Seattle's venerable Smith Tower sold

Seattle's iconic Smith Tower and an adjacent two-story building sold for $47 million Thursday to a real-estate investment trust that has been snapping up downtown property recently.

Walton Street Capital of Chicago made an unsolicited offer for the historic buildings.

The high-rise known for years as the Tallest Building in the West had belonged to Samis Foundation since 1996, when it paid $7.47 million at a liquidation sale. Samis spent $28 million on a major renovation a couple of years later.

Samis had not intended to sell the ornate Smith Tower so soon, but the offer was too good to pass up, said William Justen, the foundation's managing director of real estate.

"We were planning on holding onto it for a long time, but the offer was good enough and made us think," Justen said. "We're taking advantage when the market is strong for selling properties."

The foundation owns 500 properties in the state, including 40 in Seattle.

Walton Street also bought the two-story Florence Building, originally called the Florence Theater, which houses part of the mechanical infrastructure for Smith Tower. The front half of that building has office and retail space.

Both buildings are in the Pioneer Square Preservation District, meaning that renovations and add-ons are carefully monitored.

Walton Street last year paid $345 million for four downtown properties — the three-building Metropolitan Park complex and the older Park Place building.

It is the 20th owner of the Smith Tower, completed in 1914, which stands at the corner of Second Avenue and Yesler Way. Previous out-of-state owners include Northwestern Mutual Life and GE Credit Equities.

"We're proud to have the Smith Tower entrusted in our care, and we will continue to be good stewards of this exceptional property," Walton Street executive Perry Pinto said in a statement. Calls to the firm's office were not returned.

Local real-estate experts were heartened by the price tag, which comes to roughly $186 per square foot. That's far lower than the $280 a square foot Walton Street paid for the four downtown properties last year, but is a healthy price for such an old building.

"It's a high price and another vote of confidence for Pioneer Square and south downtown," said Seattle developer Greg Smith, whose father was part owner of the tower in the 1970s but who is not related to the man who commissioned it in the early 1900s.

Many of Seattle's large buildings have traded hands at good prices in recent years, making real-estate investors more creative and aggressive, said Scott Eshelman, senior director of the real-estate firm Cushman & Wakefield.

"There are a lot of people with appetites trying to find buildings here that would be available," he said. That has led to unsolicited offers like Walton Street's bid for the Smith Tower.

Eshelman doesn't expect sales prices to rise significantly, although higher occupancy rates could lead to higher rental income and somewhat better sales prices.

Kip Spencer, co-founder of the listing service Officespace.com, said the sale could turn more attention to Class B Seattle properties.

Most downtown real-estate activity in recent years has centered around Class A properties, which are typically modern buildings with state-of-the-art systems, elevators and air conditioning. Though upgraded during the renovation, the Smith Tower is Class B, with lobbies and elevators that are deemed city landmarks.

"Most of the sale activity has been on trophy, Class A properties, and I think there's a little sentimental value factored into this purchase," Spencer said.

The Smith Tower was built by typewriter and gun tycoon Lyman Cornelius Smith, of Smith Corona and Smith & Wesson. For decades, it was the tallest building west of the Mississippi.

Fireproofing was a major concern when it was built, said John Chaney, executive director of Historic Seattle, a nonprofit. As a result, only the building's handrails were made of wood; the rest of the structure was steel and terra cotta, including its steel office doors and trim.

Samis has received offers for the Smith Tower in the past, but none was the right price. Typically the foundation holds property for decades and sells about two buildings a year, Justen said. The foundation still owns the Butler Garage across from the Smith Tower.

Walton Street has hired commercial property managers Wright Runstad & Company to run the property, Justen said.

He also said the building has a 92 percent occupancy rate, and predicted that rents probably will increase, as they have nationally, but made clear that he can't speak for Walton Street.

The Smith Tower's largest tenants include Disney Internet Group and Providence Health & Services. Microsoft has plans to move in this June, marking its first office presence in downtown Seattle, Justen added.

"We love the building and hate to see it sold," Justen said. "But we'll still be around to keep an eye on it."

Melissa Allison: 206-464-3312 or mallison@seattletimes.com