Peep Show gets bows from Seattle, Four Seasons

When Seattle's Four Seasons hotel opens, its $400-a-night visitorscan swim in a courtyard pool with sweeping views over Elliott Bay andunwind at an outdoor fireplace. Or, they can pop over to the peepshow next door.

That last amenity isn't in the official brochure for Seattle's"most sought-after address," a $120 million project whose developersinclude billionaire Bruce McCaw and a former Seattle mayor. Theysought to buy and demolish the neighboring Lusty Lady, the onlytenant in a squat, 1900-era building owned by a local family. Thefamily rejected a sale -- and still got $850,000 for air rights tothe views over their property.

Now, the strip club is being hailed as a hero in a backlashagainst the gentrification that has swept Seattle and many other bigU.S. cities. And the club has gained unlikely supporters, from BillGates's stepmother, Mimi, to the luxury hotel itself, which says it'sdelighted with its new neighbor.

"A local cultural icon," said Peter Hodgson, vice president ofcorporate planning at Four Seasons Hotels Inc. "We cater to peoplewho can afford to pay the most. It doesn't mean we're too good forpeople. We're in the service industry."

The Toronto-based hotel company's collision with the Lusty Ladybegan in 2004, when cellular-telephone entrepreneur McCaw, formerMayor Paul Schell and other investors formed closely held SeattleHotel Group LLC.

The group bought a parking garage, intending to replace it with a21-story hotel-condominium complex for the Four Seasons. A 4,000-square-foot unit in the building, about a block from Pike PlaceMarket, will cost $8 million.

CHEAP PEEPS

The Lusty Lady is a few steps south. The club, an old-fashionedpeep show where a quarter buys a brief look at a glass-enclosedstage, is something of a city institution because of the bawdy punson its pink marquee. One week, the sign read, "Our Business Is TakingOff!"

The bawdiness wasn't out of place during much of Seattle'shistory. Sailors and shipyard workers from the waterfront crammedFirst Avenue when the Lusty Lady opened there in the 1970s.

"They used to call it Flesh Avenue," said Walt Crowley, a Seattlehistorian who wrote a city timeline published by King County.Earlier, the building housed a seamen's bar and hotel called theSeven Seas and a theater called the Sultan that showed porn films.

The Seattle Art Museum moved in across the street in 1991. Acondominium development called Harbor Steps opened to the south in1994. By the time the Seattle hotel group announced its plans, itappeared that the Lusty Lady would be priced out by its new neighbor,said Matthew Gardner, a Seattle real estate consultant.

"They're two fairly conflicting uses," Gardner said. Units in theFour Seasons are fetching $2,100 per square foot, four times the $500average for new downtown condos, he said. Work on the new hotel beganin December; completion of the exterior is scheduled for next year.

OFFER REJECTED

The building's reclusive owners saved the Lusty Lady. Last year,the Seattle hotel group discussed buying it, managing partner JohnOppenheimer said. He declined to say how much the group offered. Theowners, a family partnership headed by Christto and Dorothy Tolias,turned them down, according to their lawyer, John Sinsheimer.

"The Toliases are very private people," he said. "The tenant paysa very decent rent, and they enjoy the income."

Oppenheimer said he and the Four Seasons never counted on buyingout the Lusty Lady. After his group was rebuffed, it joined HarborProperties, owner of the condos to the south, to buy the air rightsin a purchase recorded in December. That allows more natural light onthe south side of the new hotel and protects views for Harbor Steps.

"Part of urban living is you have all kinds of neighbors,"Oppenheimer said.

Another Lusty Lady supporter is Mimi Gates, 64, director of theart museum. She married Microsoft Corp. Chairman Bill Gates' father,William H. Gates II, in 1996. The museum has embraced its neighbor,which often uses the marquee to promote new art shows. One, forartist Chuck Close, read, "Chuck Clothes."

"The Lusty Lady's marquee is a Seattle landmark," Mimi Gates said.