Developers Create Lifestyles Renters Enjoy For Long Term

Triad

Development Inc.

-- Founders: John Goodman, Frederick Grimm, John Comick.

-- Employees: 14

-- Business: Real estate development with an emphasis on multifamily housing.

-- 1989 cost of developments: $41.3 million

-- Expected 1990 cost of developments: $65.8 million

-- Developments under construction: 1,242 apartment units.

-- Strategy: Develop full-service apartment communities that satisfy lifestyle demands while maintaining corporate flexibility to react to real estate cycles.

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``Try to explain a wetland to a Texan.''

Fred Grimm of Triad Development held his hands out and smiled. He was illustrating why he and his partners, John Goodman and John Comick, all Seattle natives, had a good feel for the region and why some out-of-state developers have a hard time getting it right.

Triad Development develops apartment projects in the Puget Sound area. Grimm likes to point out that the company ``creates,'' not builds. It leaves the building to contractors, preferring to concentrate on conceptual design, marketing and management.

Triad completed its first project, Huntington Woods in Seattle, in 1986, and now has 11 projects in operation. Another three are under construction and three more are being designed.

Triad buildings are designed to reflect the changing needs of renters, said Grimm. Depending upon the neighborhood, some projects are as small as 50 units and others number in the hundreds. Current projects have pools, basketball courts, jogging and biking trails, fax machines and day-care centers, and cater to single people as well as families.

Signature Pointe, now under construction on a bend of the Green River in Kent, will have 624 units and eventually house a population larger than many cities, said Comick. The combined greenbelt and bike and jogging path will be as large as the largest park in Kent.

``We know full well that we are basically developing towns,'' said Comick. ``And we try to put a whole lot of thought into it.''

Each of the three contribute a different skill to the business, thus the name Triad. Goodman provides the financial and management perspective, Grimm is the organizational expert and Comick focuses on development concepts and works with architects and contractors.

Stuart Wilson, a Seattle investor and friend of the three, says that if the partners were the Wright brothers attempting to build the first airplane, Goodman would be selling tickets, Comick would be doing a a market survey to determine what color to paint it, and Grimm would be contemplating if man was really meant to fly.

Grimm adds that they also would be hiring somebody else to design and build it.

``None of them alone would be successful at all,'' said attorney Mike Kuntz, of the law firm Foster Pepper and Schefelman. He provides legal counsel to the company and has been friends with all three for many years.

``More seriously, they are honest, straight-forward businessmen who earned a good reputation early on in the game. When they say they are going to do something, they do it, and you can get a lot of mileage out of that.''

The company wins industry awards for its designs. It earned a Seattle Master Builder Merchandising and Marketing Excellence Award (MAME) last year for On the Green at Harbour Pointe in Everett. But Triad is just as proud of its reputation in the communities where it builds its projects.

When a 64-unit building was proposed in Wallingford, residents prepared for a fight to stop it. Grimm and Comick went to meetings and listened, then pared the project to 52 units and changed the overall design.

Grimm shrugged at the memory of the extra work involved. ``I walked around at night carrying blueprints to show neighbors in the area,'' he said. ``I knew we had an attractive building and wanted to talk to people about it.''

``Why fight?'' said Goodman. ``We'd rather negotiate and satisfy the community and build something that is an advantage to everybody.''

Kathleen Brown, a Seafirst Bank vice president, said she has been consistently impressed with how Triad can work with neighborhood groups, put up a complex and make money. For those reasons, she said, lenders are willing to work with the company.

``We are conservative,'' said Grimm. ``And the way we are received in the community is important to us. We don't want to fail.''

Goodman says Triad's strategy is to sell its conceptual and marketing skills rather than emphasize production. Grimm said that most developers come from a construction background.

``This makes the difference between us and others,'' said Goodman. ``We take the time to design. Then we can build a better product, but keep rents the same.''

Grimm, an attorney who directs projects through the maze of permits required by various departments, acknowledges that developers need to address environmental and community growth concerns. But he doesn't think developers deserve the tag of villain simply because they are providing the kind of housing people want.

``It isn't like in the movie, `Field of Dreams' where they say `if we build it, they'll come.' We're the effect, not the cause,'' he said. ``We can't put an ad in the L.A. Times inviting people to come rent our apartments. If somebody wants to place blame, point at Boeing or Microsoft, not us. People are coming here because there are jobs and a good quality of life. The business community had better wake up to the potential problems caused by a housing shortage if an antigrowth sentiment continues.''

Triad's buildings have been called ``up-scale,'' but rents fall in the moderate range between $500 and $800 for single and family-style units. Grimm says Triad's surveys show that many people have abandoned attempting to buy a home and are content to rent. Triad also surveys renters after they move into a Triad project.

Grimm calls it ``renting to existing tenants,'' and says it is cheaper to keep a tenant satisfied than to look for somebody new.

Comick, who works on site with contractors, says they sometimes don't understand why he insists on putting extra money or square footage in a unit. But he has a survey in his pocket telling him what the customer wants.

``Contractors will in many ways try to make it less expensive, which is more efficient from the contractor's standpoint,'' said Comick. ``But it is less livable from a resident's standpoint. Our objective is to build neighborhoods for people over a long term.''

When Grimm was confronted with deciding on the design of the basketball court at Covington Farms in Everett, he chose a hardwood floor and glass backboards over less-expensive materials.

``It cost an additional $5,000 and an old-school contractor would call that a waste of money. But if the units rent up that much faster as a consequence, and the tenants stay because they like what they've got, then you are way ahead. That's where our surveys come in. We know if an item is seen as necessary by a tenant. And we have found that the sizzle is worth the extra cost.''

Some developers protest added expenses because they reduce profits, but Comick disagrees with that line of thinking.

``We are looking at owning buildings over a long term and not thinking of making a large profit right away,'' he said. ``This is different from other developers who build cookie-cutter apartments that never change. As long as they can slam it into a site, it is fine to them, regardless of how well it works for the residents or the neighborhood. Our philosophy is examining how the building is going to work today, five years from now, and 10 years from now.''

One of the ways that Triad can afford to make such decisions, said Grimm, is by being selective about the property on which it builds.

``We search long and hard for the right property that makes sense and pass up on a lot of pieces that don't meet our parameters,'' said Comick. ``Because in some cases property can be good but you end up meeting community opposition for three years. That's not what we want to do.''

As part of the design element, Triad develops themes to give an identity to its different apartment sites. It tied On the Green at Harbour Pointe to the golf course, decided on a waterscape for Covington Farms, and put up cedar siding and kept the trees at Lexington Downs. Signature Point will focus on the Green River, which wraps around the buildings.

``We found early on that people don't rent a single unit, they want to buy into a lifestyle,'' said Goodman.

Triad's goal is to continue building from between 500 and 2,000 apartment units a year, but development costs continue to rise as available land shrinks. Signature Point, which will open in two months, is appraised at more than $39 million.

``Much of the growth we are seeing is in-place,'' he said. ``It is caused by changing lifestyles and children growing up needing places to live rather than in-migration of new people. Houses on my street where I grew up on Capitol Hill had five to 10 children in them. Today those homes have maybe one child or none.

``There are no easy solutions to this. It just means finding more creative ways to solve housing problems. We're trying to find the reasons people stay somewhere. Someone can build a bigger unit and charge more, but what it really comes down to is the quality of life.''

Strategies appears weekly in the Business Monday section of The Seattle Times.