Below are comments and links to news articles and other
topics relevant to the Seattle office space market from the month of July 2019.
At the beginning of July it was reported that 222 Fifth Ave N in lower Queen Anne was bought by Da Li Properties for $18 million. The site is currently occupied by McDonald’s, but the lease is scheduled to end next year. Originally there was talk that condos would be built, but Gensler stated that the new plan is for a new eight-story 200,000 square foot office building, ground floor retail, 125 parking stalls and 121 bike stalls.
The three-story 27,645 square foot Metropole Building located at 423 Second Ave. Ext. S in Pioneer Square has new life. The empty, fire-damaged building was sold at the end of June for $5.5 million. The buyer is an LLC that has an address associated with the Satterberg Foundation, but they declined to comment. The reported new plan is to renovate the structure as offices but the project requires approval from the Pioneer Square Preservation Board. To read more about complications of the project click here.
The site currently occupied by the Metropolitan Grill in the central business district, which is owned owned by the Smith family, may have mid-rise additions on 2nd avenue. The block which was assembled in 1994 and 2014 is confined by Second and Third avenues and Marion and Columbia street. In the southeast corner of the parcel a new 36-story office building called The Net located at 801 Third is proposed by Urban Visions. There has been no start date or tenant announced for the Net, however the a new plan was filed filed to add to additional floors to the Melhorn Building at 814 Second and the Marion Building at 820 Second. Greg Smith mentioned that the “Met Grill is not going anywhere”.
Sound Transit is growing its footprint requiring more office space for its workforce. The organization now has over 1,000 office based employees and recently added an additional 97,000 square feet of office space to their lease at 705 Union Station. Sound Transit now has a reported 341,000 square feet of office space near Union Station. By the end of the year, the company estimates it will have 1,200 employees. Sound Transit spokesman, Scott Thompson stated, “we’re trying to keep all teams together and plan for other growth”.
901 Fifth in the Central Business District sold for $305 Million in July to New York based Vanbarton Group. The 41-story 541,200 square foot tower was previously owned by a partnership between Investcorp and Schnitzer West. The building sold for about $563 per square foot and includes 385 underground parking spots. Schnitzer West will continue to manage the property which major tenants in the building include Cray and Pitchbook.
The Olympic Block located in Pioneer Square at 101 Yesler Way for sold for $34.25 Million or $468 per square foot in July. The building was purchased by Denver-based EverWest Real Estate Investors in partnership with Chile-based fund manager Frontal Trust. Brickman based out of New York was the seller. The building is 73,200 square feet with an additional 8,575 square feet of retail space and is 90 percent leased. Managing Director of EverWest, Ryan Madson said, they plan to improve interiors to full up the buildings and the property “checks all the boxes” for his company as he hopes to cash in on strong rent growth.
Pioneer Square has seen lots of recent building sales with the upcoming completion of the new waterfront park. Alexandria Real Estate Equities paid $13.2 million for the Masins Furniture building at 201 S Washington St plus the Main Street Gyros triangle. The sale was recorded in July and was worth about $344 per square foot for the building. Alexandria is active in the Puget Sound region with 1.4 million square feet in its portfolio. To read more about other purchases Alexandria has made click here.
Seattle’s economy has seen exponential growth over the last 10 years. However, in July housing prices fell in King County according to a report released this month by the NWMLS (Northwest Multiple Listing Services). Year-over-year median sales prices fell 2.8 percent in King County. Conversely in Snohomish County the median sale price only rose 0.7 percent. Conversely, in Kitsap County prices increased 10.6 percent and in Pierce County prices increased 7.3 percent.
Conversely, the Seattle apartment market is strengthening thanks to companies such as Amazon, Expedia, Facebook, and Apple who are adding thousands of new jobs to the region. According to, Philip Assouad and Giovanni Napoli senior managing directors at Institutional Property Advisors apartment owners in Seattle are leasing about 6-8 more units a month and offering less free rent.
July also brought news that Seattle still leads the US for the most cranes in a city’s skyline and is now tied with Los Angeles at the #1 spot. The list only counts operating cranes in 13 major North American cities.
Another positive indicator for the region’s economy is the strength of venture capital funding. As funding for startups dropped nationally in the second quarter, there was a bit of a different trend happening in the Pacific Northwest. In the second quarter, total funding doubled to $846 million up from $441 million in Q1. Some major funding rounds in Seattle included Outreach raising $114 million, Auth0 raising $103 million, Highspot raising $60 million and Flexe raising $43 million. To see the top 10 deals in Q2 in the Pacific Northwest click here.
With large amounts of funding in the technology sector comes increased demand for digital skills. There is a growing skills gap in Seattle and several other major cities. According to the Bureau of Labor Statistics, by 2020 there will be 1.4 million computer science related jobs and only 400,000 available graduates with the skills. Corporations such as Amazon are tackling this challenge by investing in employees to “upskill” them so they can become qualified for available positions.
Several experts and economists believe the next recession in Seattle will begin in 2020. At the end of July, Zillow released its second-quarter Home Price Expectations Survey, and half of the experts in the survey have stated it will start in 2020. One in five experts believes it will begin in the third quarter and another 35 percent said the expansion will end in 2021. Many people cited trade policy, stock market correction and geopolitical crisis as causes and only a few experts believe a housing slowdown is a factor in this downturn. To read more about Zillow’s findings click here.
Seattle has seen rapid economic expansion over the years and in the growing city we have also seen gentrification which is the changing of a neighborhood’s character when more affluent residents move in. In a report by the Federal Reserve Bank of Philadelphia, Seattle ranked 3rd among the country’s most gentrifying cities.
As the city has seen rapid growth new transit projects like the light-rail are needed. The $54 billion tax package that Sound Transit is using to expand mass transit is a good start, but many of the new links won’t be available for over a decade. Several people wish to speed up the process to accommodate commuters. Some useful suggestions that could help speed up the project are to buy land sooner, unite early on, find more money, and reduce planning time.
The Alaskan Way viaduct demolition along Seattle’s waterfront is another project that is dramatically changing the city. The project is in full-swing and we are starting to get more detailed views of what types of methods are used to tear down the roadway. According to Kelly Arnold of Ferma Corporation, “when you start doing demolition, you’ve got to kind of reverse engineer it to take it down” and this is shown in a video posted by WSDOT.
The Expedia Group is planning to move 4,500 employees to their Seattle waterfront campus around Oct 7th. The first building that is set to be occupied is the 500,000 square foot renovated former Amgen buildings. The new 180,000 square foot building will not be occupied until summer 2020. The company is moving its Bellevue headquarters to a 40 acre Interbay property that it purchased for around $228.9 million in 2015. To see a timeline of events click here.