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SEATTLE-The University of Washington Board of Regents has signed off on Unico Properties’ plan to turn a 93-year-old office and medical/dental building in the heart of Downtown into an apartment complex.

The 12-story, 93,500-sf Cobb Building at 1305 Fourth Ave. is one of several office and retail properties on the University’s 10-acre Metropolitan Tract, for which locally based Unico oversees development and operations as part of its 60-year ground lease with the University, which expires in 12 years. Unlike the other buildings, however, the Cobb Building’s pipes and electrical systems desperately need upgrading.

That situation is what prompted Unico to explore options for the property, which is listed on the National Register of Historic Places. The design and permitting process will begin in January 2004, with occupancy projected for spring 2006.

As part of the agreement with the University, the board agreed to extend the ground lease term on the Cobb Building by 45 years, which will allow Unico to achieve an appropriate return on its investment. Unico says it expects the building’s conversion to apartments to increase its return from the property by at least 15%. The agreement also allows for the university to buy out Unico’s interest in the building in 2014 and at other points in the future.

The apartments, averaging 810 sf, will replace just over 75,000 sf of office space on 11 floors. The 18,000 sf of street-level retail also will be renovated. To make it happen, the entire building will have to be vacated, displacing dozens of tenants. The building is currently 80% occupied.

Unico’s vice president of development Patrick McCabe says all but a few tenants in the building have a clause in their leases that allow for early termination in the event of a redevelopment of the building. He adds three other Metropolitan Tract buildings–Skinner Building, Financial Center and the lower floors at Puget Sound Plaza—-have space available to accommodate many of the Cobb Building tenants at a lease rate similar to what they are currently paying.

The Cobb Building was the first dedicated medical dental building west of the Mississippi when it opened in 1910. Unico hopes to receive tax credits for renovating the historic property. The adjacent 316-stall Cobb garage will continue to serve Metropolitan Tract tenants and will not be redeveloped.

The Metropolitan Tract includes the properties between Union and Seneca streets and Third and Sixth avenues Downtown. Unico has developed and managed the Tract since 1953. Other major properties on the Tract include Rainier Tower, Puget Sound Plaza, Financial Center, IBM Building and the Skinner Building. In addition, the Olympic Hotel is located on the Tract and managed by Fairmont Hotels.

The redevelopment of the Cobb Building, the first one in 25 years on the Metropolitan Tract, is one of several changes Unico is making to properties there. Unico is in the pre-leasing stage for the addition of two 2,500-sf to 3,000-sf storefronts on the IBM Building property, and is in the planning stages for a major redevelopment of the bulk Rainier Square’s retail space, which is currently located in a three-level enclosed vertical mall and only 60% leased.

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