I tried pretty hard on this one for you, and unfortunately, my research came up inconclusive. However, I will say that it's quite possible that it used to be a cemetery. It was quite common in the early days of Seattle for cemeteries to be moved, especially in this area because it was part of the "Denny Regrade." The Denny Regrade was a massive landmoving project undertaken in the early decades of the 20th century to remove a hill near what is now Belltown.
Here is a map showing the area where earth was moved for the Denny Regrade. You will see that the address of this supposed Cemetery is within the zone where millions of cubic yards of earth were cut away to level the land:

If you would like to learn more about the Denny Regrade, the outstanding Seattle History website HistoryLink has more info here. Also, here is a great article from HistoryLink that talks about one of the many examples of a cemetery being moved in the early days of Old Seattle.
I had a hunch that there might have been a cemetery there, and the context clues from what others have gathered suggest it was likely a Jewish Cemetery, so I went here to investigate for you:

That's the Center for Pacific Northwest Studies and WA State Archives NW Region on the campus of Western Washington University in Bellingham.
In the Archives, the friendly Archivists at Western Washington University helped me find the 1890 Polk's Seattle Directory, listing all residences and businesses in the city for that year.
In the 1890 Polk's Seattle Directory, I found this list of cemeteries (sorry for the blurry picture, cell phone camera):

Zoomed in:

Here's what it says, in part:
Cemeteries
Jewish Cemetery: Adjoining the Free Methodist Cemetery
Free Methodist Cemetery: South of Odd Fellows Cemetery
Odd Fellows Cemetery: Between Lake Union and Smith's Cove, North of City Limits.
Ok, so we know that in 1890 there was a Jewish Cemetery adjoining the Free Methodist Cemetery, which was SOUTH of the Odd Fellows Cemetery between Lake Union and Smith's Cove. A little further research reveals that Free Methodist Cemetery is also known as Mt. Pleasant Cemetery, which is up on Queen Anne. It is this cemetery which was adjacent to the Odd Fellows Cemetery, which was adjacent to our suspected Jewish Cemetery, and alas, was not in Belltown after all.
So, my hypothesis was not proven correct. However,it was not proven false. I still think it is quite likely that there was a cemetery at that location which may have been moved as part of the Denny Regrade.
Suffice it to say that I tried. More information could probably be obtained in the Seattle Municipal Archives - they will have a complete list of Polk's Seattle Directories (WWU only had the one, their collection is focused more on NW Wash.) as well as a wealth of other primary source documents - but I'm sorry I'm unable to pursue it further for you. I'm up in Bellingham this week, and was able to investigate this during my lunch hour at the State Archives NW Region on the WWU campus, but I can't invest more time in this "off the clock." Historical research is actually a large part of what I do for a living.
A good resource to contact might be the "Ask MOHAI Blog" at the Seattle PI.
MOHAI - the Museum of History and Industry - has experts who might be able to dig deeper for you. Better yet, maybe the Gnome can get a MOHAI or Historylink.org Expert to do a "Seattle History Week" on Questionland. I, however, have dug as as deep as I can for you on my lunch hour, and come up short of an answer.
Cheers