Unique ‘Regional Center’ Designation Finances $235M Mixed-Use Project in Suburban Seattle
- Feb 23, 2010
February 23, 2010
By Barbra Murray, Contributing Editor
Twin Development L.L.C. has found a way around the chilly lending market. Having successfully attained the United States Citizenship and Immigration Services’ “Regional Center” status for the City of Federal Way in Washington State, Twin Development can now rely on funds from the EB-5 Immigrant Investor Program to finance the bulk of the $235 million Sky Hotel & Residences. No bank financing will be involved.
Also known as the Investor Green Card program, EB-5 paves the way for foreign investors to participate in new commercial enterprises that will aid the U.S. economy in return for receiving practically all the benefits of U.S. citizenship. The federal program requires a minimum investment of $1 million from each applicant and allows them to take up residency and work in the U.S. within months of making the investment. Twin is targeting investors from Asia, for the most part, anticipating that the high Asian population in the area will serve as a magnet of sorts.
With a location on a 1.9-acre parcel about 20 miles south of Seattle, the 45-story Sky Hotel and Residences will feature 400 condominiums, a 120-room hotel, 20,000 square feet of retail, 16,000 square feet of office space, 18,000 square feet of meeting space and a 5,000-square-foot day spa. While ample parking will be provided–below grade facilities will accommodate over 700 vehicles–transportation is one of the project’s key themes. The new Federal Way Transit Center is across from the development site, providing access to 15 regional routes and an anticipated connection to the Link light rail system. Additionally, SeaTac International Airport is just minutes away.
If Twin’s timetable goes as planned, Sky Hotel and Residences will make its debut in 2014. But even with a scheduled completion four years down the road, some developers may find the idea of building so many condos risky, given that demand is near rock bottom across the country.
Twin, however, is not intimidated by the presently lackluster market. “We expect the majority of our investors to take advantage of the option to convert their investments into the ownership of one or two condos in the project,” Steve Smith, a partner in Twin Development, told CPE. “If not for the likelihood that the majority of the units will be taken by investors, we would not do this project. But not having banks finance the project takes the pressure off of having to sell in a certain timeframe.”
In addition to investors literally taking up space, continued economic expansion, immigration and demographic shifts towards multifamily housing may very well help increase the property’s occupancy level once it’s completed. “We have our share of oversupply of housing here; a few projects just finished, although no one’s predicting any new high-rise developments within the next five years,” Smith said. “We have very big growth projections, and within four years, the space should be all absorbed since there’s nothing else in the pipeline.”
Not only is there nothing else in the pipeline, there’s nothing else that resembles the Sky project. “Federal Way has a growth management program, and they’ve set a vision to have a high-rise downtown area, and we’re the first,” Smith said.
At 45 stories, Sky Hotel and Residences will be the tallest, towering over the highest buildings, which are just nine stories. It’s a plus. “High rises are unusual outside of Seattle and Tacoma,” Smith said.
Twin will spend the rest of this year wrapping up the permit process before kicking off construction in 2011.