RC Hedreen Co.

Rising to the occasionDowntown SeattleÔÇÖs skyline is accentuated with Dick HedreenÔÇÖs high-rise accomplishments, which he describes to Gary Toushek. Seattle developer Richard (Dick) HedreenÔÇÖs ambitious career began simply enough after his military service was up. A civil and structural engineer by trade, he got a job back in Seattle working as an estimator and project manager with a contractor, and in 1963 he decided to establish his own development business, beginning with an 11-story upscale rental apartment building in the lower Queen Anne area of Seattle.  After that he began a long stretch of primarily public works projectsÔÇöÔÇ£hard money jobs,ÔÇØ he calls themÔÇöwith a construction yard in Seattle and another in Alaska. At the same time he started seeking funding for new developments. ÔÇ£I had my own formula when I was developing, depending on the project,ÔÇØ he says. ÔÇ£Sometimes I found a partner willing to finance a project if I put in the sweat equity.ÔÇØ His Seattle high-rises are all in prominent downtown locations. In 1969 he built the Seattle Hilton Hotel at Sixth Avenue and University. Then he got involved in a series of projects that would establish him as a formidable hotel developer. He considers the 300,000-square-foot Park Place office tower, also on Sixth Avenue, and the adjoining Freeway Park to be two of the more interesting developments heÔÇÖs done. ÔÇ£I had assembled funding to acquire half the property under the office building, then an option on a 99-year ground lease on the other half. Then the city had second thoughts about development on this relatively small site; they thought maybe there should be a park next to the freeway. The architect for Park Place, Tony Callison, was a close friend, and he came up with the creative idea of Freeway Park,ÔÇØ which became an innovative Seattle landmark with both social and environmental aspects.The park bridges ÔÇ£like a lidÔÇØ over an ugly portion of Interstate 5, as well as a large city-owned parking garage, then Eighth Avenue bridges over the 5-acre park, which itself is an unusual mixture of greenery and ÔÇ£brutalistÔÇØ architecture, including concrete and waterfalls. Hedreen agreed to place his office building on the western edge of the lot and designed a front plaza that integrates with the park, which also adjoins the Washington State Convention and Trade Center, which abridges the park with a small portion. The funding for the park was a combination of the city (parking garage), county and state (parkland), and federal governments (the freeway portion), along with Hedreen as the private developer.As for the 21-story Park Place itself, initially Hedreen had two partners, and the equity arrangement was that each would own a third. ÔÇ£But as we went along, the concept became so complex that these partners decided not to continue, so I found a new source of equity, Family Life Insurance Company, which agreed to invest a million dollars, which bought them one-half of a 300,000-square-foot office building, and I kept half; that building quickly filled with tenants. We managed it and got a nice cash flow from it.ÔÇØ Of course, that meant more developments. One block south of Park Place, Hedreen built, without a partner, the 34-story Park Hilton Hotel (now the Crown Plaza), which opened in 1980. In 1983, two blocks farther south on Sixth Avenue, he completed the 28-story, 553-room Renaissance Madison Hotel. Next was a project to construct a non-branded hotel called the Elliott. ÔÇ£It was a complicated proposal that came from the convention center; we owned some property in that block,ÔÇØ says Hedreen. ÔÇ£We were a logical choice as developer because whoever did the project would have to acquire our property. So we made a proposal to develop. The convention center initially advertised a 1,000-room hotel with 100,000 square feet of exhibition space, but when you studied it closely, you couldnÔÇÖt build both; the two aspects were incompatible. So we proposed to build a 425-room upscale hotel, and we had it designed and arranged $70 million in long-term financing for the construction. At the end we thought it was a little too big for us, so we approached Nick Pritzker in Chicago with this opportunity. At that point the construction was nearly complete, and we put a value on the hotel that the Pritzker family accepted. They put up one-half the equity requirement; our half was to finish the project, which became the Elliott Grand Hyatt Seattle.ÔÇØ Under construction and nearly complete today is the Olive 8 project, at Olive Way and Eighth Avenue, with Prudential Insurance as major investors in the $200+ million Hyatt Hotel and condo complex. The first four floors are lobby space, restaurant, meeting rooms and a 20,000-square-foot spa and fitness center; the next 13 floors contain 346 hotel rooms; and the top 21 floors contain 229 luxury condominiums. The building will be LEED certified (Silver), SeattleÔÇÖs first sustainable hotel condo development. The green elements will lower water bills (and consumption) by 32 percent, energy consumption and bills should decrease by at least 10 percent, and the roofÔÇöone of the largest green rooftops in downtown Seattle at 8,355 square feetÔÇöincludes a garden with native and adapted plants, which will reduce storm water runoff. Also, steam condensation from the buildingÔÇÖs heating system will be captured, cooled and used to water all landscaping.Hedreen is semi-retired these days; his son-in-law David Thyer is company president. Their current focus is on the site of the existing Greyhound Bus Terminal, where they have plans for a major hotel: 51 stories, 1,250 rooms, 100,000 square feet of meeting space, and underground parking for 1,100 cars. The estimated cost is $400ÔÇô450 million; the schematic drawings are done, and funding is being arranged. Is HedreenÔÇÖs business being hit by the economic downturn? Other than the increases in building materials, especially steel, not really. ÔÇ£The hotel business in SeattleÔÇöoccupancies, room rates and revpar [revenue per available room]ÔÇöis not down. In our case we donÔÇÖt have highly leveraged properties; the ratio of the mortgages to the property values is quite low, so we feel secure. But this recessionary market will eventually correct itself; it always does. And there will always be opportunities for those with entrepreneurial know-how.ÔÇØ ┬á