The transaction was structured as the construction of two condominiums occupying the same high-rise structure. The apartment portion (which accounts for most of the space) is owned by a highly-regarded national pension fund managed by a respected real estate advisor. Offices occupied by the Carpenters Union are owned by the Carpenters Local.

The pension fund has financed and owns many millions of feet of union-built commercial space across the U.S., including in the Seattle market. The pension fund is a successful and responsible owner-investor that adheres to a high level of fiduciary responsibility and typically holds its projects for longer periods than do many investors. As others have noted, the developer, Harbor Properties, is highly regarded in the Seattle market and the architect, contractor and key players were “known quantities”. According to the news accounts, contractor error seems to be the likely problem (improper sealing of the structure), although the stance of the engineering inspection company appears troubling. (Having read the news accounts, I wonder if the engineering inspector performed its job adequately?)

As to whether or not the building can be salvaged: the liability risk to the ownership would be staggering if the structure continued to be occupied. There’s also the question of economic performance: how many people would want to move in after this coverage?

All told, this is a very sad outcome for all concerned, from the residents, to the developer, to the unions that built the project, to the pension fund and the Carpenters Union that own the project.

That said, it is possible that the owners of the project will opt to rebuild on the site– with a different contractor and engineering inspector, of course.