On the Block: Developing Affordable Condos is Easy... Over in Newcastle?

May 13, 2021

Mithun designed the handsome Newcastle Library, at 12901 NewcastleWay, facing that city's commercial center — and next to a Chase Bank andMcDonald's. The library was completed in 2013 by Synergy Construction. King County had acquired the vacant land in 2006 for $2 million. After thelibrary opened, there was a boundary line adjustment and an unpriced landswap with SolTerra.

SolTerra got a 27,653-square-foot parcel, which for now continues to use thelibrary's address. It's south of the library, on 129th Avenue Southeast, and includes some of the library's parking. SolTerra then did preliminary site work for the planned six-story, 98-unit Atlas, but the project stalled, the zoning changed and the company broke up. Successor Vibrant Cities owns the site, and then changed plans to a five-story condominium project, which now appears to have some if not all permits in place. The city granted a SEPA determination of non-significance last year to theproject, which was designed by Jackson Main Architecture.

Now the 62-unit Waterline project is on the market, unpriced, offered by the Colliers team of Tim McKay, Dan Chhan, Sam Wayne and Matt Kemper.

The mixed-use project comes withstrings. Vibrant Cities signed a development agreement with the city of Newcastle in March. It stipulatesthat the condos be affordable to those earning 100% to 120% of area median income. The new owner would also have to contribute about $529,000 to the city's equivalent to our Mandatory Housing Affordability program.

And 40 structured/undergroundparking stalls, of 164 total, would be set aside for library users and the general public. (Residents would also have 41 bike stalls.) There are also 13 surface parking stalls for retail use. Waterline is also to include about 5,000 square feet of retail/commercial or restaurant space.

Condos would run from one- to three-bedrooms, in a range of about 639 to 1,208 feet. Terraces would overlook 129th and the front parking strip. A green roof and roof deck are also planned. That and the terraces would total about 10,000 square feet.

It's an interesting location, both suburban and walkable. Besides the convenient library, Coal Creek Village and Coal Creek Marketplace are just across the street, with their Safeway, QFC and other retail.

Vibrant Cities is offering the project at a time when its 37-condo project in West Seattle, Infinity Shore Club Residences, is nearing completion — with its sales effort well underway. Prices there start at over $1 million, and the building features unobstructed views of Elliott Bay. On the rental front, the developer is also nearing completion on the 95-unit Pivot, on Capitol Hill, and is well above ground on its 93-unit Roystone, in Lower Queen Anne. All three of those are market-rate projects.

Waterline, by contrast, will be an interesting test of the condo market, where high-rise construction with concrete, glass and steel are now favored in downtown Bellevue and Seattle — with little new midrise construction anywhere else. For a potential project buyer and builder, the upside to Waterline is capped by its affordability component. Permits may be expedited by the citydeal, as Colliers says, “to lay the groundwork for entitlements and increase the speed of getting ashovel in the ground.” But there's still the liability risk faced by any condo builder, though the state legislature did lessen some of that risk with a 2019 reform bill. Mid-range pricing and midrise construction have been an elusive goal of both condo developers and individual buyers since before the Great Recession, like some chimerical beast in the forest. You can see it in glimpses, but never quite capture it. The city says it wants to encourage homeownership for that “missing middle” sector of the market. Could Waterline be such a unicorn? We'll see — if and when a buyer steps forward.