Downtown Seattle Real Estate Market Set for Two New Deals

By Alex Girda, Associate Editor

Seattle’s commercial real estate market is hitting its cruising speed with a number of high-profile deals set to be closed by the end of the quarter. The Puget Sound Business Journal recently broke the news regarding two acquisitions that are set to be finalized soon. The buyer in both instances is Unico Properties, an entity looking to snap up two of the properties that make up the Harbor Urban portfolio, a joint venture created by Urban Properties in Los Angeles and AREA Property Partners, a New York-based real estate company.

Both located in downtown Seattle, the two properties were part of the Bullit family’s original Harbor Properties portfolio, a venture that was eventually sold to the aforementioned partnership that became Harbor Urban. The two properties in question are the Logan Building, a 10-story office building located on the corner of Fifth Avenue and Union Street, and Pike Place Market, a retail property located near the waterfront of Elliot Bay at the base of a condo building and in the immediate vicinity of the Four Seasons Hotel.  

The Logan Building offers tenants 108,000 square feet of office space in the city’s downtown area. With a strong occupancy rate of around 93 percent, major names currently residing in the five-decade-old building include the Downtown Seattle Association, as well as retailers Butch Blum and Specialty’s Café & Bakery. The Pike Place public market includes retailers such as Cinnamon Works, Crepe de France, Hands of the World, Johnson Berry Farm, Marakesh Leather and The Great Wind-Up. The anchor tenant is Pike Brewing Co.

Image courtesy of harborportfolio.com

Schnitzer West Raises Funds Through Office Sale for Speculative Industrial, Office Development

By Alex Girda, Associate Editor

Schnitzer West has completed the sale of a number of office buildings in Bothell, The Puget Sound Business Journal recently wrote. They marked only the latest activity by the company in the South Puget Sound submarket. It is also reportedly gearing up to develop industrial properties in the area and is searching for good spots for office development.  

Schnitzer West sold seven office buildings to Eastside investor Stan Rosen as part of a portfolio traded for $25.8 million. The assets are located in Bothell, in the North Creek office campus. The deal was made for a 126,000-square-foot campus and Tech Center II, an office building totaling 31,000 square feet. The deals are reportedly fundraising for Schnitzer’s two major office developments in the greater Seattle area: Madison Centre and a Bellevue project.

Where industrial real estate is concerned, the company looks intent on developing property in South Puget Sound, following a pattern it has pursued with Valley Avenue Business Park in Puyallup. After Schnitzer West completed development on that 443,000-square-foot business park and had leasing in place for the facility, it sold it for $41.6 million.

With a proven business model and the industrial market improving in Pierce County, the company stands a chance of achieving a profitable investment on its development slate. Speculative development is popular in the South Puget Sound, according to the PSBJ, with as much as 2 million square feet of industrial space set to start construction in 2013.

Image courtesy of valleyavenue.com

Skanska USA Commercial Development’s First Seattle Effort Holds Groundbreaking

By Alex Girda, Associate Editor

Major construction firm Skanska recently held a groundbreaking ceremony for the first project that the company’s USA Commercial Development team has handled in Seattle. Stone34 is a mixed-use facility that will offer office and retail space in a sustainable environment, one that keeps in line with the firm’s eco-friendly construction philosophy. Skanska USA Commercial Development also has a number of other projects lined up for the greater Seattle area, with the submarkets of South Lake Union and Bellevue currently targeted for a number of projects.

Stone34 was designed to become a door opener for the Burke-Gilman Trail, and will serve a diverse population for the area. It features ground-floor retail and four levels of office space totaling 129,000 square feet. In addition, 8,500 square feet of outdoor pedestrian space is included in the building plans. Features will also include wide sidewalks, group seating, plaza spaces and bike rails designed by landscape architect Swift & Co. The ground-floor spaces arranged by Skanska were an essential design feature for Stone34’s anchor tenant, Brooks Sports Inc.

One of the flagships for the city’s Deep Green Pilot Program, Skanska’s Stone34 is pre-certified LEED Platinum, and plans call for the structure to employ hydronic heating and cooling, stormwater capture and reuse, as well as designs that allow for an increase in day lighting and the lowering of summer heat loads. The building’s idea of connecting two different areas is striking the fancy of the Fremont Chamber of Commerce. According to the chamber’s executive director, Jessica Vets, the entity is “thrilled that such a cutting-edge, green development is being built in this key location,” also mentioning the fact that “Stone34 will be a bridge connecting Fremont with Wallingford and shows how beneficial community connectivity is for all.”

The Seattle Deep Green Pilot Program calls for water and energy usage levels to be reduced by at least 75 percent of comparable buildings. With completion set for 2014, LMN Architects’ design will be ready for use starting next spring.

Rendering courtesy of skanska.com

Kilroy Snaps Up $170M Office Property in Booming South Lake Union

By Alex Girda, Associate Editor

The Westlake Terry office property in Seattle’s coveted South Lake Union was recently the object of a $170 million transaction. Vulcan Real Estate and occupant Group Health Cooperative sold the Class A office property to noted real estate investment firm Kilroy Realty Corp., an entity that in recent months has ramped up its spending in the Pacific Northwest.

