Executive Group luxury project will cost $200 million
Joanne Lee-Y
Sun
Artist’s rendering of the AVA project, planned for the heart of Seattle’s retail district.
Vancouver-based The Executive Group is splashing into the Seattle market with a $200-million, 39-storey luxury hotel and condominium tower in the heart of the city’s retail district.
The announcement on Monday comes as other Vancouver developers have been forced to halt projects down south, but also as Seattle emerges as a bright spot in the faltering U.S. real estate market.
The Executive Group will work with Tukwila, Wash.-based FANA Group to develop AVA. The first 17 floors of the skyscraper will be occupied by Hotel Ava, which will be topped by about 200 condo units. On the ground floor, there will be a 4,000-square-foot restaurant, a 3,000-square-foot spa, a business centre, and meeting facilities that spill out onto street-level boutiques, restaurants, theatres and nightlife. Construction is targeted to begin next year and completion in 2010.
“We have had success with this model in Vancouver,” said Salim Sayani, CEO of Executive Group, in an interview. “The market in Vancouver has been receptive to downtown mixed-use living. Now that it is more mature . . . and the availability of quality downtown Vancouver development sites has been very limited for a long time. . . . We are transporting the model into the core of Seattle.”
Sayani is expecting between 15 to 30 per cent of buyers at Ava will have “some sort of Canadian residence. Our strategy is to have more product available across the border as the strong Canadian dollar gives this market stronger buying power there.”
Recently, Vancouver developer Nat Bosa stopped construction on a 28-storey tower project in Irvine, Calif., citing oversupply, as well as the collapse of the American subprime mortgage sector. Other Canadian firms that had similarly jumped into the once red-hot U.S. market are also holding projects.
In fact, Executive Group itself is facing these issues too, even though it hasn’t actually had to stop any projects yet, said Salim.
“It’s a market that has seen a downturn in the last months. It appreciated very quickly and there was lots of supply jumping in quickly.”
He emphasized, however, that Seattle is less scathed by these woes. “Seattle never went through the same kind of boom, so it’s not going through the bust,” said Sayani. “The fundamentals in Seattle are very strong. It never saw those 40 project announcements with prices doubling, tripling in the last few years. Instead, it has seen more solid seven-, eight-, and nine-per-cent gains.”
“We have spent time speaking with lenders who are on the pulse of these things. They say that outside the core of Seattle, on the periphery, there are signs that appreciation is slowing and there is some depreciation. But because of job growth in Seattle, they don’t predict the same thing in the downtown market,” said Sayani.
He also differentiated Seattle by pointing to the way wealth has generally been accumulated there. “It’s a corporate base for Microsoft, Starbucks, Amazon, and Boeing, with lots of real wealth. It’s not on-paper, real-estate wealth based on property appraisals. Instead, a large number of senior executives from these corporates have seen their interest in their companies go up considerably. They have actually cashed out and are developing new companies and are entering the housing market. That’s what makes Seattle unique and stable, while the rest of the country goes through the falls.”
Indeed, there are others who think the same. Last week, Forbes magazine teamed up with credit research company Moody’s Economy.com to release a real estate study ranking the 40 biggest cities in the U.S. After assessing the state of local economies, new construction contracts, foreclosure rates, inventory, sales rates and local credit markets, it ranked Seattle at the top of two out of three prediction models, one for home price growth and the other for delinquency and foreclosures.
Man economic indicators are poor nationwide, it said. “Unless you live in Seattle, where the market is slowing but fundamentals remain strong.”
