Safeco to sell its Seattle headquarters

Safeco plans to sell its 22-story tower in the University District, cancel plans for a second tower nearby, and instead move employees into leased space near the university and downtown, the insurance company announced today.

The announcement marks a major reversal by Safeco, and a blow for investment in the U-District.

Under the plan about 700 employees would go into leased space near the university, and 500 downtown. The sale of the company's Redmond campus would move forward, and employees who work there would relocate to another undetermined Eastside site by 2008. Previous plans called for the Redmond employees to shift to the U-District.

In calls to Seattle City Hall this morning, a Safeco official described the "dramatic" change as a "new and revised real-estate strategy" that would help the company's competitive position in the insurance industry.

In its announcement this afternoon, the company called the new strategy a "lower-cost solution" than its plans to consolidate all of its Puget Sound employees in the University District.

"We explored many alternatives and feel this course affirms out commitment to Seattle and the Puget Sound region and positions Safeco to be a successful, low-cost provider in a competitive insurance market," Paula Rosput Reynolds, Safeco president and chief executive officer, said in a prepared statement.

The company sells insurance to drivers, home owners and businesses.

The news came as a surprise to Seattle political leaders. Council President Nick Licata said, "this is totally new to me." The company wanted to build a new 125-foot-tall office tower across the street from its existing tower. The plan would have required rezoning, and Mayor Greg Nickels and City Council members supported the effort.

Nickels's office said Reynolds called the mayor this morning to notify him. "I will say the mayor was very disappointed," said spokeswoman Marianne Bichsel.

Last April, Mike McGavick, then Safeco's chief executive, in announcing plans for the second office tower, said the company looked forward to the U-District "being our home for many years to come." He also said Safeco's departure from the neighborhood would have left a "gaping hole." McGavick, now a GOP candidate for U.S. Senate trying to unseat Democrat Maria Cantwell, grew up in Seattle and still lives in the city.

Bob Young: 206-4642174 or byoung@seattletimes.com