Seattle investor David Zarett has doubled the size of his holdings on the north end of Lake Union, where he now is considering developing an office project instead of residential condos.
Last week, Zarett paid just under $3.6 million for slightly less than a half-acre at 3301 Burke Ave. N.. A small, 1980 office building sits on the property. With the acquisition, Zarett now owns roughly half a block overlooking Gas Works Park and the city skyline.
Zarett’s decision to hold the property longer term for a possible office project of up to 120,000 square feet bucks a trend. These days, Seattle developers are building apartments. He said if the office plan doesn’t work out, he could develop a multi-family project.
“I guess I prefer not to do what everyone else is doing,” said Zarett. “It’s nice to know there’s a backup plan” in the form of apartments.
He has not yet put together the design and construction team for the office project, though he could turn to the group that helped him with the condo project. He declined to name the members of that team.
It’s unclear when the market could support speculative office development. Veteran office developer Martin Selig thinks spec development is three to four years out. “When that happens, it will happen,” Selig said.
Zarett could start sooner on the office project if he lands a user for the project.
As he waits, Zarett does have an income stream. In 1998, records show Zarett paid $1.17 million for about half an acre due west of the land they bought last week. There’s an old apartment building and some warehouses on the site.
His new property has a small office building now occupied by Restaurants Unlimited, which is moving to Pioneer Square. Zarett has not yet hired a broker to find a tenant for that space. According to public records, the office building is 8,050 square feet. King County assesses the property at $2.05 million. Zarett bought the property from members of the Komen family. Richard Komen founded of Restaurants Unlimited.
Zarett said he bought the property with some “anonymous money investors,” who are not involved in the development.
Zarett is known in commercial real estate circles for turning a century-old cold-storage building in the Sodo neighborhood into office space. He bought that property in 1997 for nearly $1.2 million, spent $8 million remaking it into an office and leased it up. Nine years later, he sold it for $20 million.