part of his long-range plan.
“My family has been in a process of acquisition over the past 100 years, resulting in today’s Denny Block,” he explains. “The vision for the Denny area has evolved over the four generations that have managed it. Today’s vision—my vision—is to make sure the right thing happens with [the development] of this property.”
During the 10 months the property was on the market, Clise looked for either a partner or a group to develop the entire parcel, which Clise estimated could cost up to $7 billion and take 15 to 30 years to build out.
Michael Seifer, managing director of Jones Lang LaSalle, the exclusive broker for the property, says Clise entertained more than 60 groups worldwide and narrowed it down to 15 serious bidders who were willing to invest at least $600 million and who shared his “master plan” of creating a development on the scale of New York City’s Rockefeller Center. Although Clise declined to comment on who was in the final group of bidders, it was reported that Dubai’s Emaar Properties were in negotiations until the plug was pulled in April.
Despite the chilly development climate, Denny Triangle is eventually expected to be one of Seattle’s hottest commercial markets. In 2006, the city stripped the area of a 1989 zoning ordinance that had capped new building heights at 85 feet, thus opening the underutilized neighborhood to about 13 million square feet of developable space.
“It’s a real treat to find such a large amount of undeveloped urban land,” says Matthew Gardner, a land-use economist at Gardner Johnson LLC. “Even with the credit crunch, Clise received significant attention for his listing because it’s rare to find single ownership of such a substantial downtown asset.”
For now, Clise appears to be in no rush. As he refurbishes the hotels and waits for the economy to settle down, he plans to list the Denny properties down the road. “Hopefully my timing with the market will be a little bit better next time,” he adds.