Seattle Office Space News – December 2017

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of December 2017.

OFFICE DEVELOPMENTS

Wright Runstad broke ground on the massive Rainier Square development at 4th & Union in downtown Seattle in December 2017.  Rhine Demolition is using four excavators to tear out the old retail below the pedestal of Rainier Tower. The shops will be replaced by the 58 story building that will have 722,000 square feet of office space leased by Amazon on the lower floors, and 200 luxury apartments on floors 41-58. While the current retail space at 1301 5th Avenue is gone, the first two levels of the new Rainier Square tower will have 79,000 square feet of retail, amenity and fitness center space including an organic food market. Wright Runstad expects the tower to be finished in the summer of 2020.

BUILDING SALES

8th + Olive sold for $185.9 million in December, passing from 720 Olive Way Venture LLC (an entity of Talon Private Capitol) to PPF OFF 720 Olive Way LLC (associated with Morgan Stanley). The building, located at 720 Olive Way in Downtown Seattle, just underwent a $12 million renovation in 2015 after Talon acquired the property in 2014.  Talon purchased the 20-story building for $101 million in 2014 when it was four-fifths occupied with CHP of Washington who was set to move. After a massive renovation complete with all new elevators and a beautiful lobby, the building is now fully leased to online legal services company Avvo, along with Airbnb and Coupang, a Korean online retailer.

Off Center LLC has sold the Shilshole West office building in Ballard for $7.1 million, after paying $6.2 million for the property in 2014.The buyer was Shilshole West LLC, associated with a private investor in Kirkland. The six-story building is just under 40,000 square feet and was built in 1997, and is reportedly fully leased.

OFFICE LEASES

Internet retailer Coupang, the “Amazon of Korea,” leased 47,000 square feet at 8th + Olive in December. The company leased three floors with space for up to 350 employees. Coupang already employs over 100 people here in Seattle, and is looking to hire more. The company was founded in 2010 and has raised more than $1.4 billion.

Also, Cascadian Therapeutics has subleased a large portion of space from CTI BioPharma Corp at 3101 Western Avenue. The 52-month lease starts January 1, 2018 and gives Cascadian 44,000 square feet on two floors of the Belltown building.

ECONOMY

With Amazon pursuing it’s “HQ2”, there has been much hand-wringing and worrying about the potential economic effects of Amazon turning its gaze elsewhere. But, two top experts dampened the fires of panic by weighing in on some of the potential upsides of an Amazon power vacuum. Heather Redman, Co-founder of Flying Fish Partners and chair of the Seattle Metropolitan Chamber of Commerce insists that diversity of business is helpful. By seeing that Seattle is “open for business,” new tech firms could fill any gaps created by Amazon’s potentially decreased presence. Matthew Gardner, chief economist at Windermere Real Estate, agrees. He states that without Amazon immediately grabbing every new square foot of office construction, a desirable slowdown in rent increases could occur. And with less of a footprint, housing demand may slacken a little as well – something he would “not be unhappy about…whatsoever.”

Despite these calming opinions, the Seattle City Council has reached out to Amazon in December seeking to “hit the refresh button” on its relationship with the tech giant. Amazon responded, seeking to schedule a round table discussion in January. The issues of “mixed messages” sent to Amazon about the community of Seattle – and how welcome Amazon is in the city – will likely be addressed.

In another interesting indicator, Amazon ended the year with 3,500 job openings posted in Seattle, and that has some people worried. While the number sounds astronomical, it is down more than half from June 2017, where 9,000 jobs were listed for Seattle HQ alone. Amazon’s current listings are the lowest since 2014, petering out after a massive hiring binge that has lasted several years. While it may seem that Amazon’s appetite for employees is endless, it isn’t. With their new HQ2 search in the works, Amazon will likely seek to hire and fill needs in their chosen second home. Also, the internal news of hiring freezes/postponements, reorganizations to reduce redundancy, and cuts in travel fees speak to the need for Amazon to come to terms with how all their new hires will fit into the company. Whether these are simply normal fluctuations or the beginnings of a new trend for the company remains to be seen.

Despite the wintry weather and holiday season, home sales didn’t slow down in Seattle in December, which is sending housing prices through the roof. Sales of single-family homes went up 3.3%, and in King County, the median home price jumped 15.6% to $575,000 (including condos). Still, winter is the best time to buy, with less competition and sellers motivated to close out the year with a sale. The tax bill moving through Congress could also be a factor in the increase of home sales during the holiday season. Some real estate professionals have expressed concern that the tax bill would reduce or eliminate home owning incentives, which in turn could decrease the desire to own vs rent.

