Grey Gallery joins trend of Capitol Hill bars getting landlord's boot -- but this time, lounge happy to go

In a possible sign that landlords are starting to expect a better return on investment for their properties, another Capitol Hill bar is on the rocks as it struggles with a property owner's desire to raise rent. Grey Gallery and Lounge is losing its lease unless it agrees to a big jump in the monthly rent it pays for its space at 1512 11th Ave between Barca and Purr.

Grey owner Erik Guttridge tells CHS the higher rent was only the last blow in an ongoing poor relationship between the gallery and its landlord. "It's not a good situation but it hasn't been for my 2+ years in this building.  It's kind of a relief though at an enormous expense to me, my staff, artists and investors," Guttridge wrote in an e-mail to CHS.

Guttridge says his lease ends at the end of June and he's shutting down Grey's space on 11th on the the 19th. In the meantime, he is on the hunt for the next home for Grey. "I want to stay in Pike/Pine," he said. "But everything is up in the air."

CHS reported that north Capitol Hill's Roanoke Tavern is also facing the prospect of jacked up rent as a new owner prepares to take over the building. The tavern has said it has new hope of working with the buyer after its own bid to buy the space fell short.

Grey is part of a large building housing the lounge and storage and loft space. Property owner Matt Basta purchased the 1915 building in 2000 for just over $1 million, according to King County Records. He faced a bevy of fines in 2008 when city inspectors found people living in the building which is zoned for retail and commercial use only. We will contact the property owner to try to get the landlord's side of the story in the situation with Grey. UPDATE 11:10 AM: We talked with landowner Matt Basta who confirmed to CHS that he was negotiating with Guttridge for a new lease since late last year. Basta said he is sorry to see Grey go. "I haven't rented any space on 11th in two or three years so I don't know what the environment is," Basta said. He also said a lot of the drama for Guttridge came from a person he initially sublet the space from. As for what comes next for the lounge space, Basta said he doesn't have anything lined up yet. "I've owned the building for 20 years. I'm hoping it will be retail or a restaurant but it's too early to say."

11th Ave between Pike and Pine is slated to undergo significant change if the Sun Electric project continues to move forward. The mixed-used development is planned to transform the 1926 warehouse and garage at the corner of Pine and 11th into apartments, lofts and ground-floor retail.

Guttridge says there is a silver lining to Grey's landlord struggles and being forced to move on. "It gives me the opportunity to run this business with less drama in the background," Guttridge said. "Everything other than the landlord has been great about this business."

UPDATE 4:25 PM:
Here's the press release from Gutridge about his decision -- a roster of final events is included in the attached PDF version of the announcement.

GREY GALLERY AND LOUNGE CLOSES ORIGINAL LOCATION JUNE 19TH, 2010

Due to unfortunate complications between the building owner (Matt Basta) and the landlord (Nicole Stone)- Grey owner, Erik Guttridge, has decided to close Grey at its current location and seek a more secure tenancy elsewhere in the Capitol Hill neighborhood. Guttridge plans to reopen Grey by the fall of 2010.

The original 8-year lease between Grey and Stone, a 3-year lease with a 5-year option, became void when building owner, Basta, evicted Stone under questionable circumstances in October 2009. Basta and Stone are currently suing each other. Basta has been unwilling to negotiate a lease rate reflecting fair market value asking for as much as an 85% increase in rent (later backing down to a still steep increase of 50% for only a 1 year term), effectively forcing Grey out of the location less than 3 years after an extensive build-out financed by Guttridge and investors.

Guttridge is currently looking at other locations in the neighborhood and talking with investors and other supporters of Grey to make the move possible. “I am proud of what Grey has accomplished in its first two and a half years while maneuvering through a hostile relationship between the landlord and building owner. Although moving comes at a significant cost to my staff, exhibiting artists, investors and myself, I am excited about the possibility of running Grey in a much more positive and professional environment,” says Guttridge.

Since Grey opened in January of 2008, it has been named one of “Seattle’s Best Bars” by Seattle Metropolitan Magazine, “Best Lounge,” also by Seattle Metropolitan, and “Best New Gallery/Bar” by Seattle Weekly. Through exhibiting local and emerging artists and hosting events for arts organizations and non-profits, Grey has become a social hub for Seattle’s creative community. “I love the community of neighbors, artists, collectors, designers, musicians, business people, friends and strangers that congregate and celebrate at Grey. I’m very fortunate to be part of a community that appreciates and supports a business like Grey. Maybe they just like us for our cocktails. That’s fine too,” says Guttridge.