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HomeStreet Funds $13.5 Million Loan for Office Phase of Capitol Hill Urban Redesign

February 05, 2014HomeStreet Bank has provided financial for the refinance and redevelop of three historic buildings in Seattle. The redevelopment portion, the Chophouse Row mixed-use office project, is the final phase of a multifaceted urban redesign.

HomeStreet Bank Commercial Real Estate, one of the Northwest’s leading multifamily and commercial real estate lenders, announced today that it has financed a $13.5 million loan for Dunn & Hobbes, LLC (through property entity Pacific Chop LLC) to refinance and redevelop three historic buildings and an adjoining parking lot in Seattle. The redevelopment portion of the site, the Chophouse Row mixed-use office project, is the final phase of a multifaceted urban redesign led by Seattle developer Liz Dunn. Financing includes the retirement of a $2.8 million bridge loan previously provided by HomeStreet for two buildings, and construction financing for the redevelopment work on the third.

When completed in the fall of 2014, the project will increase the amount of retail, apartment and creative technology-oriented office space in the vibrant Capitol Hill neighborhood. “This is one of the first new mixed-use office projects developed on Capitol Hill in several years and will increase foot traffic and offer new space options for employers,” said Randy Daniels, HomeStreet Bank Commercial Real Estate lending director. The Pacific Supply and Manhattan buildings, which date from the 1920s, were redeveloped in an earlier phase. The third, previously known as the Chophouse, is thought to date from 1919. The Chophouse name reflects the history of the building as a music practice space, with rooms rented to hundreds of aspiring bands over three decades. The Chophouse will retain its historic facade and 80% of its interior structure as it is redeveloped into a five-story mixed-use boutique office property.

Spanning the block between 11th and 12th avenues, the project includes underground parking and over 55,000 square feet of new and existing retail, office and apartment space. The office floors feature an open plan loft design with floor-to-ceiling windows and exposed steel structure. An open-air retail plaza and pedestrian alley will connect the buildings and inspired the new “Chophouse Row” moniker. Reclaimed materials including wood, concrete and steel will complement the interior and exterior of the 11th Avenue structure. The anchor corner of Chophouse Row will be occupied by a new culinary venture from Ericka Burke of Volunteer Park Café. The ground floor of the project is currently 80% committed to a collection of local tenants that will focus on delivering morning-into-evening food, beverage and retail options to office workers, residents and visitors to the neighborhood. These tenants will occupy an open market configuration along the street, alley and courtyard.

Forty percent of the office space is committed to date to technology, media and co-working tenants, with approximately 13,000 RSF still available. Onsite amenities include a CrossFit gym, doggie daycare, event and co-working space, and indoor bike parking and shower facilities.

Demand for commercial space on Capitol Hill is strong given the growth in the residential component of the market, with almost 1,200 multifamily units to be delivered to the market in 2013-2014, according to Kidder Matthews.

“There is a growing population of small businesses and entrepreneurs who demand well-designed and stimulating work environments near great retail, restaurants and public transit,” said Liz Dunn. “This project and its nearby amenities address those needs while expanding the type of space available to appeal to a wider range of Seattle tenants.”

Ms. Dunn is the president of Pacific Chop LLC and the principal of Dunn & Hobbes, LLC. She previously developed Melrose Market on Capitol Hill, the Agnes Lofts and the Piston & Ring Building, preserving historic building elements in each project. Heartland LLC through its affiliate, HIO 12th Avenue Investors LLC, is Dunn & Hobbes’ capital partner.

HomeStreet Bank Commercial Real Estate loan officer Katie Plett originated the loan to fund construction of the office, retail and residential mixed-use development. The architects are Sundberg Kennedy Ly-Au Young and Graham Baba, and the structural engineer is MA Wright. The general contractor is MRJ Constructors, which also worked on Melrose Market.