The single-family housing market may be hot, but the condo market is even hotter. Seattle faces a severe condo shortage compared to other large metropolitan areas, and this decrease is shooting the average condo price through the roof. In Seattle, the median condo price is now $453,000. Only 350 condos are available for sale throughout the entirety of King County, and it doesn’t seem likely to change any time soon. In Seattle, 94% of the housing units coming down the pipeline are apartments for rent.

Seattle’s endless climb in housing costs has landed it in the top five most expensive cities for renters. The median rent reached $1,448 in 2016, and all trends point towards further increases. Across Lake Washington in Bellevue, the median rent is a staggering $1,846 per month. And for the first time ever, Tacoma has hit the “$1000 Club,” with the median rent now $1,045.

With rental rates reaching all-time highs, the issue of rent control – long banned in Washington State since 1981 – is starting to become a viable possibility. State Representative Nicole Matri, D-Seattle, plans to introduce a bill in the upcoming session to repeal this ban on rent control. This bill will be the first attempt to overrule the ban since 1999. Despite most bills of the sort being deemed as doomed on arrival in Olympia, the housing crisis is worsening not just in Seattle, but across the state.  For the first time in years, Democrats will control the Legislature during the 60 day session starting in January. Some see it as an opportunity to push for rent control, while others warn that it will do more harm than good in the long run.

Finally, President Trump’s desire to curb immigration stems from a desire to help the America people and boost the economy. But KoKo Huang, an attorney at Jackson Lewis P.C. in Seattle, argues that it could actually weaken our region. It is no secret that Seattle has become a top destination for tech talent and startup growth, and plenty of those founders and entrepreneurs have been immigrants. In the Seattle area alone, immigrant residents total around 614,000 and paid $6.5 billion in taxes in 2014. Some of the most iconic startup companies in Seattle have been founded by immigrant entrepreneurs, such as Stripe, eBay and SpaceX. Under Trump’s immigration changes, Huang argues that immigrant entrepreneurs will leave or avoid Seattle, hurting our overall economic growth and significantly reducing our workforce.

ARENA

Seattle’s KeyArena, former home to the Seattle Supersonics, is officially getting a facelift. Early in December, the Seattle City Council approved a plan to let Oak View Group spend $600 million to renovate the aging event venue. The development will nearly double the size of KeyArena to 680,000 square feet and will create capacity to seat 17,000 for hockey games, 18,350 for basketball games and as many as 19,100 for concerts. Oak View group has been focused on acquiring an NHL franchise and turning KeyArena into a world class NHL and concert facility in the hopes of eventually also attracting an NBA team back to Seattle.

Tim Leiwicke, head of Oak View Group, addressed various topics revolving around the KeyArena renovation at the GeekWire Sports Tech Summit this past summer. Some of his plans include streamlining transportation around the new arena, engaging with companies like Activision Blizzard, and improving spectator security through the use of technology like facial recognition and drones.

Oak View Group will fund the entire project, and their 39 year lease comes with two 8 year renewal options, totaling 55 years. The agreement between Oak View Group and the city includes many benefits to the city, from relocations of Seattle Center tenants (and their reintegration post-construction) to a $20 million Community Fund, with $10 million dedicated to YouthCare.

Finally, it seems like the agreement between Oak View Group and the city of Seattle couldn’t come at a better time, because National Hokey League Commissioner Gary Bettman has reported that the NHL Board of Governors is willing to accept and consider an expansion team application from Seattle. The application fee is $650 million, but Oak View Group is already planning to conduct a season ticket drive and collect deposits to show Seattle’s eagerness to have the NHL return to the Emerald City. There is already rampant speculation over the potential new team’s name, and NHL fans through the Puget Sound are excited about this new prospect.

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Seattle Office Space News – November 2017

 

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of November 2017.

OFFICE DEVELOPMENTS

November brought news of Amazon’s newest high-rise, 2205 Seventh Avenue, which is being designed with an “urban treehouse” theme. The site, Block 18, is being designed by Graphite Design Group and will have 388,000 square feet of office space and 8,800 square feet of retail. The top floor deck will be available to all tenants, and the building will also have collaborative gathering areas called “birds’ nests.” More pictures can be found here.

Also, Life sciences developer BioMed Realty showed off their new plans for 700 Dexter, a new life science campus in South Lake Union. The 500,000 square feet of office space is being designed by SkB Architects, and will be split between two 14-story buildings, each one connected by a double-decker sky bridge.

BUILDING SALES

There were no reports of office building sales in Seattle in the month of November 2017.

OFFICE LEASES

Uber may reign supreme in Seattle, but the competition is starting to heat up. Lyft signed a lease for 19,616 square feet at the 83 King building, adding to the 19,000 square feet they already occupy in the National Building. The ride-hailing company is currently hiring for a variety of positons in Seattle, and now has the room to add 200 more non-driver employees to its current 110. Lyft’s sales are growing faster than Uber’s, but despite this headway Uber still leads the market.

