Thursday, October 28, 2004, 12:00 a.m. Pacific

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Hotel, condo conversion eyed for historic buildings

By J. Martin McOmber
Seattle Times business reporter

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Two of Seattle's historic office buildings could get new life under deals being negotiated by the city.

A Spokane developer has proposed turning the Arctic Building, at Third Avenue and Cherry Street, into a hotel. A local real-estate investment group plans to convert the century-old Alaska Building, at Second Avenue and Cherry, into moderate-priced condominiums.

Seattle is selling the two city-owned buildings to help pay for its $267 million Civic Center project, which includes the new City Hall, public plaza and Justice Center.

The deals — which must be approved by the City Council — are expected to be completed by early next year, but the city would not disclose the proposed sales price.

For years, the buildings have been used for city office space. But they are considered among Seattle's architectural gems.

When it was completed in 1904, the 15-story Alaska Building was Seattle's the first modern "skyscraper." Built with a steel frame, it was the city's tallest building until 1911.

The nine-story Arctic Building, completed in 1914, is best known for its ornate Dome Room and the whimsical walrus heads on its terra-cotta exterior.

Both are protected under the city's historic preservation regulations.

At least 14 investment groups submitted proposals for the buildings since the city put them on the market in June, said Mary Pearson, the city's director of real-estate services. The city selected the buyers based primarily on the amount they were willing to pay and on their ability to finance the deals.

Developer Robert Brewster plans to turn the Arctic into a 113-room hotel. It would not be the first historic rehab for the 35-year-old real-estate investor. He renovated Spokane's century-old Montvale Hotel and transformed that city's historic Holley Mason Building into high-tech office space.

The Arctic started life as a high-end club that included hotel rooms, and Brewster hopes to restore the feeling of its early years. The building will require an extensive interior renovation and seismic upgrades.

"We have a long road ahead of us and have a lot of hurdles to clear in the coming months," Brewster said.

Converting the Alaska Building to condominiums will also require major work. But Kent Angier, president of Kauri Investments, said the building's location near Pioneer Square, the waterfront and the city's financial center make the project worthwhile.

"It has a number of challenges, but we are very excited about doing it," Angier said.

Kauri is teaming up with Ariel Development, the firm renovating the former Rainier Brewery into artists' spaces.

The Alaska Building would differ from most high-rise condo projects proposed for downtown. Instead of targeting the luxury market, Angier plans to aim the 700- to 800-square-foot units at first- or second-time home buyers.

J. Martin McOmber: 206-464-2022 or mmcomber@seattletimes.com