July 2002  

by Jan Michels
WSBA Executive Director
janm@wsba.org

In 1996, the WSBA entered into a 10-year full-service lease, occupying approximately 35,000 square feet on two floors of the 4th and Blanchard Building, a distinctive-looking building two blocks north of the downtown Seattle retail core. This "headquarters" space accommodates 120 staff who maintain disciplinary and regulatory services; offer counseling, law office management and other member services; publish Bar News and collateral material; present continuing legal education programs; and staff the Board of Governors (BOG), sections, committees and other member programs. The cost of the lease is $20 per square foot, totaling $58,000 a month. Included in the lease are two five-year renewal options at 95 percent of the market value at the time of renewal (2006 and 2011).

Because of concerns that rapidly increasing market rates could double current lease costs after 2006, the Facilities Committee was established in early 2001 to accommodate the substantial time needed to plan office facilities, and to consider various options such as extending the current lease, finding alternative space to lease, constructing a new building in a suitable location, or buying and renovating an existing building. The committee includes the WSBA president, executive director and director of finance; a WSBA past president; two governors; a downtown Seattle lease-tenant representative; and two WSBA members who have experience with downtown Seattle rental markets and building ownership. With the changes in the economy as of spring 2002, the rapid increase in lease rates has stopped, and rates are decreasing. While an increase is expected at some time, it is not possible to predict when or how rapidly.

As part of the exploration process, the Facilities Committee surveyed WSBA staff, members who use the WSBA office, and other law-related entities. In addition, a space-planning consultant volunteered to study the WSBA's current space needs and use. Committee members have consulted mortgage lenders, and have stayed apprised of the downtown Seattle real estate market and the impact of current economic conditions on leasing and ownership options.

Based on the above research and the Facilities Committee experience, the following conclusions have been drawn:

• To be accessible to most lawyers and to retain existing staff, WSBA headquarters should stay in downtown Seattle.

• The current facility is generally adequate, presents the appropriate image for the Bar, and uses its space efficiently. The biggest problems are its distance from the legal hub in Seattle, limited CLE space, and a lack of easily available parking.

• The reasons to consider ownership are stability, long-term predictability for office space, and long-term occupancy costs. Reasons against considering this option are the lack of a sufficient down payment and the likelihood of increased short-term costs (moving, tenant improvements, furniture).

• Bankers and landlords consider the WSBA an excellent credit risk/potential tenant.

• Many bar and trade associations own the building they occupy, often through a foundation or nonprofit entity, with management and lease-back options to the association.

• The WSBA expects to maintain current services and programs with only incremental expansion, as membership grows or service demands change.

• Since the Puget Sound region is presently experiencing a favorable lease market but future conditions are unknown, and although our lease expiration is four years ahead, the WSBA may want to take advantage of current market conditions.

• The long-term costs of all available options will not vary significantly; under prudent fiscal management, the WSBA will not consider options that cost considerably more then current projected costs.

In an ideal situation, the WSBA would occupy a building in the downtown Seattle core with parking and conference facilities, which would accommodate up to 20 years' growth using short-term leases to other law-related entities until the space was needed by the WSBA. One scenario is for the WSBA to use existing assets for a sufficient down payment to make debt service approximately equal to current and expected future lease costs, and own its building. This "law center" scenario would require a $3-5 million down payment, and timing of occupancy to coincide with the expiration of the current lease. The committee continues to explore each facet of this scenario, but the likelihood of satisfying all these conditions is slim. Consequently, the committee seeks member response and suggestions for compromise to the various proposals.

At section midyear meetings in June, committee members conducted a short survey, the results of which will be discussed in a follow-up article in Bar News. The committee will hold a focus group with the BOG and WSBA liaisons, and will review responses from this article. Please consider the following list of proposed facility characteristics, write your top five priorities on the lines below, and fax to Jan Michels, WSBA executive director, at 206-727-8319, or e-mail janm@wsba.org.

1. "Landmark" building: a facility with an image that becomes associated with the WSBA, for example, a historic or architecturally unique building.

2. Convenient location: a facility within a few blocks of Seattle courthouses, law firms, and related legal services.

3. Association with a law school: a location on campus or close to Seattle University or the University of Washington; participation in educational programming and sharing of CLE space.

4. Building ownership: The WSBA or its foundation would purchase an office building.

5. Easy access: to I-5, I-90, ferries and the airport.

6. In-house CLE conference facilities: space for CLE presentations in order to minimize space and catering costs from outside facilities; sharing or subleasing of conference facilities with other building tenants or organizations. (The WSBA's present use does not justify full-time lease or ownership.)

7. On-site teleconferencing facility: Develop a facility that is a teleconferencing hub for meetings, presentations and CLE programs.

8. Parking availability: within a few blocks of the WSBA.

9. "Home away from home" utilization: Include a place for members to meet, take depositions, use phones and fax machines, and hold conferences.

10. Public transportation access: a location where public transportation is easily available.

11. Washington "law center" concept: Name the building to attract law-related entities to co-lease.

12. Professional image: a facility that portrays the professional image of lawyers without appearing extravagant.

If there are other features that are important to you, please let us know.

Please fax to 206-727-8319.