Building Up Area -- Sodo Center's Success, Starbuck's Presence Revitalizes The Neighborhood South Of The Kingdome

It's a magnet for geographic superlatives:

The largest building in Seattle.

Home of the oldest Sears store in the United States.

Headquarters of the leading specialty-coffee company in North America.

Sodo Center lends itself to big claims. Towering over aging factories and warehouses in the heart of Seattle's industrial area, the massive building a mile south of the Kingdome is hard to miss.

At night, the blazing-red SODO atop the center's faceless clock tower is a landmark for drivers along Interstate 5.

It's also a sign of a new era for the nine-story building, whose history at South Lander Street near First Avenue South is mingled with Seattle's own.

The 1.8 million-square-foot center (which in size is bigger than the 76-story Columbia Seafirst Center), with some floors longer than three football fields, was the former home of Sears'catalog-distribution center for the Northwest. But the building, which once had 2,100 workers, grew quiet after Sears closed its catalog operations there in 1987, leaving only the retail store.

Sears sold the 17-acre complex to Nitze-Stagen, a development and investment company in 1990. Along with a new owner, the building acquired a new name, borrowed from the area some referred to as Sodo (for south of the Dome), bounded by Interstate 5, the Duwamish River, the Kingdome and 100th Street Southwest.

Five years later, the building is bursting at the seams with a mix of manufacturing, distribution, retail and office tenants. There's a waiting list to lease space, but little tenant turnover.

And with its glamour tenant - Starbucks Coffee Co. - in the midst of a major expansion, Sodo Center and the area are on the verge of more change.

Sears since 1913

No matter what the sign atop the building says, First and Lander still means Sears to many longtime Seattle residents.

In 1913, the Chicago mail-order company found the wet tidelands south of Pioneer Square cheap and plentiful, perfect for building a warehouse that could expand along with business.

Within two years, Sears built another large warehouse along with the landmark tower. In 1925, when Sears moved into retail sales, it opened a Seattle store, now the oldest Sears store in the country. Both the store and the complex continued to expand over the decades. But Sears' catalog sales eventually dwindled nationwide. Sears closed the Seattle distribution center in 1987 (six years later it abandoned the venerable "Big Book" business altogether). The site's retail store continues to operate.

Enter Nitze-Stagen, which bought the property in 1990 for $12 million - considered a low price per square foot - then invested $25 million in renovations to update the building for warehouse and retail space.

Sears' decision to keep its store open helped sway other retailers to take a chance. Nitze-Stagen tore down Sears' automotive center across the way on Lander Street, built a new one at First Avenue, then constructed a building that now houses Home Depot. A 25,000-square-foot OfficeMax is on the first floor of Sodo Center.

"They said retail would never go here," said Frank Stagen, president of Nitze-Stagen, who proved those prophecies wrong, along with one of his own - that Sodo Center would always have plenty of space for lease.

Fully leased

From the start, a key marketing strategy emphasized the building's flexibility - "accordion space," as Stagen put it. Lease 10,000 square feet now, the center told prospective tenants; if you want 20,000 later, it will be available. Tenants took them up on that promise; many subsequently expanded.

One was Olympic West Sportswear, which manufactures outerwear for L.L. Bean and Lands' End. It started with 77,000 square feet in 1993; now it has 206,000 square feet, making it the building's largest manufacturer. Intermation, a record-storage and retrieval company, went from 50,000 square feet in 1992 to 125,000 today.

The center's easy access to Interstates 5 and 90 and its proximity to downtown, Seattle-Tacoma International Airport and the Port of Seattle also became good marketing tools. Dozens more tenants signed on.

And now the accordion has stopped playing. Sodo Center is fully leased, with more than half its space devoted to industrial storage and manufacturing. There is a waiting list to move in. Because tenant turnover is almost nil, the center won't add names to the list unless someone wants at least 10,000 square feet of space.

Russ Johnson, who represented Sears in the 1990 sale, said Sodo Center has become a mixed-used business park, only it's vertical.

"It's taken on a life of its own because it's so wonderfully located," said Johnson, a vice president at CB Commercial Real Estate Group.

The center's first three floors are devoted to retail.

Manufacturing and warehouse tenants are on the middle three floors. They include downtown companies that don't want to pay downtown rents just to store documents, small manufacturers, importers and familiar institutions such as Pacific Science Center, which stores exhibit materials, and Swedish Medical Center, which keeps infant incubators, heart monitors and other surplus medical equipment on site.

Starbucks expansion

Starbucks, which leased 60,000 square feet for administrative offices in 1993 on a temporary basis, decided to stay and turn the upper three floors of Sodo Center into its corporate headquarters. More than 600 workers and nearly all Starbucks offices are there. Starbucks has grown to nearly 300,000 square feet and may double its space within the next three to five years.

Starbucks reportedly looked at space in other parts of Seattle, including downtown, and at former Boeing office space in Tukwila.

No other site matched Sodo Center's expansion options and cost, said Howard Wollner, Starbucks vice president for administration. "We really feel comfortable here; we think it suits us well."

To accommodate the coffee company, two tenants had to leave a warehouse now being transformed into a 700-car garage and elevator tower for Starbucks. As leases of several other tenants expire, Starbucks will continue to expand.

Starbucks has been deliberately low key about Sodo Center but says it has built upon the warehouse surroundings to create large open offices linked to commons areas. At Starbucks, conference rooms are named after its coffees; a mock retail store is stocked with the latest Starbucks products.

Starbucks' desire for an urban campus is also the chief catalyst for Nitze-Stagen's plans to revamp Sodo Center's exterior, with trees, landscaping and park benches around parking areas, and upgrades to the building's facade.

The company's impact on Sodo Center is already being felt.

"We're already seeing an upturn in our apparel lines when the work force comes down for lunch," said Jim Peak, general manager of the Sears store. "I'm excited about the future of this location."

Those in the real-estate industry say Sodo Center's rebirth and Starbucks' presence is spurring renovation throughout the area and will bring growth in the retail and office sector south of the Kingdome.

Craig Kinzer, real-estate adviser to Starbucks, expects a further "stretching" of downtown, with low-end industrial and warehouse users eventually moving farther out to where land is cheaper.

Competition from Kent

Sodo has a low vacancy rate and virtually no vacant land. Property prices, in the range of $15 to $20 a square foot, haven't shot up partly because of competition from the Kent Valley, where there are still large tracts of land for manufacturing and warehouses at about $5 a square foot, Johnson said.

Migration to the Kent area continues, mainly because Sodo has few large contiguous parcels for companies that want to expand.

Last December, West Coast Paper Co. combined two separate operations on First Avenue South into one new production facility in Kent. Hill Investment Co. spent six months rehabbing West Coast's old 144,000-square-foot building, said Hill property manager Mark Scalzo. It's now home to Outdoor Research Inc., a sportswear manufacturer, and a distribution company that left Sodo Center to make way for Starbucks.

But many industrial users are choosing to stay and search for old buildings to adapt to their needs. Byrne Specialty Gases, which serves high-tech and research-oriented companies, has expanded three times in Sodo.

President Dan Byrne said he looked at sites in Kent and Preston but couldn't give up quick access to the area's major freeways.

"In Kent, we probably would have more land at about one-third the price and more room to grow," he said, "but it's farther away from where our customers are."