South Lake Union is one of the fastest-growing office markets in the United States, and sustained activity from online retailer Amazon.com and tech giant Microsoft Corp. has cemented the neighborhood’s appeal.

Located on an entire city block at 320 Westlake and 321 Terry Ave. North, the 320,399-square-foot Westlake Terry office campus was built in 2007. It is set on a major transit line, with other mass transit arterials located in the immediate vicinity. The two-building property has earned a LEED Gold certification from the U.S. Green Building Council, making it much sought after.

The campus is entirely leased, with Microsoft and Group Health Cooperative occupying more than 85 percent of the space.

Westlake Terry’s occupancy figures are a clear indicator of the healthy office market that Seattle in general and South Lake Union in particular have been experiencing over the past few years. Data provided by Marcus & Millichap Real Estate Investment Services indicates that national vacancy rates are on a slight downward trend, while Seattle’s vacancy numbers have taken a dive since 2009. The strengthening market is a positive indicator for the local office market, a trait investors clearly appreciate.

For more on the sale, turn to “Vulcan Sells Kilroy $170M, 321 KSF Office Property” on cpexecutive.com.

Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com

Rockefeller Group, Sterling Realty Plan Bellevue Office Complex

By Alex Girda, Associate Editor

New York-based real estate company The Rockefeller Group is partnering with local entity Sterling Realty Organization on development of a 2.4 million-square-foot mixed-use office-and-retail complex on a 5.5-acre lot owned by Sterling Realty and located in Bellevue’s downtown area. The project will progress in phases, based on demand.

Located between NE Eighth Street and 106^th Avenue, next to the Pedestrian Corridor and  Key Bank, the site comprises five adjacent land parcels. According to the partnership, the earliest drafts of the plan call for a three-tower office complex on top of retail space. It will also include a public area featuring a number of top cultural amenities.

Rockefeller Group President & CEO Kevin Hackett said Bellevue “has become a dynamic ’24/7’ city – the type of vibrant urban environment on which our company has always focused when seeking office development and investment opportunities.” The Rockefeller Group is an 85-year-old entity that owns, develops and invests in real estate assets, with a portfolio that includes 7 million square feet of Class A office properties.

Image courtesy of Jelson25 via Wikimedia Commons. 

Turn to CPExecutive.com for more on this deal.

Essex Property Trust Closes Multifamily Deal with Kauri, Which is Also Set to Begin Construction

By Alex Girda, Associate Editor

Bellevue-based real estate company Kauri Investments recently completed the sale of one of its Seattle multifamily properties. The company has sold The Annaliese apartment building to Essex Property Trust for a reported $19 million, The Puget Sound Business Journal writes. The company is also intent on developing a new Seattle property, one that would be similar to the mixed-use development in which The Annaliese is situated.

  The development includes a 160-key Hyatt Place hotel that was not included in the sale. Developed in 2010, the complex is located at 110 Sixth Ave. N., near Seattle Center. According to PSBJ, the sale was not planned by Kauri, but an inquiry by Kidder Matthews representatives Giovanni Napoli and Phillip Assouad, working on behalf of Essex Property Trust, eventually got the deal going. According to Kauri’s CEO, Kevin Angier, the 56-unit multifamily rental property had an occupancy rate of 95 percent at the time the transaction was completed.

Kauri Investments has also announced plans regarding a development that has a lot in common with the Annaliese-Hyatt Place project. The company is set to begin with the construction of a 46-unit apartment building and a Hyatt House hotel that would offer guests 126 rooms. Tentatively located at Fifth Avenue North and Broad Street, the development would capitalize on both the upward trend that multifamily properties have seen in the greater Seattle area during the past months and the strengthening hospitality market of the Pacific Northwest.

Image courtesy of arieldevelopment.com

Vulcan Real Estate Debates Multifamily Developments as Project Pipeline Grows Longer

By Alex Girda, Associate Editor

With all the real estate talk of the town focused on Amazon.com’s endeavors, the commercial market has been getting plenty of attention. But the residential market also hit its stride in 2012 and local development giant Vulcan Real Estate is not immune. According to the Puget Sound Business Journal, it is intent on developing a new multifamily property.

Vulcan is currently assessing market conditions and determining whether a construction start would be opportune. Tentatively set at 4041 N.E. Roosevelt Way, the 216-unit residential project would also include a 150-space underground parking facility, as well as the inclusion of 3,600 square feet of retail space. The proposed development is in the city planning phase, and yet Vulcan is still debating whether it will immediately go ahead with construction of the seven-story structure, according to the local business publication.

The project is somewhat unusual for the Paul Allen-controlled entity, as the company has to date focused its attention on South Lake Union, its only  development outside the submarket being the Martin apartments, an ongoing residential project next to the Cinerama Theater. The Seattle Housing Authority is currently considering Vulcan, along with a number of other developers, for the redevelopment of the Yesler Terrace public housing project in First Hill, while the company is also set to develop a City Hall complex for the city of Bothell. However, the municipality currently has that last project on standby.

