In 1987, Seattle's Hazama USA, the U.S. subsidiary of the Japanese company, Hazama Corp., joined a group of investors to finance construction of City Centre, a premier office building and retail complex in downtown Seattle. As with many large projects at the end of the 1980s, it fell into financial difficulty, and in 1990, a year after it opened, the building was refinanced and Hazama USA became managing general partner.

Operationally, with the original developer as project manager, the building performed decently; its retail space was 90% occupied, office space 80% let and the project even housed Seattle's first public collection of contemporary glass art - the City Centre Collection of Pilchuck Glass Art. But in 1993, City Centre was about to enter a difficult transition period. Gucci, one of the original tenants in the mall, was leaving, and some smaller tenants were facing the end of their lease and needed to be rolled over. Even more serious, however, many of the original five-year leases in the office tower, about 220,000 sq. ft. of the tower's 845,000 sq. ft. of office space, were due to turn over.

"Because the building was built in 1989, we knew in 1994 a lot of the five-year leases would be coming up for renewal, and we wanted to get as many tenants to roll over as possible with higher rents as possible and the lowest tenant improvements," says Bruce Zavon, general manager at Hazama USA in Seattle. Hazama felt the building not only needed a change in property managers, but it wanted to bring in a large, national property management firm with industry contacts to finish off negotiations and to lease up what was to become empty retail space. It chose Chicago-based LaSalle Partners Management.

On day of notification that it was to take over the management of City Centre, LaSalle brought in a customer service representative who did a complete tenant survey to determine tenant concerns. It also, Zavon says, brought in a "S.W.A.T. team" to get up to speed on the property, including the negotiations.

"Our goals were threefold," says Gary Bezer, a vice president with LaSalle Partners: immediately address leasing challenges, because there was a potential for the vacancy level to drop to 60% in a worst case scenario; improve tenant services; and hold the line on operating expenses without minimizing quality or service. "We used the theme 'polishing the diamond,' because this building was their diamond, and they needed us to polish it and enhance it."

On the retail side, the key more by LaSalle was to bring in FAO Schwartz, the upscale toy retailer to take the place of Gucci. This not only brought in a featured tenant, almost like a department store in a shopping mall, but by combining other retail space and taking out some common area, the FAO Schwartz store actually increased the amount of leasable space in its particular corner of the mall from 11,000 sq. ft. to 16,000 sq. ft. (the retail area totals 75,000 sq. ft.).

In addition, with the new construction, it brought an isolated part of the shopping arcade into the main flow of traffic.

Also to help the retail, LaSalle established a new position of promotions coordinator and, for the entire project, created a concierge desk.

Since City Centre is one of the premier office buildings in Seattle, LaSalle improved tenant service to be commesurate with the quality of the building, even going so far as to change the uniforms of the security guards. At the same time, it attacked the leasing challenge by priotizing space and pricing offices differently depending on encumbrances, views and the position on the floorplate. The less valuable space was chipped away first, so that the only empty spaces left are two contiguous blocks. In total, the building is 95% leased.

Since LaSalle came on in 1993, the company has signed 46 leases, for 390,000 sq. ft. of office and retail space. In all cases, on a net-effective basis, rents increased.

In addition, LaSalle was able to save, on an annual basis, $575,000 per year on expenses for the building, plus, it increased building non-rental revenues by approximately $605,000 per year. Part of that were rental costs for two movie shoots, Disclosure and Assassins, which took place in the building.

"More important," Zavon says, "was the creation on a sense of ownership for the people who work in the building. It came through to tenants that everyone is working as part of a team. Our intention on the office side was to make tenants feel very comfortable, stay in the building and get their needs satisfied from the property management company."