Amazon often gets credit — or in some cases ire — for transforming large swaths of downtown Seattle into a unique urban campus for the online retail giant. But it took some of the city’s and world’s biggest events, as well as a slew of savvy business people and good timing, to bring this change to fruition.
Three of the most influential people in this historical development got together at the Urban Land Institute’s Spring Meeting in Seattle this week: John Schoettler, Amazon’s Vice President of Global Real Estate and Facilities; Ada Healey, Vice President of Paul Allen’s Vulcan Real Estate; and Al Clise, CEO of multi-generational property owner and developer Clise Properties.
They went over the series of events that led to Amazon’s massive campus. These new buildings have gone a long way to building up two new neighborhoods — South Lake Union and the Denny Triangle — and bolstering the city’s tech and real estate booms.
As of the end of 2016, Amazon occupied 8.5 million square feet in 34 buildings across Seattle, much of it in the two aforementioned neighborhoods. Amazon has said it will occupy approximately 12 million feet by 2022, but with its recent leasing and building spree it may already have passed that threshold.
The story of Amazon’s campus doesn’t start with the opening of the Doppler Building in the Denny Triangle neighborhood in 2015, or even the landmark announcement that Amazon had leased 11 planned buildings from Vulcan in 2007. To get a full appreciation for the transformation of the city, you have to go back to the day after the Great Seattle Fire of 1889, when J.W. Clise and Lyman Smith arrived in the city.
J.W. Clise helped assemble land for what ultimately became the University of Washington. His wife Anna founded Seattle Children’s Hospital. Smith built Smith Tower, then the tallest building west of the Mississippi.
J.W. Clise founded the family business, Clise Properties. In 1931, his son Charlie took over. In the lead-up to the Great Depression, buyers were snapping up brand new properties created when Denny Hill was flattened as part of the regrade project. But the Depression took its toll, and many of these properties fell into financial peril.
Charlie Clise began buying up these properties, and that practice continued as the company was handed down through the generations. By 2000, Clise Properties had amassed 13 contiguous acres just north of downtown Seattle, an area ripe for development, Al Clise said.
“The vision of a canvas where something truly special could happen was born,” Al Clise said of Charlie Clise’s strategy.
Meanwhile, Paul Allen was trying to figure out what to do with a big chunk of land near Lake Union. He had lent $30 million to the campaign to build a Central Park-like project in the area, which would have been forgiven had the park vote passed, Healey said. But the measure failed, twice, ironically because voters were worried it would turn into a big real estate development. With the vote failing, much of the land reverted to Allen.
Healey said the land at the time was far from a destination. It was mostly low-slung industrial buildings; a strip club, a Hooters. There was very little green space.
“It was a neighborhood you drove through, you did not drive to,” Healey said. “It was also a neighborhood that had been neglected for 40-plus years. Since the World’s Fair there really had not been any sort of investment in infrastructure.”
But there was potential. The Fred Hutchinson Cancer Research Center was there, and Vulcan managed to lease space to biotech-oriented companies and institutions, like the University of Washington, Merck and more.
It looked like the neighborhood had a chance to become a biotech hub. As this was happening, Amazon employees, tired of being spread throughout buildings across the city, were peppering leadership teams about getting everyone together in the same place. In 2005, with a few years left on Amazon’s building leases, Schoettler asked CEO Jeff Bezos to start thinking early about future real estate strategy. Bezos’ only requirement was that the company stay in Seattle.
There weren’t a lot of options available at the time. Clise was deep in talks with Emaar, a master plan developer that is known for its work in Dubai. Vulcan was building apartments and other projects in South Lake Union, but still had plenty of available land.
The two sides started talking at the beginning of 2007, and spent much of the year negotiating — working on lease terms, talking to city officials, planning projects with architects. That December, they announced the deal to lease 11 buildings totaling 1.6 million square feet. That was supposed to last until 2016. It did not.
“We needed more space, and we went out and leased additional square footage because we needed to be able to put more people in by the time we even had begun to move butts in seats at the campus Vulcan had done for us,” Schoettler said.
In 2010, while much of the Vulcan campus was being built out, Schoettler was tasked with finding even more space because Amazon was growing faster than expected. Clise’s deal with Emaar had fallen through thanks to the recession, so the Denny Triangle land was in play.
Amazon in 2012 dropped $207.5 million for three blocks, where it had planned to build 3.3 million square feet. Then it followed up in 2014 and bought another block, with plans for another tower. And that still wasn’t enough. Last December it bought a part of another block, where it plans to build a 17-story tower.
Today, Amazon is snapping up every building it can find, and Vulcan and Clise are in great position. After building almost exclusively in South Lake Union, Allen’s company has projects in the University District, the Central District and downtown Bellevue.
Clise still owns big chunks of land near the Amazon campus. It is constructing a huge high-rise apartment complex a few blocks away. Charlie Clise bought three sites for that project in the 1940s for about 40 cents per square foot, or a grand total of about $8,000. Today those sites are worth about $30 million, or about $1,500 per square foot.
Amazon defied trends when it stayed in the city rather than moving out to the suburbs. That’s partially because Amazon is willing to take risks, even if they don’t always pay off — it’s one of the core leadership philosophies that the company follows to this day.
“You are going to make mistakes,” Schoettler said in reflecting on the lessons he learned from building out this campus. “Mistakes are OK. If you know exactly what every single outcome is going to be, especially if you are pioneering and trying to do something new, it was never an experiment in the first place. So you have to be willing to make mistakes and take big, bold bets.”