Land mogul stirs discomfort in Sodo

He drives a pickup, wears no jewelry, dresses in jeans and speaks gently in his dingy walk-up office overlooking an alley. He wouldn't be mistaken for Donald Trump.

Yet Henry Liebman is a genuine real estate mogul, controlling more property just south of downtown Seattle than any other single landowner.

Married with two grown daughters and a luxuriously furnished home in West Seattle, Liebman, 55, won't say what he's worth, but he acknowledges being "fortunate beyond any number I ever had in my head."

Friend, colleague and investor Vince DeLuca, a senior vice president at commercial real estate giant Colliers International, estimates Liebman's worth to be "several tens of millions of dollars."

		MERYL SCHENKER / P-I
	Henry Liebman, 55, controls more real estate just south of downtown Seattle, including the Ederer Cranes Building on First Avenue South, than any other single landowner. Liebman used foreign investment and a federal immigration service program to acquire land.

The profile of Liebman's company, American Life Inc., was low until March, when news broke of a rent squabble in one of his buildings. He became more visible in June, when he announced plans to expand his holdings outside Sodo by buying the Alaska Building in Pioneer Square and running it as a hotel.

Both developments irked some Seattleites who were already peeved at how Liebman, a former immigration lawyer, finances many of his purchases. He uses money from foreigners, invested on their behalf in exchange for permanent residence in the U.S.

Critics think his exclusive local participation in the federal immigration service's EB-5 program gives him an undeserved advantage over other prospective buyers.

It's all the more unfair, they say, because it lets immigrants invest less to get a green card based on Sodo's high unemployment rate -- a rate they say doesn't exist and never has.

Liebman is also raising the traditionally affordable rents of Sodo's industrial tenants, causing some to consider moving away. That leads critics to say he is using the federal program to undermine a local government initiative: preserving industrial land for industrial use.

But then, many things about Liebman seem to tick people off. His critics most often describe him as disingenuous.

Take, for example, his ambiguous stance on a Sodo rezoning, which would let him build bigger, more lucrative buildings to house non-industrial tenants once alien to the area.

The city's current use restrictions on industrial land "have turned out to be pretty foresighted," said Dave Gering, executive director of the Manufacturing Industrial Council of Seattle. "Henry has absolutely subverted those," turning the Sodo real estate scene "into a big 'Monopoly' game -- and he's winning."

The King County Industrial Council called a meeting Tuesday to build a coalition against rezoning efforts -- efforts backed, in the group's view, by Liebman. Executive Secretary David Freiboth called rezoning a threat to the financial viability of middle-class workers downtown.

Then there's Liebman's bid to expand the regions in which he is entitled to invest under the federal program to Everett and Tacoma from Sodo, Pioneer Square and South Lake Union. Some see that as a threatening expansion of Liebman's power base.

But in the eyes of international investors and immigrants -- for whom Liebman has made possible both citizenship and a healthy profit -- he is a trustworthy businessman and ally.

Pam and Bob Swift of Chichester, England, chose to immigrate through Liebman's foundation. "They're a tried and tested investment," said Pam Swift, 48. "Everything he said was true to his word."

Friend DeLuca attributes negativity about Liebman to his role as a landlord -- and to jealousy.

"That combination of keen intellect and a lot of street smarts -- you put that together, and you're gonna end up with a guy who knows how to make a buck," he said. "I really do think there is no small amount of envy out there."

In his own view, Liebman has a knack for making money and an unusual combination of qualities: language skills including midlevel Japanese, an immigration-law background, knowledge of real estate and finance, and a good idea of how the world works.

"It's a narrow blend of skills," he said when discussing how he has built his empire. "It's not that no one else could do it. It's just no one else has done it."

On a recent walking tour of Sodo, Liebman -- slight, trim and deeply tanned from a recent Alaska fishing trip -- showed off a dozen of the 29 buildings his company owns. Some are former manufacturing facilities being converted into office and retail space.

Even industrial zoning allows for limited office and retail space -- just not residential facilities, indoor sports facilities or big-box retailers, he said.

Many of the buildings are so undistinguished architecturally that they will be torn down. Others feature clerestories 45 feet up that let the light pour in, heavy, old-growth beams sandblasted until they glow, and a sense of history despite their modern comfort and efficiency.

"Isn't this better than those five-story towers along Elliott Avenue?" Liebman asked. "Who wouldn't want to be in a building that has character like this?"

'Looking for a way out'

Liebman discovered Sodo as an investment in the early 1990s.

A Miami native, he attended Syracuse University in New York and completed his undergraduate studies at the University of Washington. In 1980, he graduated from the University of Puget Sound Law School.

"I had to do something," he said. "My father was a lawyer. What else could I do?"

At first practicing tax law and then immigration law, Liebman made a "decent living and was better at it than most," he said. But he didn't enjoy the practice.

"I was always looking for a way out."

The way out was real estate, which he began buying in downtown Seattle in the mid-1980s and in Sodo about 1993.

