Seattle Office Space News – April 2019

1/ May 2019

Below are
comments and links to news articles and other topics relevant to the Seattle
office space market from the month of April 2019.

OFFICE
DEVELOPMENTS

In April Simon Property Group announced plans for a massive redevelopment of the Northgate mall that will eliminate the Nordstrom building along with several other shops. According to plans filed with the City the new project will have 978,500 square feet of office space but the timeline for redevelopment is still unclear. The nearby light rail station is scheduled to open in September 2021.

Construction fencing has gone up around the former FX McRory’s building at 419 Occidental Ave S as part of the RailSpur development in Pioneer Square. Urban Villages and Manchester Capital are converting this and two other historical buildings to 98,800 square feet of LEED Platinum office space. Renderings of the space can be found here.

SRM Development of Spokane will co-develop deep-green Living Stone offices at 3524 Stone Way N in Fremont with Schwartz Co. They hope to begin construction in early 2020 with completion in estimated for late 2021. Weber Thompson is designing the five-story office building. The building will employ the Living Pilot Program which allows for more floor space in exchange for various green features.  There will be about 115,000 square feet of office 7,700 square feet of retail/ commercial space and 149 parking spaces.

Nitze-Sagen paid $8.5 million for 760 Aloha Street and plans to expand the South Lake Union warehouse into boutique offices. The plan is to add three levels plus a penthouse creating a 44,481 square foot building.

OFFICE
LEASES

The biggest office lease reported in April was signed by Dropbox Inc who leased four floors at 1201 2nd Ave in the central business district.  The building, better known as 2+U, is currently under construction and being developed by Skanska.  Dropbox is expected to move into the space in late 2020. The 2+U building is 60 percent leased with other tenants including Indeed and Spaces, a co-working company.

Also, Hulu signed a 67,400 square foot lease in Seattle’s Madison Centre located at 920 5th Ave; which could accommodate nearly 450 employees. The Los Angeles-based company plans to hire more than 200 new technology and product workers by the end of the year. Other tenants in the building include WeWork which leased 91,000 square feet last year.

Square Inc continued their expansion into Seattle by leasing 14,000 square feet of office space in the Financial Center building at 1215 4th Ave in the CBD. The new office has room for 100 employees. The company recently expanded in the Bay Area leasing all 356,000 square feet of Oakland’s Uptown Station and expanded its San Francisco headquarters to more than 469,000 square feet.

Finally, WeWork continued their expansion into Seattle with a lease of two floors at the Viewpoint building located at 2401 Elliott Ave in Seattle’s waterfront submarket.   The coworking giant now has 1.7 Million square feet in the Seattle Area.

OFFICE
BUILDING SALES

Unico Properties along with a Portland minority partner has acquired the 34,568 square foot Washington Park Building at 80 S Washington Street located in Pioneer Square. The sale was confirmed in a press release, but no partners or price was specified. The building located on the corner of Alaskan Way South faces the viaduct that will be gone by late summer or early fall.

ECONOMY

Even with news of Amazon looking outside of Seattle, the e-commerce giant still has plans to have 55,000 employees and add another 2 million square feet of office space here. There are several building permit applications filed with the Seattle Department of Construction and Inspections which include expansions, improvements and new projects at several addresses in Seattle. The additional space would give Amazon enough room for about 15,500 employees. 

With new housing openings scheduled to peak this spring and summer, there is a consensus that rents won’t be increasing much for a while. The average rent across the region, including King and Snohomish counties increased less than 1% over the last 6 months, which is the smallest spring time increase since 2010. About 1 in 10 apartments across the city currently remain empty. Seattle is undergoing a building spree as evidenced by the 17,450 apartments delivered in 2018 (48 per day).

Across King County, availability of condos has tripled since the market peaked last year and a typical condo now sells for below list price. The number of condos on the market countrywide has soared 164% while sales have decreased 15% versus a year ago.

According to The International Construction Market Survey, Seattle ranks as the world’s sixth most expensive city for construction. The average cost per square foot in Seattle is $338 coming in behind San Francisco at $417 per square foot. The report lists Seattle as a city that is overheating, meaning there is high cost inflation because of intense competition for resources and labor.

An annual survey of some of the biggest foreign institutional real estate investors shows that Seattle is third among cities where investors want to increase their real estate exposure- behind New York and Boston but ahead of Berlin and San Francisco. Investors ranked New York as the leading global city for the most stable and secure real estate market and second for capital appreciation.

TRANSIT

The section of Columbia Street that was closed during the demolition of the on-ramp to the Viaduct reopened on April 10, 2019.

The viaduct demolition has passed the 30% completion mark and the $93.7 million project remains on track to finish this summer.

ARENA

The privately funded Key Arena construction project costs have reached $900 million and the targeted reopening has been delayed several months. NHL Seattle President and CEO Tod Leiweke stated that the project should be delivered by the summer of 2021. According to Leiweke cost estimates have also escalated because of higher local building material and labor prices and upgrades implemented by OVG and NHL Seattle.

OTHER NEWS

CallisonRTKL, a large Seattle architect firm, is renovating its longtime Seattle office at 1420 5th Ave and housing the same number of employees in a third less space. “We looked at how we work and how things changed over the years. We don’t have the big sets of drawings. We don’t have drafting boards. We don’t have all the stuff that’s not needed anymore because technology is really a mainstay of how we do our business now,” Reeves said. The cost of the renovation is $1.8 million and includes furniture. The space will include co-labs, smaller worker spaces and a wellness center.

Written by // flinn

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