In 1860, the Legislative Assembly of Washington Territory passed "An Act to Relocate the Territorial University" in Seattle, "provided a good and sufficient deed to ten acres of land, eligibly situated in the vicinity of Seattle, be first executed to the Territory of Washington for University purposes." Early in 1861 Arthur and Mary Denny, Charles and Mary Terry, and Edward Lander fulfilled the legislature's stipulation by executing deeds to a forested 10-acre knoll overlooking Elliott Bay. The University was established there, on the site of what is now The Fairmont Olympic Hotel on University Street.
Over the next thirty years, growing enrollment and the growth of Seattle around the 10 acres made the property inadequate for the University's future needs. In 1895, the University's main campus was relocated to its present Montlake site on the shore of Lake Washington. Some years later, the original campus site (less a small portion that had been sold in 1902) was leased to the Metropolitan Building Company for a term of 50 years. The Metropolitan Tract was expanded in 1958 in a property exchange with the US Postal Service and in the 1962 purchase of the site for the Olympic Hotel garage. The present area is 11 acres, and is managed and operated through long term leases with Unico Properties, Inc. and LHCS Hotel Holdings.
For more history on the Metropolitan Tract, an excellent resource is Denny's Knoll: A History of the Metropolitan Tract of the University of Washington by Neal O. Hines.