Landmark Smith Tower mostly vacant
Seattle's landmark Smith Tower is now at least 70 percent vacant; also, some former InfoSpace executives are off the hook in lawsuit alleging tens of millions in improper payments to option holders.
Thanks to the recession and Washington Mutual's collapse, there's no shortage of vacant office space in downtown Seattle. One of the emptiest buildings also is one of the region's best-known and most-loved.
The 95-year-old Smith Tower, once the tallest building west of Chicago, is at least 70 percent vacant, according to online listings and commercial real-estate databases.
The street-level retail spaces along Yesler Way and Second Avenue are empty save for a Starbucks. Upstairs, every floor from 8 through 17 is unleased and unoccupied, as are 19, 20 and 21. The fourth and fifth floors, vacated by Microsoft, are available for sublease.
The Smith Tower's owner, Walton Street Capital of Chicago, isn't advertising any available suites on floors 22 through 33, in the skinnier, needle-looking part of the tower. Office tenants occupy at least some of that space.
But Cleita Harvey, a principal with Urbis Partners, the building's leasing agent, said in an e-mail that only one- to two-year leases are being negotiated on those floors while Walton Street continues to consider converting them to luxury condos.
Walton Street bought the 257,000-square-foot Smith Tower for $43 million in April 2006, when the market was nearing its peak and the tower was 92 percent occupied, according to its previous owner.
Less than a year later the new owner sought — and ultimately received — city approval to convert the entire building to condos, a move prompted, in part, by the impending departure of the tower's two largest office tenants.
Michael Allmon, Walton Street's local operating partner, told the city's Pioneer Square Preservation Board in March 2007 that residential use probably made more sense because most office tenants wanted buildings with more space per floor and other features the Smith Tower just couldn't offer, despite extensive upgrades in the late-1990s.
When the downtown condo market began to cool later in 2007, Walton Street scaled back its condo-conversion plans to just the top 12 stories.
But it hasn't pursued permits for that scenario for more than a year, city records indicate.
Meanwhile, the building has emptied. Allmon declined to answer questions about the Smith Tower's future — or its present.
Seth Howard, who owns the nearby Collins Pub, says the exodus has hurt his business.
A few months ago, he said in an e-mail, he printed posters and taped them to the tower's walls, hoping to draw attention to the building's empty state and prod its owner into making some deals.
"Will the last person to leave the Smith Tower please turn out the lights?" one read.
Building management was not amused, Howard said. The posters came down.
— Eric Pryne
Some ex-execs off the hook in InfoSpace suit
A King County judge this past week dismissed four former InfoSpace executives from a lawsuit that alleges the company arranged "a sweetheart deal" for management and board members to reap millions of dollars in "compensation" for the decreased value of their stock options when it distributed a half-billion-dollar special dividend to shareholders.
But Superior Court Judge Barbara Mack ruled the lawsuit can proceed against James Voelker, formerly the CEO and now chairman of InfoSpace, and six current or former board members who weren't part of the management team.
The suit, filed in December in what's known as a derivative action on behalf of the company, seeks the return of tens of millions InfoSpace paid in special "make-whole" and "tax gross-up" benefits to the executives, board members and other option holders. Voelker received $33.7 million from the plan, while four board members collectively received more than $1.3 million.
The suit claims the special payments ate up more than 25 percent of the total current assets InfoSpace had left after paying the massive dividend to stockholders.
Mack ruled that InfoSpace officers who weren't on the board and hadn't been involved in creating the compensation plan couldn't be sued. But Voelker was involved in crafting the plan, according to company filings cited in the case.
Attorney Dave Simmonds, who filed the case along with the Gordon Tilden Thomas & Cordell law firm, said he'll seek to hold those still named in the suit responsible for the entire sum of the allegedly improper payments — at least $50 million.
An InfoSpace spokeswoman welcomed the dismissal of claims against four defendants, but said the company couldn't comment in detail because of the continuing litigation.
Comments? Send them to Rami Grunbaum: 206-464-8541 or email@example.com
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