Tide turned on Doc Freeman's

Lee Knudsen might have shaken his head and laughed at the sign announcing tomorrow's liquidation sale at Doc Freeman's.

Over the past half-century, Knudsen, his dad and Doc himself built the store's reputation for having any part for anything that floated. They amassed parts largely by picking through the remnants of floundering and failed marine businesses, sometimes sending tractor-trailers as far as the East Coast to haul back a bounty of parts.

What's left of Doc's will be sold at tomorrow's auction, adding the company to a growing list of former Seattle institutions, such as Chubby & Tubby and Warshal's, that no longer are waypoints on the city's cultural landscape.

Doc's demise wasn't inevitable, even as chain stores such as West Marine moved into the area and the Internet offered hard-to-find parts more cheaply.

As recently as the late 1990s, Doc Freeman's was making good money for its owners and the nearly 75 people who worked there.

Before Knudsen died this summer after a 22-year battle with Parkinson's disease, he orchestrated a series of land deals, with help from Fremont real-estate investor Suzie Burke, that he hoped would ensure the company's future.

Instead, he ended up mortgaging his Ballard home in a bid to save his beloved store from a downward spiral of missteps and bad luck that would cause its demise.

The original 'Doc'

Orrin Henry "Doc" Freeman opened his marine store in 1947 after several years of stockpiling parts and boats the military was dumping. He built the shop at the Fremont marina he owned, where he had lived with his family in a converted ferry and later a converted fishing scow.

"They had stuff stashed all over town, and they figured they would get in the supply business," recalled his son, Mark Freeman, who still owns the property. "Through auctions, they bid on all sorts of stuff ... it was incredible. We bought literally thousands of motor launches from the Navy yard."

After five years, Doc Freeman sold the store to two employees, Pete Knudsen and Bob Braas, who built the business around the motto "If Doc's doesn't have it, it probably doesn't exist," while grooming their sons, Lee Knudsen and Chuck Braas, to someday take their place.

In the following decades, Doc's prospered with the area's fishing fleets and the growing number of recreational boaters.

For generations of boat owners, visiting the original wood-floored store to browse the tight-packed shelves and countless cubbyholes for valves, varnish, rope and thousands of other items was part of the whole boating experience. It's what made Doc Freeman's a special place for anyone around here who made their living from boats or simply took pleasure from them.

"Doc Freeman's was like walking into a graduate program in esoteric maritime stuff," said Dick Wagner, founding director of the Center for Wooden Boats. "It was an education center, a therapy center, and I wouldn't be doing what I'm doing now if it wasn't for Doc Freeman's."

After Chuck Braas died while scuba diving, Lee Knudsen bought out his father and Bob Braas in 1985.

Business grows

Doc's continued to grow in the 1980s and 1990s, and Lee Knudsen began buying property around Fremont. The store outgrew its 15,000-square-foot home, which Knudsen still leased from Mark Freeman, and opened separate outlets for galley items and boating clothes on Stone Way North, just up the street from Doc's.

Knudsen had picked up the properties for the shops in a foreclosure auction in the late 1980s. He also bought land farther east in Fremont. Eventually, Knudsen owned land worth nearly $4 million, said his wife, Connie Knudsen.

But he was willing to trade nearly all of it for a chance to buy a vacant former Ernst store on Leary Way Northwest near the Ballard Bridge, where he hoped to build Doc's "empire."

For Knudsen, the 40,000-square-foot store was a chance to consolidate the company and give it room to grow. It was close to the water and close enough for customers, and the company would finally own the property and the store.

Knudsen had no room to expand in Fremont, and rents were rising along the waterfront.

"We only had 15,000 square feet here, and he got a chance to double or triple the space," Freeman said. "So he took it."

But not without a complex deal.

Knudsen tried to contact the company that gained control of the property after Ernst's bankruptcy, but was brushed off, his wife said. So he and Burke, the real-estate investor, crafted a deal that would allow Freeman's to eventually own the store and half of the two-acre property.

