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May 23, 2017

Developer buys Midtown Center, partners with African-American community on 550-apartment project

Puget Sound Business Journal

Marc Stiles

Seattle's African-American community has secured a big role in the redevelopment of one of the city's last hubs of black-owned businesses.

Lake Union Partners on Tuesday acquired Midtown Center, a retail center at the rapidly developing Central District corner of 23rd Avenue and East Union Street, for $23.25 million.

In a pioneering move, the Seattle real estate company is partnering with land-preservation nonprofit Forterra and a group called Africatown Community Land Trust on a six-story development with around 550 apartments and commercial space. Nearly half of the new apartments will be affordably priced.

Lake Union Partners will sell a fifth of the block to Forterra, which will be the interim buyer on behalf of Africatown.

Backed by Seattle-based investment firm HAL Real Estate, Lake Union Partners will build as many as 420 apartments and 20,000 square feet of retail space, while Africatown/Forterra will develop around 130 apartments and 3,100 square feet of commercial space.

Lake Union Partners and Africatown and Forterra said that ideally they would like to build both of their projects at the same time and share design and construction team resources. The team plans to start the city's design review process later this fall.

Lake Union Partners bought Midtown Center from the longtime owners, the Bangasser family. Brokers Rob Anderson and Jason Rosauer of Kidder Mathews marketed the property for sale for the family.

The black community's ownership stake is an extraordinary example of "inclusive development," which typically means a developer hires minority community members to build a project that includes small shop spaces for neighborhood businesses, thus giving residents an opportunity to share in the wealth wrought by the region's unprecedented real estate boom.

Not long ago this was unfathomable in the rapidly gentrifying neighborhood, where rising rents have displaced African-Americans, driving down the black community's presence in the area from 36 percent of the population in 2000 to 12 percent in 2015.

"What I heard a lot was, well, (gentrification) is just what happens," said Wyking Garrett, president of Africatown.

Africatown, created by Garrett and other black community leaders, works for community ownership of land in the Central District. Africatown Board Member Kenny Pleasant, a real estate broker, called it "an historic partnership."

Africatown is the first of its kind community land trust in Seattle, and it came together with backing from the city, Forterra and Yesler Community Collaborative, a Seattle group that promotes equitable development.

Africatown and Forterra previously worked on a similar ownership arrangement with a pair of Florida-based developers, though that deal fell through.

Lake Union Partners has developed two new apartment buildings around 23rd and Union and is building a third.

"We were rooting (Africatown and Forterra) on, thinking this was going to be a good addition to the neighborhood," said Joe Ferguson, a principal at Lake Union Partners, which made an offer to buy Midtown Center when the Florida companies ended their development bid. "Once we had it under contract, we said, 'Hey, we'd like to pick up where (the previous group) left off,' and off we went."

For the full story, go to Puget Sound Business Journal.

© 2017 American City Business Journals. All rights reserved.

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