HomeStreet gets the doors open

After a very long gestation period, Seattle-based HomeStreet bank birthed its Madison Park baby today, finally revealing to the world its long-awaited branch along the neighborhood's main thoroughfare. The prominent Madison Street location next to Bert's Red Apple was most-recently the site of the Tully's, the much-lamented and long-departed coffee shop.  It's been almost two years since that exit.

HomeStreet would have been here earlier had it not been for the involved design and permitting processes and the fact that the hundred-plus-year-old building was in worse shape by far than originally anticipated.  The end result of all that rehabilitation is pretty impressive, however.  If you're willing to accept the fact that Madison Park is now a banking hub with five bank branches calling the neighborhood home, you will probably be pleased with the attractiveness and compatibility of HomeStreet's finished product. The bank sign apparently meets the community standards for its modest size, and the building doesn't look too bank-like. That, we're told, sits well with the neighborhood "powers that be" who try to enforce the various "village" standards.  Another concession to the community: the fireplace that graced Tully's is back in an improved form to add to the ambiance of the bank's interior.

While we certainly can't claim that HomeStreet is not a bank, it can be argued that it's a bank that is different from the others that (with the exception only of KeyBank) have been part of the Madison Park community for many decades.  Though they certainly didn't start out that way, each of the neighborhood's other four bank branches is a part of a big national bank organization based out of state---far out of state, in most cases (New York in the case of Chase, Ohio in the case of Key and North Carolina in the case of Bank of America).  Only Wells can make the claim that it's even based in the general region (California).

Not that there's anything wrong with being from out of state.  However, HomeStreet is definitely home grown, having been founded in Seattle as a mortgage company 93 years ago, later becoming a federally-chartered savings bank.  HomeStreet, with about $3.3 billion in assets, operates 31 branches, ten of these in Seattle.

In charge of HomeStreet's Madison Park location is Ila Wagner, who joined the bank from Chase during the past month.  She told us that she understands the fact that "there's a fear of over-saturation with banks in Madison Park."  But "HomeStreet will be a different kind of experience."  She cites the bank's intense involvement in the communities it serves as one example.  Also, HomeStreet is, we're told, the "official bank" of both the Seahawks and the Sounders, with promotions related to both teams (special deals for season ticket holders, for example).

While today is Day One for HomeStreet's Madison Park incarnation, the big official grand opening will take place for the community in early September.  That's when the bank will be giving away a lot of money.

Just kidding.  (About the money give-away, that is).

[As a matter of self disclosure for those not already aware of the fact, the Madison Park Blogger is a banker by day, though not an employee of any of the banks who operate branches in Madison Park.]

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What's the story?

Former Tully's site languishes

It's been almost ten months since Tully's abandoned its Madison Park location in a downsizing move last October.  And it's five months since the Madison Park Blogger reported that HomeStreet Bank would be opening a branch in the space.  Yet to date, about the only thing that's happened to the building is the addition of some graffiti.

One of the most-asked questions we hear is, "What's up with that Tully's space anyway?"  So we decided to see if we could get an answer from HomeStreet.  Karen Brandvick-Baker of the Bank's corporate communications department responded as follows:  "We do not announce potential new branch locations until we have received approval to open the branch. The location has not yet gone through that process."

In the meantime, presumably the Bank is paying rent on the lease, which was rumored to have been $10,000 per month or more when Tully's held the space.  So it may be an expensive waiting game for HomeStreet, which recently announced it's buying small banks in Seattle and Yakima.  Those purchases also require regulatory approval.

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Madison Park: regional banking center

HomeStreet Bank to lease the former Tully's space?

Though the neighborhood is already home to four bank branches, Madison Parkers are apparently about to get a fifth banking option. According to our sources, HomeStreet Bank, a State-chartered savings bank based in Seattle, has leased the prime location that was vacated by Tully's last October (4036 E. Madison Street).  HomeStreet was unwilling to confirm the story "at this time" when we quizzed the Bank about it this morning.  Nevertheless, the Bank's commuications officer was helpful in correcting some errors in an early draft of this story, which we had forwarded to her for review.

Assuming our sources are accurate, HomeStreet will be moving in sometime later this year after extensive alterations to the 2,100 sq. ft building. In its previous lives the building, built in 1900, had been the home of several different retail operations. If a bank now takes the space, the move will further solidify Madison Park's growing reputation as a place where you can get a meal, have your hair done---or cash a check.

