Seattle Office Space News – December 2019

8/ January 2020

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

OFFICE DEVELOPMENTS

Kilroy Realty purchased five parcels from Vance Corp for $133 million or about $2,224 a square foot. The parcels are located between Fifth and Seventh avenues and Stewart Street and Olive Way. The properties bought include a Bank of America branch, a circa-1925 parking garage at 600 Olive Way, a small surface parking lot at 1818 Sixth Ave, the Lloyd Building at 601 Stewart St and a large surface parking lot at 1825 Seventh Ave.

Unico Properties and Partners Group will work together to develop Cascadian, a nine-story, 211,100 square foot office building project located at 330 Yale Ave E in South Lake Union with expected completion summer 2021. The project has been in the works for years, formerly called Y + H but was rebranded to Cascadian. Perkins + Will designed the building and Sellen Construction is the general contractor. Unico and Partners Group also noted they will buy the Bellevue Connection, Bungie Inc’s current headquarters, a 227,800 square foot building located at 550 106th Ave NE in downtown Bellevue.

Schnitzer West purchased a development site located at 570 Mercer St for $7.8 million from Darlene Linke and Siegfried Linke. The site is across the street from the Bill & Melinda Gates Foundation at the intersection of South Lake Union and Queen Anne. The plan is to develop an office building with more than 100,000 square feet. Additionally, Schnitzer West has purchased a 1.5 acre property at 10635 NE Eighth St in Bellevue for $65 million and has been active in purchasing and developing properties in Colorado. 

OFFICE LEASES

Pitchbook continues to grow its footprint. The company added nearly 50,000 square feet of office space in Seattle, New York, London and San Francisco. In November, the company expanded to four floors at 901 5th Ave in Seattle’s Central Business District. The workforce has doubled since 2016 and Pitchbook plans to add 500 employees by 2021. CEO John Gabbert stated in a news release, “As our product user base nears 33,000 users and we look to accelerate our innovative roadmap, our operations need to grow and scale to support.”

Neoleukin Therapeutics, a publicly traded company, is expanding its Seattle presence. The company  leased 33,300 square feet of office and lab space at 188 East Blaine St in Eastlake. Other leases in Alexandria Real Estate Equities owned building include Bluebird Bio with 25,000 square feet and Seattle Cancer Care Alliance with 40,000 square feet.

OFFICE BUILDING SALES

This month New York-based KKR purchased two recently constructed office buildings in the Puget Sound for $1.2 Billion. They brought the F5 Tower located at 801 5th Ave in the Seattle CBD and a three-building complex located at 355 110th Ave NE in Bellevue CBD which includes a tower leased to Amazon. KKR purchased the 915,000 square foot complex from Hines for $756 million; approximately $809 a square foot. The F5 Tower was purchased from Stockbridge Capital Group for $440 million; approximately $888 a square foot.

The Apollo Building occupied by Amazon and located at 325 Ninth Ave N in South Lake Union was sold by South Korea-based Mirae Asset Global Investments. The 12-story,  317,804 SF building was purchased by a joint venture of Tristar Capital LLC and RFR Holdings both based out of New York City for $270.1 million; approximately $849 a square foot. The joint venture owns a total of three South Lake Union properties, two leased to Amazon known as Brazil and Amelia and one leased to Facebook known as Dexter Station.

Urban Renaissance Group LLC (URG) recapitalized Plaza 600, the approximately 209,250 square foot office building, located at 600 Stewart St. URG transferred ownership to BentallGreenOak for $97 million. The new partnership will allow for renovations in the lobby, common area, and ground-level retail spaces. The building is 91 percent leased and major tenants include MBI, Hoffman Construction, Regus coworking and Sazaan.

Roosevelt Commons, located at 4300 Roosevelt Way NE and 4311 11th Ave NE in University District sold for $157 million; approximately $684 a square foot. The, 229,300 square foot, two-building office property includes two parking structures with 432 stalls.  Intercontinental Real Estate Corp out of Boston bought the property from DWS Group.  The U District light rail station is two blocks east of Roosevelt Commons. The parcels will benefit from new zoning regulations which raised heights from 65 feet to up to 320 feet. The building is mostly leased to Seattle Children’s and the University of Washington.

1800 Ninth currently occupied by Amazon and Regence BlueShield sold for $206.25 million; approximately $653 a square foot. The property located at 1800 9th Ave was purchased by J.P. Morgan Investment Management Inc. from Chicago-based Heitman America. It was last sold for 76.5 million eight years ago.

ECONOMY

New data from residential real estate resource NWMLS shows November was more of a seller’s market for King County than at any time since the residential cooldown began 18 months ago. There were more buyers with fewer homes for sale. Furthermore, there were fewer new listing this November than the three previous years.

Along with the hot seller’s market, Seattle saw some of the largest rent increases in that past decade. Out of the 50 largest US metros, Seattle ranked 11th for rent paid in 2019 and had a 4.1 percent year-over-year increase. The areas with the fastest growing rents in the past year include Phoenix, Las Vegas and Charlotte.

As Seattle becomes more expensive, we also learned the Puget Sound ranked top in earning power for local employees. According to the U.S. Census Bureau’s 2018 American Community Survey, the average Seattle worker earned $46,857 last year. Seattle ranked fourth overall for the median work earnings among 53 major cities. However, earnings are not the same as income—it is one of the 42 components of income.

TRANSIT

Regional and state transit infrastructure has several expansion plans for the next 10 years to accommodate for growth. The public transit ridership has grown consistently and more transit options are in the works. The most notable project is the expansion of the Sound Transit’s light rail. The expansion includes extension to Lynnwood, Mercer Island, Bellevue, Redmond, Federal Way, Tacoma, and West Seattle all will expected completion before the end of the decade.

OTHER NEWS

The waterfront redevelopment in Seattle may require certain properties to owe more than $1 million dollars. The $160 million dollar waterfront Local Improvement District (LID) assessments listed twenty-nine properties with an LID assessment of $1 million or more. The owners of large properties have been supportive; however several small properties have sued the city to find alternative funding. Other funding will come from the state, city and philanthropists.

Written by // flinn

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