The Benaroya Company, Tourmaline Capital, Teutsch Partners and KG Investment Management are vying for the lower lot and all propose to pursue retail, office and medical uses.
Main Street Properties, Lake Union Partners, Polygon Homes and Intracorp are competing for the upper lot, proposing various apartment and townhouse projects.
“This is where these guys all kinda have to sharpen their pencils,” Kenmore City Manager Rob Karlinsey said. “They’ve given us what they call first round offers but now we need final offers. They’ve given us what they’d pay for the land but we’re not disclosing that right now because they’re all still in competition with each other. But we want them all to sharpen their pencils and improve their offer and terms. We also want to see which ones we’re most comfortable working with. That’s what the process over the next few weeks is going to be: figure out which ones we want to give the wedding ring to.”
Late last year, the city retained two brokerage firms to list the Kenmore Village properties for sale, following an extensive public involvement process to reconfirm the goals for the downtown area and develop a “Position Statement” for the properties.
Karlinsey said 15 total offers were brought forth and he and consultants interviewed all the potential buyers for the city-owned property made available after then-developer Urban Partners and the city parted ways in a separation agreement in 2010 after a five year relationship that got bogged down in an economic free fall.
The city manager said he’d love to see a purchase and sale agreement approved by the end of April, early May the very latest.
“I’ve already had a second round of interviews with all of them so I already have my preference on who I think will make the best offer … I’m already starting to zero in on a couple but they’re still all in play at this point.”
Karlinsey said Kenmore is now taking a bit of a different approach to the sale of the land, after its unsuccessful experience with Urban Partners, which never owned the property.
“One thing we’re doing that may be different from other cities in similar situations is we’re actually getting the property off our books and just letting the private sector do their thing. Kenmore and Urban Partners courted for five years and the land was tied up while they (UP) were waiting for all the right market conditions, tenants and all that. They weren’t willing to pay cash for the land until they had certain conditions met, like critical mass of tenants and other things.”
Karlinsey continued: “So that’s where cities have risk because they own the land while developers try to figure things out. Here we’re shifting the risk, saying you just take it and you figure it out. We may have some strings attached to the purchase and sale agreement; we may say you have to be under construction or X square feet completed within so many months or we have the ability to buy it back for what you paid for it. Bothell does stuff like that.”
One of Urban Partners’ downfalls was its inability to secure an anchor store in the shopping center. Karlinsey said that may no longer be a problem, with Kenmore Camera, the local business icon, in the process of relocating to a more expansive site across the street in the lower lot.
Other than that, have the retail developers locked up any new tenants?
“Not yet,” Karlinsey said. “They’ve told me who’d they go after. A couple right out of the gate said they’d go after a specialty grocery store…but something that doesn’t compete with Safeway. There may be a little overlap but something that’s more of a natural foods store, like a PCC or a Trader Joes.”
So are these good days to be a Kenmore city manager?
“Very much so,” he said with a smile. “This is really thrilling because of the high quality of developer interest. We had 15 total proposals and they were all great. These four (for each lot) that remain are the cream of the cream. The broker was really surprised with what quality money is now coming after this site.
Any one of these (buyers) would be awesome. That’s the dilemma and it’s a good problem to have on our hands.”