HomeStreet, which has 22 retail branches, has been ramping up in recent months, recently opening a new branch in Fremont and soon to open a 23rd branch on Capitol Hill.  As a community bank of modest size, it would be the only financial institution represented here that is not a major commercial bank (JPMorgan Chase, Bank of America, Wells Fargo and Key are each big national players).

The fact that another bank may be coming to the neighborhood rather than a new retail shop, however, will certainly reignite the debate that raged when Key Bank added itself to the mix in 2011. Many Madison Parkers argued then that landlords here have a responsibility to keep the supposedly village-like character of the business district intact by leasing only to retail shops. That argument didn't prevent Key Bank's move to Madison Park, and it didn't sway the landlord of 4036 E. Madison this time. It was clearly an economic decision.

We understand that the commercial real estate broker, when taking down the "For Lease" sign on the building late last week, told passersby that only a bank was willing to pay the cost of the lease (reported to be in the $9,000-$10,000 per month range). That rent is a tough nut for any retailer to crack, though there had apparently been interest in the space by many potential lessees. (For example, rumor has it that Bert's took a look at using the building for a wine & spirits shop but determined that there was not enough square footage).

Madison Park Business Association President Terry Short had this to say about the possible introduction of another bank into the business district:  "There seems to be a void when a business leaves our neighborhood, especially one that meets the needs of our residents. The banks in Madison Park have increasingly supported our community and have tried hard to be sensitive and support both the businesses and residents who live here."

What happens to the Tully's space has been a matter of intense speculation by many Madison Parkers over the past five months. In fact, a commercial broker tells us that in his long career he's never seen such a high level of interest by any other neighborhood in what was going to happen to an individual retail space. But the time for speculation is now over. "Confirmed" or not, a bank it is.

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Whither the Tully's crowd?

Since the closing of the neighborhood Tully's in early October, many of the coffee shop's onetime aficionados are feeling bereft.  We understand, though we have not seen this with our own eyes, that a few regulars can now been seen gracing spots at the neighborhood Starbucks, perhaps with some discomfort.  Others are turning up for their fix at Madison Park Bakery or other existing local coffee purveyors.

But knowing the Tully's crowd as we do, It seems unlikely that many of them are now driving, biking, or bussing to some far-off Tully's location in order to enjoy their brew (the nearest Tully's is almost two miles away, at 746 19th Avenue E. on Capitol Hill). Instead, they are hoping for another neighborhood alternative to take up the slack, perhaps on the very site of the previous Tully's location.

That hope may be in vain, however, since Tully's already was the most significant neighborhood alternative to Starbucks--and in the end the economics of that strategy (and coffee niche) just didn't work here.  We've been told by several area merchants who've looked into the matter that the landlord is expecting a level of monthly rent equal to or even higher than what Tully's had been paying.  A coffee shop is therefore not a likely outcome unless it is coupled with some other economically viable enterprise (no, not a bookstore).

But don't think that there still might not be viable alternatives here for the former patrons of Tully's.  As we noted in our posting on Madison Kitchen, the soon-to-arrive replacement for Park Place Deli, one aim of the new operator is to provide a combination of high-end coffee, good seating, and a strong vibe that may attract some of the neighborhood coffee-house crowd, Tully's or otherwise.

We also received a tip that Madison Park Bakery is looking into stepping up the competition on the local coffee scene. Owner Karen Hofman confirmed the story, saying she and her husband are considering expanding the seating area of the bakery to enhance the ambiance and encourage more of the sit-down trade, including coffee drinkers.  She cautioned however that the planning is in the early stages--and something she definitely does not want to do is reduce the size of the back-of-house kitchen, which is already small enough.

So hold on, Tully's fans.  All is not lost. There may soon be a couple of new Starbuck's alternatives for you to check out.

As for the old Tully's space, is Madison Park ready for a head shop and marijuana provisioner?  That might just be a more economically viable option than what came before.

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What next for the Tully’s space?

Madison Park Blogger descends into rumormongering

Someone started the rumor last week that the now-vacant Tully’s space is soon to be taken over by a bank—specifically, US Bank, the Madison Park Blogger’s former employer.  This perverse idea began making the rounds within a day or two of the announcement that Tully’s was abandoning its Madison Park location.  As the week progressed, it became clear that many people had heard the story, including the managers of some of the neighborhood’s bank branches. So we, of course, had to investigate.  Unfortunately, in doing so, we ended up asking a lot of people about the possibility of another bank invading the ‘hood, thereby further spreading a story that may have no basis in fact.  How irresponsible of us.

