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Allen’s Vulcan Urges Seattle to Increase Building Heights

Vulcan Inc.'s Paul Allen
Paul Allen, co-founder of Microsoft Corp., speaks during a Bloomberg BusinessWeek "Captains of Industry" event at the 92nd Street Y in New York on April 17, 2011. Photographer: Ramin Talaie/Bloomberg

Billionaire Paul Allen wants Seattle to grow up -- again.

City planners are preparing a recommendation on raising height limits for new buildings in South Lake Union, the former warehouse district north of downtown where Inc. moved its headquarters. Vulcan Inc., Allen’s Seattle-based investment company, is the main proponent of taller buildings in the area.

It would be the third time since 2005 that Seattle has raised the maximum height of buildings in and near downtown. The potential change, to be presented by June to the mayor, was spurred in part by a forecast that Seattle will gain as many as 100,000 residents and 84,000 jobs by 2024. Mayor Mike McGinn will make a recommendation to the city council, which is likely to reach a decision by the end of the year.

Vulcan’s real estate unit owns about one-sixth of the land in South Lake Union, where it has added or is building 5 million square feet (465,000 square meters) of offices, stores, restaurants, apartments and medical-research labs.

“There are many community benefits to building up,” said Ada M. Healey, vice president of real estate for Vulcan, in an interview. “It’s a more efficient use of limited resources, and better environmentally. The best solution for the city is a smart approach to density that incorporates taller buildings where it makes sense.”

‘Hottest Neighborhood’

Vulcan wants new apartment towers near the lake shore. More stories will mean more residents, creating a livelier neighborhood, generating tax revenue and allowing people who work downtown to walk to their jobs or use public transportation, which would reduce pollution, Healey said.

“South Lake Union is the hottest neighborhood for retail in Seattle,” said Jeremy Moller, a broker at JSH Properties Inc. “Traditional retail strongholds command higher rents and have higher sales volumes, but no neighborhood has more buzz or interest from retailers at this time.”

A group called the Lake Union Opportunity Alliance advocates a step-down to the waterfront, with the tallest properties farthest from the lake, home to Seattle’s annual Fourth of July fireworks display. The alliance doesn’t oppose taller buildings, as long as they aren’t built adjacent to the water, said Chris Gemmill, a spokesman for the group, made up mainly of residents and small-business owners in the area.

No ‘Money Block’

“We don’t want a ‘money block’ of 300-foot towers at the lake, which could cause the rest of the area to stagnate economically,” Gemmill said in an interview. Construction ought to mimic the natural bowl-like topography of the area, which is surrounded by Queen Anne Hill to the west, Capitol Hill to the East and office towers in the central business district to the south, he said.

Current zoning can accommodate the projected population and job growth in South Lake Union through 2024, Gemmill said.

“We don’t want to build more than we need and incentivize a boom-and-bust cycle or impede development opportunities in the downtown core,” Gemmill said.

Under current zoning, 16,000 jobs and 8,000 households are expected to be added to South Lake Union between 2004 and 2024. alone has relocated “thousands” of employees to the district since moving its headquarters in 2010, said Mary Osako, a company spokeswoman. She declined to give the exact number of workers who moved.’s South Lake Union campus has room for about 8,500 employees based on its space built or under construction and the industry average of 200 square feet per employee. The company also leases space nearby with room for an additional 4,600 employees, based on the same formula.

Three Height Options

Seattle’s Department of Planning and Development is considering three alternatives for increasing height limits, as well as the option of maintaining current zoning, said James Holmes, a senior urban planner at the department. The first alternative calls for the highest limits, of as much as 240 feet (73 meters) for commercial buildings and 400 feet for residential, with the other two plans calling for smaller changes.

“We’ve been looking for a few years at appropriate heights,” Holmes said. There would need to be a benefit to the public in exchange for taller buildings, he said. “Affordable housing is heavily weighted because it’s an urban center.”

Most of the neighborhood is currently zoned for maximum heights of 65 feet to 85 feet, or about six to seven stories, depending on the block, Holmes said. Near the lake front, on Valley and Mercer streets, the maximum height is 40 feet. Heights of 65 feet are allowed as long as 25 percent of the development area is devoted to publicly accessible open space, he said.

BioMed Center Approval

Rezoning already has been accomplished in parts of South Lake Union as individual projects have sought and won approval for lifting height restrictions. BioMed Realty Trust Inc., a San Diego-based owner of biotechnology and pharmaceutical offices and labs, won city council approval in December to build a research center to 85 feet.

“There have been enough contract rezones within South Lake Union that are consistent with the proposed rezoning that it seems apparent the rezoning will go forward,” said Lisa Picard, executive vice president and regional head in Seattle for Skanska USA, the New York-based unit of Swedish construction company Skanska AB.

The company in January bought 43,000 square feet at 400 Fairview Avenue North and is seeking a zoning change to build an office-and-retail complex at the site, Picard said.

‘Urban Centers’

“You need a certain amount of density to support a really active ground floor,” Picard said.

The Planning Department expects to release a final environmental impact statement on the proposed changes within two months, and a final city council decision is likely by the end of 2012, Holmes said.

South Lake Union is one of six areas Seattle designated as “urban centers” in the city’s 2004 growth plan. Seattle officials want to foster a concentration of jobs and housing in those areas to preserve single-family neighborhoods and protect natural resources. Other urban centers include the Northgate area, home to a Simon Property Group Inc. shopping mall.

South Lake Union is a mostly square-shaped neighborhood bordered by the lake at the north, Denny Way to the south, Aurora Avenue at the west and Interstate 5 to the east. The district includes two stretches extending north along the lake’s western and eastern shores.

Allen’s Fortune

Vulcan has already built or is constructing about half its development potential in South Lake Union. The company owns about 57 acres (23 hectares) in South Lake Union, said Lori Mason Curran, director of real estate investment strategy at Vulcan. The district has a total of about 330 acres, according to the city.

Allen, Vulcan’s founder, also is the co-founder of Microsoft Corp., the main source of his fortune. The 59-year-old philanthropist and owner of the Seattle Seahawks football team had a net worth of $13.2 billion in 2011, making him the 23rd-richest American, according to Forbes magazine. He began acquiring land in South Lake Union in 1996 with the goal of creating a waterfront park to be called Seattle Commons, an idea that voters rejected.

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