Template revised April 12, 2018.
COMMISSION
AGENDA MEMORANDUM
Item No.
BRIEFING ITEM
Date of Meeting
October 27, 2020
DATE: September 25, 2020
TO: Stephen P. Metruck, Executive Director
FROM: Dave McFadden, Managing Director, Economic Development Division
Kyra Lise, Director, Real Estate & Economic Development
SUBJECT: Real Estate Strategic Plan Update
EXECUTIVE SUMMARY
Staff is working with Heartland LLC (HTLand) to update the Port of Seattle’s Real Estate Strategic
Plan. The project is currently at the midpoint which, when completed, will deliver a
comprehensive plan to advance Port Real Estate development efforts over the next five years.
Heartland and staff will brief the Commission on the work to-date including an analysis of Port-
owned property development opportunities. Port staff will also highlight work ahead including
potential future land acquisition strategies, as well as novel financing tools to help the Port
support real estate development projects in the future. The final report will be delivered to
Commission in February 2021.
CURRENT PLANNING EFFORT
The draft recommendations presented at Commission will address certain key questions and
issues related to the Port’s real estate portfolio:
1. Identify the key properties in the Port’s development portfolio and evaluate them against
current market trends for industrial property within the Puget Sound region and key
Seattle submarkets (Ballard/Interbay and SODO).
2. Provide recommendations to the Commission on principles and strategies that make the
best use of Port real estate under a “highest and best use” standard for key Port
properties
• Identify development objectives and outcomes for each property based on
observation and analysis supported by market data and discussion with internal
and external stakeholders associated with the planning effort.
• Update plans, strategies and timelines for each property.
• Provide specific implementation recommendations that support the Port’s
ongoing Real Estate development initiatives in-line with the Century Agenda and
portwide goals and reflecting the new realities for the real estate market due to
COVID19.
• Recommend whether any Port properties should be sold/traded.
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Meeting Date: October 27, 2020
Template revised September 22, 2016.
Properties Being Evaluated
The Economic Development Division has taken a comprehensive look at the Port’s real estate
portfolio to determine which sites merit investment. Staff is focusing the real estate strategic
plan on every Port property that can support industrial or commercial development. This does
exclude Seaport Alliance terminals, sites impacted by the SAMP, sites nearing development like
T106 and Des Moines Creek West, several sites which are part of separate processes already
underway to support other projects (Pier 2, CEM) and a few small sites (ex. Terminal 16/17).
The following properties will be evaluated during the strategic planning process:
• Salmon Bay Marina
• Fishermen’s Terminal
• Terminal 91 Uplands
• Pier 69
• Harbor Marina Corporate Center
• World Trade Center West
For a variety of reasons, the following properties will not be evaluated:
SAMP impacted: 55 acre, L-Shape, 13 acre and SASA
NWSA properties: Terminals 5, 10, 18, 25, 30, 46, 103, 104, 105, 107, 108, 115 and 117
Current/pending RFPs: Des Moines Creek West, CEM, Pier 2 and Terminal 106
Timelines/Milestones
The current strategic planning schedule included input from internal and external advisors and is
intended to wrap up by the end of the year (2020) with the final report presented to the
Commission in early January 2021.
This is the second of three Commission briefings that have been scheduled during the planning
effort.
BACKGROUND
Successful real estate development initiatives can help support the Century Agenda and top Port
goals:
• Grow as an international logistics hub.
Kick off
March 20
Mid-point
Oct 20
Final
Feb 9
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Meeting Date: October 27, 2020
Template revised September 22, 2016.
• Sustain fishing, cruise and other maritime industries.
• Advance equitable economic development.
• Enhance and protect industrial lands.
• Advance sustainability and energy efficiency.
• Generate income to help sustain Port operations and investments.
Heartland has proposed a set of guiding principles to direct the Port staff’s effort to realize the
benefits of proactive real estate investment decisions on existing Port properties. These
principles are derived both from existing strategic documents and frameworks, as well as
foundational Port practices when it comes to the use and development of real estate. These
principles are:
Manage for the Mission: Setting clear objectives and goals for each property and development
project established in close connection to the Century Agenda and the Port’s operational
missions, as well as larger strategic frameworks more recently established such as sustainability
and equity principles.