Burke divided the property in half, with the parking lot going to developer David Sucher, who planned to build a $2 million retail and office building there, city records show. Burke then leased the former Ernst Building to Doc Freeman's with an option to buy it for $3.5 million.

As part of the deal, Burke also bought one of Knudsen's Fremont properties for $1 million, which paid for Doc's renovations of the Ernst building. Knudsen planned to buy the Ballard building from Burke after he sold his Stone Way properties.

"He could have been in the building free and clear," Burke said. "And then he got sick."

Many questioned the move to Ballard. A big part of the Doc's experience for many boaters was going to the cramped, musty store itself. Customers wondered whether Doc's would change for the worse.

"It has been a slow, steady decline," said Mike Kenney, marketing director for Fisheries Supply, a locally owned boat-parts store. "One of the biggest things that hurt Doc Freeman's was when they moved away from the waterfront."

Doc's decided to sell as much of its 70,000-item inventory as it could before the move, in hopes of raising cash and cutting moving costs. The fast-moving items flew off the shelves, but not the obscure stock, so when the store opened its doors at the new location in late 1998, there was a problem, said Bill Dreewes, Doc Freeman's president.

"The reality was 20 percent of our inventory produced 80 percent of our income," said Dreewes, who took over day-to-day operations after the move. "I found out in short order (that) we didn't have the appropriate inventory in stock. So we ordered stock like mad, but unfortunately, when you order, it takes months, and we were behind everyone else in the industry."

Among employees, the initial excitement about the new store was replaced by growing unease. In an effort to cut costs, the company laid off some employees. Others left and weren't replaced. Service and expertise, a hallmark of Doc Freeman's, suffered. Meanwhile, customers grumbled more and more that Doc's seemed to have every part but the ones they needed.

"We noticed when it started taking a while to get parts," said Norm Dibble, a 30-year employee who specialized in marine engines. "You could detect problems."

Deals fall apart

Meanwhile, Knudsen's real-estate plans began to unravel.

Although he had found buyers for the Stone Way properties that would have pumped cash into the company and provided the money to buy the store, the deal started to fall apart after an inspection found petroleum contamination in the groundwater.

"We spent $175,000 to determine what the problem was, and ultimately we determined it was substantially polluted and was most likely coming from an off-site piece of property," Connie Knudsen said. Doc's has a pending lawsuit against a company that used to have a gas station nearby.

While the store struggled to hang onto customers, the long-planned development on the neighboring property started. Sucher had sold to another developer, Michael Mastro, who built a four-story office building.

Doc's had relied on the vacant lot for parking, even though it was supposed to provide parking behind the store. Dreewes said Doc's needed the storage space it had in the back.

Knudsen decided Doc's had to move again, this time to a former Longs Drugs on Eighth Avenue Northwest, farther from the water and farther from the Doc's that customers loved.

The new store allowed the company to cut costs dramatically, Dreewes said. It was half the size and half the rent of the Ernst site. The number of employees had been cut to 23. They hoped the change would help the company stop its downward spiral.

The move meant Doc's broke its lease with Burke.

"Truthfully, if it was anyone other than Lee, I would have sued," Burke said. "I told Lee he had to give me something to terminate the lease, and he sold me the (Stone Way) property they were unable to sell."

Burke paid $500,000 for the land. Knudsen kept $50,000 and poured the rest back into the store to stock up the inventory. By then, Doc's had mortgaged other properties just to pay key suppliers.

Knudsen quietly tried to sell the store or find an investor to help turn it around, but no one was willing to take the risk. In May this year, the company filed for Chapter 11 bankruptcy protection to stave off creditors.

"We went into Seattle's venture-capital community, and no one was interested in buying Doc Freeman's," Connie Knudsen said. "We couldn't get them interested in one lousy million dollars to buy Doc Freeman's."

Knudsen died in July. Two months later, Doc Freeman's closed for good.

J. Martin McOmber: 206-464-2022 or mmcomber@seattletimes.com