Liebman's real estate career got a huge boost in 1995, after several city, state and federal government programs aligned in his favor. Those programs were already trying to revitalize some areas south of downtown by using grants and tax incentives to entice businesses to remain there, Liebman said. He found them useless.

But then the federal immigration service made a key change in its EB-5 visa program. That program initially required that every investment directly create 10 new jobs. But in 1995, it changed that requirement, instead mandating that every investment create 10 jobs either directly or indirectly.

Liebman made a beeline for City Hall, where he asked the city to support his bid to make the Central, Southeast, Delridge and Duwamish areas (the latter encompasses Sodo) a so-called regional center. Only properties within a regional center can serve as investments under the federal program.

His bid for a regional center was approved. He called it the Golden Rainbow Freedom Fund. As of Dec. 31, he had invested $292.3 million in Sodo real estate, roughly split between visa seekers and other investors.

Today, though, Mary Jean Ryan, director of Seattle's Office of Economic Development, may wish she'd never heard of Liebman.

In September 1996, she wrote a letter to the U.S. immigration service advocating authorization of his regional center.

"When we wrote it, our understanding of the funds is that they would be a source of capital for small businesses in the Duwamish area," she said. Instead, by investing in real estate, the fund has actually undermined the manufacturing base, Ryan said.

"We ... never would have supported something like this, that would have the ultimate consequence of making it difficult for them to operate in the industrial area," she said.

Sodo's changing residents

Sodo has been a home to manufacturers since industry first came to Seattle. Among Sodo's corporate residents have been makers of cranes, winches and other heavy-duty gear for the decks of commercial fishing boats, cork insulation and pottery.

The 4-square-mile area is also still home to about 50,000 employees, averaging earnings of about $50,000 per year, according to the Sodo Business Association. It houses about 2,000 businesses, which account for about 20 percent of the city's tax base.

But the area's makeup is changing. Retailers and companies occupying office space are creeping in, while longtime industrial occupants have moved out. Among the departed: Canal Boiler Works, Western Castings and Ederer Manufacturing, which built the steel wheels, rails, motors, gears and controls used to move the retractable roof at Safeco Field.

In 1998, a city report said the vision for Sodo's future included "an emerging high-technology business base." The city is now re-examining that vision, considering whether to change Sodo's industry-preserving zoning to allow more retail and commercial uses. Last month, the Seattle Planning Commission issued a study recommending that the city "significantly restrict" retail and commercial uses allowed in areas now zoned industrial.

But there is no unified bloc of industrial companies opposing rezoning, said Rick Osterhout, a senior vice president at GVA Kidder Mathews. "Some companies that own land want the freedom to sell and make a profit from it, and freezing zoning could hold down the land's value," he said.

Joe Hoff, a merger-and-acquisition specialist who once headed Ederer Manufacturing, said Sodo is already too expensive for heavy manufacturers.

"Unless your customer base is right there, it probably doesn't make sense to be running a manufacturing operation there," Hoff said. "I did hear that what Henry's doing in the Sodo district is controversial, but I think he's just filling a gap."

Rezoning a 'bonus'

Liebman's position on Sodo rezoning is hard to pin down. Until this spring, his company's Web site claimed that the Port of Seattle favored rezoning Sodo and that it would likely occur. In a May 3 letter, the Port demanded that Liebman remove those statements from the site, which he promptly did.

More recently, Liebman issued an enigmatic remark on his rezoning stance.

"I'm in favor of keeping it industrial and not having residential here -- but it's all in how you define 'industrial,' " he said. "I'd include software, engineering-intensive, the medical instrument companies as industries. That's modern industry. Microsoft would probably want a downtown campus."

A change to full mixed-use zoning would clarify whether technology and R&D are an industrial use, Liebman said, and would mean some parts of Sodo would have fewer restrictions on office space. It might also allows some residential use.

"We don't buy anything on a bet that a rezone would occur," he said. "We don't need a change in zoning to be profitable and produce a very nice return for the investor. That would be a bonus."

Freiboth, of the county labor council, thinks Liebman's ambiguous stance is less than candid.

"When property is purchased and rents are raised, tenants move out, and if new industrial tenants don't replace them, he can say, 'It wasn't my intent, but that's the way the market goes.' "

That's precisely what Liebman does say. MacMillan-Piper Inc., a freight handler, rents 108,000 square feet at 1762 Sixth Ave. S. from Liebman. He has told the company that he will raise the rent 60 percent when the current lease expires.

"We had a discussion," Liebman recounted. "I said, 'If you can't afford that price, then you've got a problem with your (economic) model, because that's not me, that's the market.' "

Liebman doesn't believe that companies are leaving Sodo because rents are rising. In his view, they are leaving for other reasons. "The vacancy rates are almost zero," he said. "As we walk around, I can point out by memory why people left."

How does Liebman feel, being a landlord at the center of so much controversy?

"It's uncomfortable," he said. "A lot of landowners here are probably thanking me for it, because they want a rezone, too, but they've been able to stay out of the papers."