Image courtesy of the City of Seattle at seattle.gov.

Amazon’s Denny Triangle Campus Phase One Gets General Contractor in Sellen

By Alex Girda, Associate Editor

Amazon.com announced the contractor that will be taking charge of the first phase of its Seattle campus in the downtown area of Denny Triangle. The tech giant has named local company Sellen Construction for the much-talked-about development in downtown Seattle, the Puget Sound Business Journal wrote.

Sellen has handled a number of high-profile Seattle projects in the past, including the redevelopment of the PacMed Tower, which interestingly enough was Amazon’s headquarters at the time it was finished, as well as the green and tech-laden Federal Way South redevelopment. That last project, previously referenced on this page, was handled for the U.S. Army Corps of Engineers.

For the Denny Triangle project, Sellen will construct a 37-story office tower on Seventh Avenue, as well as a 2,000-seat gathering space. Plans filed by the developer indicate that a retail component is also part of phase one, as well as an underground parking facility that will accommodate around 1,000 cars. A groundbreaking won’t be held soon, although reports this summer placed the start of the construction process sometime during 2013. But now that most of the approvals are in place and a general contractor has been selected, there should be no major stalls to keep Sellen from building phase one of the three-block, NBBJ-designed Amazon campus.

Sellen Construction has handled major projects such as the Russell Investments headquarters in Tacoma, a 273,453-square foot office building; and the 1973-built Safeco Tower, another 270,000 square-foot office building. Other projects include the Tommy Bahama Corporate headquarters, the Vulcan Real Estate-owned South Lake Union campus that has housed Amazon.com, the Skyline Tower in Bellevue and many others.

Rendering courtesy of archpaper.com

Amazon.com-Occupied Office Tower Trades Hands, Expands in Denny Triangle

By Alex Girda, Associate Editor

Amazon.com is the bona fide engine of Seattle’s office market. If evidence of that fact up until this point is still deemed unconvincing, just take a look at the recent Amazon-involved headlines. West 8^th, the online giant’s new residence was recently purchased in a deal, which according to public records stood at around $278 million. The entity that acquired the office property is associated with AEW Capital Management, a Boston-based company that deals with institutional and private investment.

The 28-story building is located at the corner of 8^th Avenue and Virginia Street in downtown Seattle. Completed in 2009, the construction was previously owned by local company Touchstone Corp. alongside Prudential Real Estate Investors. After a couple of rough years during which the building failed to secure a major tenant and lay mostly unoccupied, Amazon finally snapped up most of the available space.  

In more Amazon-related news, the tech company has seen its plans for the proposed Denny Triangle campus approved by city planners recently. No less than three million square feet of office space are to be built in the area through six high-rise buildings with heights of up to 38 stories. The project also calls for a meeting center to be built including a 2,000-seat hall, retail venues, parking facilities to accommodate most of the employees, transportation improvements for the area, dog areas and garden terraces, the Seattle Post-Intelligencer noted.

Amazon is not finished with the plan yet, as the approval is still available for public appeal and changes recommended by the Design Review Board. The company has included a number of measures that it will support to avoid overcrowding the area with its development. These measures include: a third streetcar, $50,000/block for signal timing modifications, the reduction of single-occupant car use to no more than 21 percent of cars driving to the site during rush hours.

Photo courtesy of west8th.com 

Rendering courtesy of djc.com

South Lake Union Set for Rezoning Overhaul

By Alex Girda, Associate Editor

South Lake Union is growing at a frantic pace. Some developers are pitching office high-rises in hopes of scoring one of the big names that are constantly circling the neighborhood’s available office space, while others are proposing the next young-professional-oriented multifamily building. However, growth must be sustainable, and there are some skeptics that believe that the boom should be controlled and harnessed in a way that would prevent a possible new market breakdown. Vulcan Realty is not among those skeptics.

The company is proposing three high-rises close to the shore of Salt Lake Union. The Paul Allen-controlled entity claims that view corridors would be enhanced by the building of the 24-story-tall buildings, although there are people who oppose the project, claiming it would damage the aesthetic of the neighborhood, should the signature views of the lake be obstructed. The city is currently in talks to get a rezoning plan for South Lake Union that would allow the construction of 40-story towers in the area. However, Vulcan was hoping to be able to develop three 240-foot-tall towers near the shores of Lake Union in exchange for land and its contribution to important public benefit works.

Essentially, should its proposal be approved by the city council, Vulcan will hand over 37,600 square feet to the project called Real Investment in Social Equity that would get the area between Mercer and Republican streets affordable housing units, childcare services and a community kitchen. The 1.5 acres of land the city is hoping to amass for the initiative include 17,000 square feet of already owned land and another 12,000 square feet currently under private ownership. According to Vulcan Realty, the land the city would be getting is valued at around $10 million.

Rendering courtesy of djc.com