PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.:
7b
STAFF BRIEFING
Date of Meeting:
May 24, 2011
DATE:
May 16, 2011
TO:
Tay Yoshitani, Chief Executive Officer
FROM:
Mark C. Griffin, Director, Real Estate Development
SUBJECT:
Tsubota Steel Site Request for Proposals
BACKGROUND:
The Port acquired the 3.4 acre Tsubota Steel site in April, 2005. At the time, the Port was
engaged in a large-scale redevelopment planning effort that encompassed the Port’s Terminal 91
uplands site just west of the Tsubota site and a few other adjacent sites not owned by the Port.
The Tsubota site has been under short-term lease since its acquisition. Because the site lacks a
direct tie to the Port’s operations, the Port’s Century Agenda planning identifies it as a “Tier 3”
property. These facts coupled with what appears to be an improving real estate market—based
in part on staff receiving several unsolicited inquiries to buy or lease the site last year—prompted
staff to issue a request for proposals (RFP) on February 8, 2011. Staff published the RFP in the
Daily Journal of Commerce and Puget Sound Business Journal and forwarded the RFP to an e-
mail list of real estate developers and investors.
BRIEFING OUTLINE:
The RFP offered respondents the option to either (i) long-term lease the entire site or (ii)
purchase the entire site, both on an “as is, where is” basis. The Port received one, non-
responsive purchase proposal before the submission deadline and one, non-responsive lease
proposal after the submission deadline.
Acquisition Proposal. This response proposes acquisition of only the northern portion
of the site or approximately 1.3 of the 3.4 total acres, which is inconsistent with the
RFP’s offered terms. The $2 million proposed purchase price equates to $35 per
square foot. A larger, nearby site with the same zoning recently listed for sale at $51
per square foot. The proposed purchase price thus appears to be substantially below
market. In addition, under this proposal the Port would retain the southern portion of
the site. This configuration would result in even greater access and traffic challenges
from the existing traffic signals, bus rapid transit lane, and restrictions on north-bound
turns on 15
th
Avenue W.
Lease Proposal. This response proposes leasing the site for 15 years with two, 5-year
options to extend the lease term. The proposal requests the Port contribute as much
COMMISSION AGENDA
Tay Yoshitani, Chief Executive Officer
May 16, 2011
Page 2 of 2
as $1.8 million in site/tenant improvements despite the RFP’s “as is, where is”
requirement. The proposed rent stream has a negative net present value when the
requested improvements are included in the return on investment analysis.
Neither proposal improves the Port’s current position. Staff recommends declining both
proposals and continuing short-term lease of the site until the real estate market further improves.
OTHER DOCUMENTS ASSOCIATED WITH THIS BRIEFING:
PowerPoint presentation.
