Apartments to rise on Wonder Bread site

Seattle's old Wonder Bread bakery will come down after some 50 years as a Central District landmark.

Due to take its place: a five-story apartment complex, with monthly rents ranging from $1,200 to $1,700.

Legacy Partners of Foster City, Calif., said Monday it had bought the 1.6-acre site at 18th Avenue South and South Jackson Street for $9.4 million. Fairfield Residential of San Diego, Calif., was the seller.

Legacy plans to demolish the shuttered bakery in the first half of next year and begin work on a 250-unit complex with ground-floor retail. Opening is tentatively set for the second half of 2008.

Still undecided is the fate of the red-lettered "Wonder Bread" sign looming above the bakery. Area residents have expressed an interest in keeping the sign as a neighborhood landmark.

Kerry Nicholson, a senior vice president with Legacy in the Seattle area, said the development company is not yet sure what to do with it.

Nicholson said he expects the new apartments to appeal to workers who want to live near downtown but not pay exorbitant rents. He noted that apartments in Belltown are renting for nearly $240 a square foot, about 25 percent more than Legacy plans to charge.

Legacy is known locally for converting apartments into condos. It has two such projects, one on Queen Anne at the former high school, the other in Mukilteo.

It is turning its attention to apartments, in part, because hundreds have been converted to condos in the past few years, leading to fewer choices for people who prefer to rent rather than own, Nicholson said.

At the same time, apartment vacancies are down, and rents are up, two favorable factors for developers.

The vacancy rate in and around downtown is 3.3 percent, down from 4 percent a year ago, according to Seattle-based Dupre + Scott Apartment Advisors. Monthly rents for all sizes of apartments average $1,042, up from $984 a year ago.

"I'd call it a tight rental market," said Mike Scott, a principal with Dupre + Scott.

About 900 new apartment units opened or will have opened by the end of this year in the downtown Seattle area, up from an average 500 new units annually for the previous two years.

Even so, Scott said, development activity has not yet returned to the levels of the late 1990s, when the economy was booming and about 1,000 new units were built each year. Next year, only about 600 new units are expected, Scott said.

Developers stopped building apartments during the 2001 recession and remained reluctant even as the economy recovered. Low interest rates after the recession contributed to record home-ownership demand.

Now, with interest rates on the rise and home prices beyond the reach of many, rentals are gaining appeal, Scott said.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com