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.
I’m disappointed to hear that Grey will be losing its lease. Places like Grey and Vermillion, among others, that bring life back to historic buildings, give Pike/Pine a distinctiveness and vitality that other neighborhoods lack. No news here, but it’s often the older buildings that are better equipped to rent out spaces to more interesting commercial tenants, though owning an historic building does have its own unique challenges, among them paying for seismic upgrades that make them “earthquake-proof”. That this building’s rent is skyrocketing makes me wonder what the future has in store for other spaces on 11th Ave.
Grey adds a unique flavor to the neighborhood and makes for a fun and convenient hopping from Vermillion to Barca to Grey to Purr. I’m sorry to see it leave that space.
So here we are in the middle of a recession and the property owners want to raise rents. “and the Bush legacy marches on”.
There’s an interesting space available next to Rancho Bravo, across from Oddfellows/Eliott Bay Books/Everyday Music. I think BMW used it for storing cars before they moved out of the area. I keep eyeing it hoping something vibrant and local pops up in there.
That makes two of us. That building definitely seems like one of the next obvious spots in the neighborhood for an exciting new tenant that can build on the momentum generated by Elliott Bay, Every Day Music, Oddfellows, and the upcoming Holly Smith brewpub at Pike Street. Additionally, from having peeked through the windows, the building’s interior at least appears to be in excellent condition and a prime space for an occupant.
What exactly does Bush have to do with this? Is he the landlord?
Grey’s current space has a very special place in my heart (I got married there in March) so it’s going to be incredibly sad to see them leave. That said, Erik is extremely talented and dedicated to his gallery, so I’m optimistic that Grey #2 will be just as awesome.
I’ve wondered about this space, too and why it hasn’t rented in the local boom economy going on in this neighborhood…high rent? or, maybe it’s in bad shape and/or expensive to remodel? I don’t think it has sprinklers, and that is an expensive proposition for new business owners of restaurants, bar, clubs and entertainment venues. But, it’s a cool space for someone with the money to remodel it.
It is such a huge expense for a small business to move and rebuild in a new space. Our small group uses Grey Gallery often as a place to throw parties for our clients, meet friends and generally use it as a jumping off point for our evening. I’m sadden to see Grey move but am really surprised that the landlord is not doing more to retain a fixture like Grey in their building. Tenants add stability in a changing market and I would assume majority of landlords would do what is needed to keep their folks. Tis the best strategy when thinking long term for ones building. It doesn’t take much in this city for other perspective tenants to know that they might be going into a space that is unable to retain their tenants. Interesting….
I wish the best of luck to Grey and know we will follow them to their new location.
It has been a remarkable feat of business, not to mention community, for Grey Gallery and Lounge to have been open – and attempting to sell art – solely for the 2.5 worst years of our economic lifetime. Grey has developed and implemented (quite beautifully) a sustainable business model for art and conversation in our neighborhood, and has served an invaluable role to the Capitol Hill community of creatives, professionals, and friends and neighbors in general. The fact that a business like that has to then face insurmountable challenges resulting from a poor building owner/landlord relationship is an embarrassment to the neighborhood culture. You’d be surprised at how much power these people have by law and how helpless small businesses and commercial tenants are, even in a city that prides itself on creating and fostering diverse and vibrant neighborhoods of locally owned operations. Shameful.
As ChaviH said, this move will come as a huge expense to one of few small businesses keeping its head above water at a time when it’s most painful. I too will follow Grey to its next location, and hope the neighborhood will rally to make it even better and more successful than ever.
What? Are landlords immune to the recession? Methinks they’re the ones hurting the most.
Boo hoo! If the business model was “sustainable,” as you say, the business would have no problem meeting the rent increase.
Let’s face it: Building-owners don’t want vacant spaces any more than we do. But to get anything resembling an ROI — and you can Google that acronym, if it’s new to you — they’ve got to make difficult choices to ensure they keep up a property’s upkeep, don’t default on their loans, put food on their family’s table, etc. Sometimes, that means raising rents to keep pace with the cost of living (which is in no way decreasing, my friend). Unfortunately, it’s often the landlords who dish out concession after concession to tenants that end up being the sleaziest, sorry to say.
And as a 43-year Capitol Hill resident, what really can we do to *rally* behind a local business we like? Patronize it? Buy drinks there? Sure. But unless a savvy-enough professional is running that business, my efforts will just throw more hard-earned paychecks into a pit of squashed dreams. At least it would be fun while it lasts, but whatever.
Bring on the Chipotle franchise.
Doesn’t a sustainable business need to stay in business to be “sustainable?”
http://slog.thestranger.com/slog/archives/2010/06/01/grey-ga
It will likely take months before the building owner finds a new tenant who will come close to his asking price, and many years before he before he recoups the months of lost rent from Grey. Unless Grey’s lease was ridiculously cheap, it’s hard to see this as a money-driven decision. The owner must have wanted Grey out for some reason.
“Methinks they’re the ones hurting the most.”
Pricing their tenants out is a great way to not go under.
“Boo hoo! If the business model was “sustainable,” as you say, the business would have no problem meeting the rent increase.”
Have you ever had to plan finances in your life? A sudden spike in rent for anyone can create the need for a move, no matter how “sustainable” their work is. I don’t know why you’re so snotty, especially when you’re completely ungrounded on this issue.
Greed/desperation does funny things to a person’s common sense.
“Have you ever had to plan finances in your life?”
I’m not sure what about my post led you to this conclusion, but I’m fairly certain you didn’t read past the first line. This is not a “bad landlord hates amazing tenant” issue, or at least, we have no proof that it is. Galleries come and go, even the ones with loft spaces and decent drinks.
Let’s face it: In many cases, a “sustainable” retail operation owns its space and has other stakes in the fire to maintain liquidity should its operations not meet expectations. That’s a pipe dream for many, sure. It’s sad that someone’s dream is squashed, but certainly, no property owners/managers are out there to remove “sustainable” businesses from their holdings in the worst U.S. commercial real estate environment of all time. I hope the Grey Gallery finds another space at which it can be profitable and save for unforeseen circumstances (though in this environment, a rent increase does not qualify as unforeseen … ).
“though in this environment, a rent increase does not qualify as unforeseen …”
Raising rent on a regular basis and to a fair market value is certainly standard procedure, but nothing about this situation sounds standard. Read the press release above. To have your lease pulled out from under you because the building owner evicts your landlord, then demands rent increases ranging from 50%-85%…sounds like some serious BS to me, especially as the man states above that he has no one to fill the space and hasn’t rented a spot in that building in 2-3 years. If he “[doesn’t] know what the environment is” what in God’s name informed his decision to drive the rent up so astronomically? I agree with Sean.
And I agree that Grey has done an impressive job of developing and sustaining an arts business. Even the major players in the Seattle gallery scene are hurting, because no one is buying art right now. The estimable, 13 year old Howard House just announced it’s closing, and it sounds like Lawrimore is on his way out, too. It’s a bleak sector these days, but Grey kept it afloat with a guaranteed revenue stream: BOOZE. Every time I’ve been there, there has been a decent crowd, cocktails in hand.