Just to be clear, there is no evidence that US Bank—or any other of the few remaining major banks not already represented in Madison Park—is planning to open a branch in the hallowed space that had for almost two decades served as the neighborhood’s anti-Starbucks.  At the time the shocking bank rumor got started, the “we regret we’re closing” notices had just been posted on the building’s entry doors and the brown-paper coverings had just been applied to the windows. Lack of information breeds speculation, and given the outsized reaction of some Madison Parkers to the introduction of Key Bank into the neighborhood (and the more recent dust up about the Wells Fargo signage), what more provocative rumor could be invented than the introduction of a fifth bank branch into Madison Park?

The wood-frame building at 4026 E. Madison St. that for almost two decades had housed Tully’s was originally built in 1900 and has had many incarnations, including, apparently, hosting a mini-mart.  The property covers 4000 sq. ft., of which the one-story building comprises just over half the total space, 2,080 sq. ft.  It could therefore easily accommodate two shops or one larger tenant, such as a bank.  Interesting enough, the tax-assessed value of this prime commercial property in the heart of Madison Park is only $401,000 and has been held by the assessor at this level, with virtually no variation, since 2001.

King County records list Wallace Properties of Bellevue as the property’s “taxpayer.” Tully’s founder Tom O’Keefe, in a recent email exchange we were copied on, stated his belief that the building is actually owned by a family trust.  And indeed, when we called Wallace regarding the current disposition of the lease, we were told that the company only serves as the leasing agent for the property.  Although we left a message with the listing agent at Wallace, we did not receive a return phone call following up on our request for comment. 

So we decided to go directly to US Bank to see if the bank is indeed in the hunt for space in our neighborhood.   We were aware that in past years the bank had been interested in the potential of Madison Park, so the idea did not seem farfetched.  Unfortunately, US Bank was only slightly more forthcoming than Wallace Properties in providing an answer.  At least we did get a call back, though all Chris Heman, the bank’s regional Retail Banking manager, was willing to give us was an official “no comment.”  Now you might think that if the story were absolutely untrue the bank would be willing to deny it.  But that’s not how things work in the corporate world, so we probably should not make any assumptions. 

Except perhaps one.  Late last week Wallace Properties slapped some “For Lease” signs in the windows of the building. So, whatever the status of any behind-the-scenes negotiations for tenant space, at this point we may assume there’s no done deal.  And with regard to the idea of another bank coming into Madison Park, is that concept really crazy?  This is, after all, where the money is.  And, as one of the neighborhood’s bank managers pointed out to us last week, the Magnolia neighborhood already hosts five or six bank branches.  So why not Madison Park?

Indeed.

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Tully's to close Monday

In bankruptcy, Tully's will shut "unprofitable" location here

As we reported on our Facebook page this afternoon, Tully's Chapter 11 bankruptcy, announced earlier today, has implications for coffee drinkers in Madison Park.  Sunday will be the last operating day for our neighborhood Tully's.  It is one of eight Seattle-area stores that the company will be closing, according a story in the online edition the Puget Sound Business Journal.  Tully's has been struggling financially for many years (indeed, its ultimate demise has been assumed in some quarters for much of the company's twenty-year history).  Tully's Chapter 11 filing does not mean that the company is going under, however, since a reorganization plan will be developed while the company is in bankruptcy. If the plan is acceptable to the creditors and the court, Tully's will likely emerge in a somewhat slimmed down form. But Madison Park will clearly not be part of Tully's future, whatever that might be.

Though it might have been journalistically correct to enter Tully's this evening to interview the staff and patrons about their reactions to the bankruptcy, we decided that would be gauche.  It's hard, however, not to think about the employees now losing their jobs, as well as those Tully's aficionados who will in future have no coffee-house alternative to Starbucks in the neighborhood. 

Columnist Knute Berger once claimed to see Madison Park as a neighborhood divided along a Starbucks vs. Tully's fault line:

"Starbucks and Tully's are locally founded chains...One is much like the other. But the difference in feel between these two cafes is marked...Tully's embodies some kind of older, village version of Madison Park. Starbucks seems to bustle like a cross between a busy ski lodge and a place where people in office-casual dress take meetings. The Starbucks and its customers seem a little more groomed, more LA, more SUV. Tully's is a bit more neighborly, relaxed. It's old tennis shoes versus the tennis club."

With Tully's gone, how are we going to differentiate ourselves now?

[Tully's is located at 4036 E. Madison Street.]

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