Port of Seattle drives another major business out of the city

Potential Port tenant, and 600 jobs, to leave, blaming officials

Korry Electronics cites better deal

Friday, March 21, 2008
Last updated 3:47 p.m. PT

By KRISTEN MILLARES YOUNG
P-I REPORTER

By the time the Port of Seattle came around to offer Korry Electronics Co. the Interbay lease it wanted, it was too late.

Too late to keep Korry's 600-plus jobs in Seattle, despite the city's newly strengthened zoning laws meant to encourage industrial development here.

Too late to salvage the Port of Seattle's reputation as being more intent on remaking its 99 acres north of Terminal 91 at Interbay into a mixed-use development branded as "North Bay" than in preserving industrial land for industrial jobs.

"It became a pretty uncomfortable, disheartening situation with the port," Korry Electronics President Dan McFeeley said of his company's decision to move to a 14-acre property outside of Seattle in an as-yet-undisclosed location. "It's not for lack of wanting to stay, but it just got too scary and too risky."

Since 1937, Korry has been manufacturing parts for airplanes in Seattle. Now a subsidiary of Bellevue-based Esterline Technologies Corp., which specializes in aerospace and defense, Korry continues to be a major Boeing Co. supplier.

For the past several years, Korry's management has been eyeing the 2011 end date of its lease on a 189,000-square-foot building on Dexter Avenue North. Sources close to the transaction say that nearly two years ago, Korry approached the port through its representative, Craig Kinzer of Kinzer Real Estate Services, only to be put off by proposed lease rates more suited to downtown office space than to manufacturing.

By Feb. 27, the port had a better offer: a 250,000-square- foot building on 10 acres for $2.30 to $2.50 per square foot. After matching Korry's list of lease requirements, the port waited for a response from Korry that never arrived.

Tired of wrangling, Korry had found a better deal.

"I can't speak to the port's intentions, just their actions: The delays were endless enough that we lost faith," McFeeley said. "They rarely had decision makers at the table with us ... and it led to roadblocks."

McFeeley said the only difference between the port's offer and that of his new landlord is that the new deal offers lower lease rates -- and the promise of more reliability.

Port spokeswoman Charla Skaggs said the public agency -- which oversees 4,000 acres of land, including its seaport terminals and Sea-Tac Airport -- is "deeply saddened" by Korry's decision.

Industrial advocates said the port's contrition is poorly timed.

"They lied to us, telling us that there was no industrial interest in the North Bay property when there was a lot of interest," said Eugene Wasserman, president of the North Seattle Industrial Association.

"They want to play real estate gods or something and do other kinds of development, which I don't think are part of the reason they exist."

Dave Gering, the executive director of the Manufacturing and Industrial Council, said Seattle's losses of Korry and of the Ballard-based aerospace company University Swaging indicate that reform is needed.
"The message that's been sent with the Korry episode ... is that it took two years, and they couldn't get it done," Gering said. "It is very hard for outsiders to put much faith in the port" -- though he wants to give the port's new, widely respected chief, Tay Yoshitani, a chance.

McFeeley said his new landlord will have completed the pending lease within 45 days of opening the dialogue, in contrast to his company's 18-month- long negotiation with the port. A Seattle resident, McFeeley said he was unhappy about leaving the city but had made up his mind by December that he needed to begin looking elsewhere.

Korry had spent the previous summer helping the port lobby the City Council for mayor-backed zoning changes at the North Bay property, which would allow for large-scale office and retail development in addition to the manufacturing uses already allowed there. McFeeley supported the overlay but said the port tied signing the lease to its passage.

The City Council nixed the overlay, citing Seattle's extremely low vacancy rates on industrial land and the importance of manufacturing to the city's jobs and tax base. While the city wanted the port to sign Korry, the deal remained undone.

Within that tightly squeezed market yawns the port's 57 acres of vacant property north of the Magnolia Bridge at Terminal 91, next to existing major tenants Trident Seafoods and City Ice Cold Storage. That is likely to continue for the foreseeable future: Port Commission President John Creighton said the port, which has spent more than $7 million to redevelop North Bay, is no longer anticipating building a biotech hub as once envisioned by retired port Chief Executive Mic Dinsmor