Leverage Expertise: Whenever possible, identify opportunities to realize multiple Port policy
objectives within our real estate development and investment efforts to enhance the impact of
our leadership in areas where we have the greatest expertise.
Partner to Amplify Impact: In this time of declining revenues and economic adjustment look
outside the Port to find financial and policy partners to support our real estate objectives so we
can maintain the positive momentum we’ve gained delivering on Real estate development
projects in recent years.
In addition to these guiding principles, Heartland has developed a simple classification framework
that allows us to consider properties according to the strategic role that may play towards
realizing Port goals and support a method of priority setting for real estate projects. Those
categories are:
Operational properties: Properties whose primary role is to support Port operations or
to optimize operational capacity for the Port and its industry partners and tenants.
Cashflow properties: Properties whose primary purpose is to generate net cash flow in
order to reinvest in other key priorities of the Port.
Opportunity properties: Properties with underrealized market or mission value generally
on underdeveloped Port land.
This classification framework recognizes that properties usually represent a hybrid of two or
more of the types and that property classifications can and do change over time. Having a
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Meeting Date: October 27, 2020
Template revised September 22, 2016.
classification framework will allow us to develop appropriate evaluation metrics to determine if
we’ve met our objectives.
Using this succinct framework, Heartland provides profiles for each of the seven properties
analyzed for this plan along with a set of strategic recommendations for each based on the
principles noted earlier for each of the properties.
Fishermen’s Terminal: Following on the Commission’s 2016 Strategic Plan for Fishermen’s
Terminal (FT), Heartland notes the important operational role the property has played historically
and continues to play as the homeport of the North Pacific Fishing fleet and those enterprises
that support the fleet. The profile is based on a thorough review of FT’s existing building’s overall
operational and financial performance, while looking at the real estate development
opportunities considering current market conditions, including the COVID19 crisis which has
disrupted the conventional wisdom about real estate generally and industrial development.
Salmon Bay Marina: Adjacent to FT and the Port’s most recent acquisition (2017), the profile
considers the opportunities to connect uplands development to in-water uses and expanding the
footprint of operations at FT.
T91 Uplands: Development of light industrial buildings is underway, and the property can support
more development to support maritime industries with additional infrastructure investments.
These facility investments recognize the key role the T91 Uplands has played for maritime
operations and points to strategic opportunities the property plays for the future of maritime
industrial development.
Harbor Marine Corporate Center (HMCC): While a successful Marina operation continues the
waterside, HMCC’s value with its location directly under the West Seattle Bridge has been greatly
impacted by the bridge’s recent structural failure, as well as a high level of vacancy. The building’s
operational and financial future is intimately tied to the health of the bridge. Recommendations
are made to consider selling or repositioning this property to serve public users working on the
bridge itself.
World Trade Center West (WTCW): WTCW was a significant property for the Port’s vision for
establishing an international business hub along the Seattle waterfront and symbolic of the
significant role the Port has played in international trade. Today the office building has been
impacted by both slow growth during a period of heavy construction at the central waterfront
and the COVID economy. Recommendations include reviewing the continued relevance to
current Port missions and operations and consideration of whether the property should be sold.
Pier 69: The much beloved Pier 69 has served as the Port headquarters since 1993 and represents
a major investment by the Port in the City’s waterfront revitalization, as well as serving as an
important depot for the West Coast Clipper fleet on the waterside. Recommendations are to
consider how continued teleworking post-COVID may impact the need for Port-used office real
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Meeting Date: October 27, 2020
Template revised September 22, 2016.
estate and open the conversation about adding additional tenants, along with the
reconsideration of the now vacant Clipper Café space.
ATTACHMENTS TO THIS BRIEFING
(1) Presentation slides
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
March 10, 2020 – The Commission was briefed on the Real Estate Strategic Plan.
