Seattle Office Space News – August 2019

5/ September 2019

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

OFFICE DEVELOPMENTS

Earlier this year Seattle was ranked No. 1 emerging life science hub, and in August we learned that Alexandria Real Estate Equities paid the city of Seattle $143.5 million for Mercer Mega Block. The development site resides between Amazon’s campus and the many life sciences institutions located in the center of Lake Union neighborhood. The land deal is one of the most valuable and expensive land deals in Seattle history. Preliminary studies by the developer indicate the site can fit 740,000 square feet of office and lab space by 2022. To learn more about the Mercer Mega Block and Alexandria’s projects in the Seattle region click here.

Rainier Square, a mixed use development in the central business district, became the second tallest tower in Seattle in August.  The building, which is fully leased to Amazon, will total 58-stories and is expected to open in August 2020. This past month Wright Runstad & Co and its partners had a topping out ceremony which honored tradespeople who have worked on the project. The building was built eight to nine months faster thanks to the new structural system that Magnusson Klemencic Associates engineered.  The development is comprised of 80,000 square feet of retail, 720,000 square feet of office space, seven levels of underground parking and 191 luxury apartments.  Amazon is marketing the entire office portion for sublease.

Also in August a new 605 foot, 53-story residential, office and retail project known as 800 Stewart St released the first renderings. Six years ago real estate company Per Day LLC paid $13.4 million for the third of an acre property which is relatively small for a skyscraper. The office will be located in Seattle’s Denny Triangle neighborhood, and will have around 37,240 square feet of office, 568 residences, ground-floor retails and five levels of underground parking.

An office development known as Fremont Crossing broke ground just North of the Fremont Bridge and is expected to be completed in June of 2020. Last November, Pacifica Capital Investments and Pastakia + Associates acquired the land and project for $8 million. The development is located at 316 Florentia St. The project will preserve the three story century-old Bleitz building and connect to a new four-story building. The two buildings will have roughly 58,000 square feet of offices.

OFFICE LEASES

Alexandria Real Estate Equities announced that their project known as Eleven65, located at 1165 Eastlake Ave E in the South Lake Union submarket, announced a full-building lease while still under construction. Adaptive Biotechnologies signed a 12-year lease for the four-story 100,084 square foot building which is expected to be completed in second quarter of 2020.  Phase II of the campus located at 1150 Eastlake and will break ground next year with occupancy 2022.

Massachusetts based Bluebird Bio leased 25,000 square feet in the Atrium Building located at 188 E Blaine St. The space which includes research laboratories and offices can accommodate 50 people and the company currently employs 30 people. Other tenants in the Atrium building include Seattle Cancer Care Alliance with 40,000 square feet and Sana Biotechnology.

OFFICE BUILDING SALES

Canal Place Office Park sold two buildings located at 180-192 Nickerson St to Stephen C Grey & Associates for over $18 million last year.  The buildings will be renovated and expanded. The other two buildings in the complex are separately owned. The area was up zoned to 55 feet which allows for an addition. The developer plans to add three-stories to each of the current three-story buildings which would double their size.

ECONOMY

Seattle has seen dramatic changes over the past several years with increased home prices and massive development. With this growth the cost to live in the Emerald City has increased. According to a study, called the Cost of Living Index published by The Council for Community and Economic Research, Seattle was listed as the fifth most expensive city to live in. The only cities ahead of Seattle are New York City (Manhattan), San Francisco, Honolulu and Brooklyn. The six categories the study examines are housing, utilities, grocery items, transportation, health care and miscellaneous goods and services. Additionally, LendingTree announced in its study that Seattle is tied with Boston at No. 17 with the cities adding the most million-dollar companies. The No. 1 city was Austin, Texas.

Even though we are an expensive city, Seattle’s home-prices are lower than they were a year ago. The housing prices nationwide are still posting a strong increase, but since 2018 Seattle has seen a cool down in home-prices.  However, Seattle is the only major American city where prices have fallen compared to last year. The housing markets with the most growth are located in Phoenix, Las Vegas, Tampa and Charlotte.

Seattle may be the fifth most expensive city to live in, but King County condo prices have fallen and inventory has increased.  Many Seattle condo owners have sold their condos or are planning to in response to new city regulations that include several limitations. Several new developments are adding bonuses such as decorator allowance in tens of thousands of dollars and financing options to spark interest.  Developers and listing agents hope that more job growth will continue to fuel luxury condo developments and they believe it is not just Amazon’s presence.  For example Dean Jones mentioned, “consider Expedia’s move to the Interbay area. Google and Facebook and Apple haven’t even begun their job growth here.”

Serena Sayani and Joe Delaney both selected as CRE Attorney of the Year weighted in on the huge impact Amazon has had on the Seattle real estate market. They both agreed that Amazon has been a driver of Seattle’s growth throughout the years. Sayani stated, “Its growth has undoubtedly caused other big tech companies to establish a presence in Seattle in order to gain access to the talent pool here.” And Delaney stated, “They have directly driven growth by leasing and building over 10 million square feet of space.” To read more about what they have to say click here.

As several companies come to Seattle to establish offices to gain access to the talent pool that Amazon and Microsoft have fostered, James Payne senior vice president of US Bank states, “we’re living in a contemporary gold rush.’ Companies such as Google, Facebook, Salesforce, Apple, have leased office space for years to come which shows a commitment to the region.

TRANSIT

The city has seen rapid growth in the past several years which has led to a great need for improvements and innovation in our transit system. The removal of the viaduct is well under way and this past month the most suspenseful part of the demolition began. The removal of the viaduct is occurring in Pioneer Square where several buildings are only feet away from the removal. In order to protect the buildings new methods are being implemented and mesh curtains and plywood are used to cover the century old buildings. Earlier on in the demolition teams could smash entire decks, but now they are sawing and extracting the material using cranes. The schedule is about five to six months behind the initial schedule, but they do not expect big cost overruns.

One new innovation to Seattle is the editions of streetcars which help people get around the expanding city. Last year, a total of 1.7 million rides were taking on the South Lake Union and First Hill streetcars. However, the ridership in First Hill increased by 31% and the ridership in South Lake Union fell by 4%. A new segment is slated to open in 2026 and would connect the South Lake Union and First Hill lines. To read more about how the streetcars work, who uses them, and how much they cost to operate click here.

OTHER NEWS

The new waterfront park in Seattle is scheduled to be completed in 2023.  AIA Seattle’s Urban Design Forum will offer free tours that show post Alaskan Way Viaduct from 4:30 to 7 p.m. on October 2. The goal of the park is to help reconnect the city to the waterfront. Representatives from design firms, project leaders and the public sector will guide the tour of the pre-built-out waterfront. To register for the event and learn more about the project click here.

Equinox luxury hotel and fitness brands will be coming to Seattle. According to Wright Runstad & Co the Rainier Square will have an Equinox club on the fourth floor. However, the F5 Tower which is located five blocks away also has construction permitting records that indicate Equinox plans to build a fitness center in a neighboring building. This month several member of Equinox cancelled their memberships after an executive of the company hosted a fundraiser for President Donald Trump. Equinox executive chairman Harvey Spevak stated, “Our focus has always been about building a community centered on our values, not politics.”

A new street project in Pioneer Square with an estimated of $20 million is in the works in order to encourage more sidewalk activity and provide safer connections to the waterfront park. The streets included in the project are parts of South Main, Washington, Yesler and King. The goal is to make wider sidewalks, remove curbs, add greenery and give pedestrians better access. The project is expected to be completed end of 2022.

Written by // flinn

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