Paul Schell -- Cornerstone Article Tells Part Of Story, Deserves Response

The Seattle Times' article Oct. 14 regarding Paul Schell and Cornerstone Development Co. only tells part of the story and deserves a response ("Schell built big, but projects lost big").

The underlying principle behind the formation of Cornerstone was that re-developing on a neighborhood scale, in an area such as this run-down part of downtown Seattle, was a necessity in order to reduce the development risk.

It needed to be bold and be done on a neighborhood scale, as this was a neighborhood that people perceived as unsafe and were afraid to go out at night.

By mixing the uses, with the emphasis on building a residential neighborhood, a "critical mass" could be created that would be successful from both an economic as well as a social standpoint, but any of this is subject to stabilized market conditions, just like any other real-estate development.

Cornerstone was economically successful for its owners through the mid-1980s, but as markets began to change, what "penciled out" a few years earlier changed with the market. This is a fact of life in the development business; just ask Unico, Prescott, Herman Sarkowski, Wright Runstad or Martin Selig.

Literally, hundreds of millions of dollars in value were lost in the latter part of the 1980s and early 1990s in real-estate projects throughout the Northwest. If one had the resources to "weather the storm" and "ride it out," these lost values would return just as they always have done in previous cycles and have now done in Seattle.

The city of Seattle even took advantage of this market condition by acquiring the AT&T Gateway Building at a bargain price.

If, on the other hand, for whatever reason, you decide to unload quality real estate with excellent locations, at the bottom of the market, at fire-sale prices, as was decided at Cornerstone in 1988-1990, the results are inevitable.

The bottom line of the Seattle Cornerstone project was that it was a visionary project that retrofitted six blocks of downtown Seattle containing decaying structures, porno shops, pawn shops, adult book stores, vacant and dirty store fronts into a functional and exciting part of the city.

This is now a neighborhood where a cross-section of people live, commute by foot, not by automobile, walk to work in the morning and are able to walk their dog at night. It's a major downtown project that is still human in scale.

It was orchestrated by Paul Schell, a man who looks at things differently than most developers. It was a pioneering effort that led the way for what is the vibrant downtown residential character that Seattle is known for today.

Jim Youngren Co-founder and partner Cornerstone Development Co., Seattle