Spaces, a subdivision of the co-working company Regus, opened their first Seattle office with 60,000 square feet at 450 Alaskan Way in Seattle’s Pioneer Square submarket. The ever-growing number of co-working companies flocking to Seattle has experts predicting the total co-working square footage to double to over 1.3 million square feet in the near future.

Meanwhile, Nordstrom continues to offer more and more space up for sublease. The retailer has recently put 177,000 more square feet on the market at Russell Investments Center, which is located about five blocks from the Nordstrom flagship store. Nordstrom now has over 300,000 square feet available for sublease at Russell, some of which has already been subleased by Oracle and Indeed. Nordstrom insists that the release of space has nothing to do with financial troubles, and instead stems from a desire for consolidation of personnel. Regardless, Nordstrom is giving up more than a fifth of their downtown Seattle office space.

ECONOMY

People often talk about how Amazon’s growth has affected rents in Seattle, but a new report from Zillow has officially quantified the tech giant’s impact. Seattle rents have increased by an average of $0.11 per square foot per year since 2011. And about $0.07 of that increase is due to what Zillow calls the “South Lake Union jobs boom.” New jobs means more people, and more people drives up demand – and rent. Zillow discovered a relationship between the number of SLU employees in a neighborhood, and larger rent increases.

In a new quarterly report from HSH.com, the study found that the average prospective buyer needs an $11,000 pay raise just to afford a typical mortgage. Households need an income of $93,400 per year to afford monthly house payments in the Seattle metro area, up from $82,000 only a year ago. Down payments are also increasing, putting pressure on some to buy now before costs get too high, or simply pricing people out of the market entirely.

Downtown Seattle’s skyline may be looking increasingly crowded these days, but developers continue to erect apartment towers despite the squeeze. Skanska recently paid $21.6 million for a property in Belltown, which will eventually become a 346-unit apartment tower. Multi-family housing keeps popping up, but the demand is still outpacing supply. Seattle continues to add jobs, and the record appetite for office space in the city sends a clear message: people working in Seattle need to live somewhere. Skanska’s Executive Vice President, Murphy McCullough, says that even though it’s hard to believe, the market still isn’t building enough apartment buildings.

Many of Amazon’s office leases are coming to a close in 2019, but John Schoettler, vice president of global real estate, insists that many will be renewed. Amazon’s future space needs are up in the air, but for the foreseeable future, Amazon will be a major leasing tenant in Seattle and also Bellevue.

All these rapid changes in the market have resulted in some mental turmoil in the Seattle area. A recent poll regarding the direction of Seattle’s growth reflects a mixed opinion – pessimistic in some regards, optimistic in others. 70% of people believe that the region’s growth benefits only a few, but 69% also believe that the Puget Sound region is moving in a positive direction. Just over half of those asked think that the region is becoming “world class,” but only 38% believe that their quality of life has gotten better.

ARENA

The Seattle City Council is just about ready to approve Oak View Group’s bid to renovate KeyArena. The vote will be on December 4th, right after a memorandum of understanding (MOU) with Chris Hansen expires. If the vote passes, the City will sign a 3-year MOU with Oak View Group. The project’s overseer, Lance Lopes, revealed some details of the timeline and goals of the arena renovation, including budget, parking concerns, and whether or not the NBA will decide to move back to Seattle.

TUNNEL/VIADUCT

The new Highway 99 tunnel is over a year away from completion, but the lower deck is now being built out. 1,152 concrete panels will form the lower deck, a different construction than the tunnel walls and upper deck, which were cast in place.

A Geekwire article has taken an even deeper look into the future home of Highway 99, riding through the tunnel before its completion. For more pictures and a narrative exploration, read on here.

OTHER NEWS

Our shifting work landscape continues to move away from the linear efficiency-focused model of past decades, and towards a creative, flexible model that encourages expression, fluidity and innovation. The office environment can be set up in a way that fosters creativity and empowers employees, 87% of which seek creative, forward-facing companies (according to a 2016 Gallup poll).

Wood-products company Weyerhaeuser has won NAIOP’s “Office Interior of the Year” award for its innovative, re-purposed headquarters in Pioneer Square. Images of Weyerhaeuser’s space and the other finalists can be found here.

Finally, Launch Pads takes a look inside Hulu’s dynamic tech space at Fourth & Pike, which runs 24-hours per day to monitor Hulu’s growing host of apps. A closer look at Hulu’s office can be found here.

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Seattle Office Space News – October 2017

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of October 2017.

OFFICE DEVELOPMENTS

Construction officially began at the Rainier Square site in October, which when complete will have 722,000 square feet of office space and 58 stories leased to Amazon. The University of Washington currently ground leases the site to developer Wright Runstad for $413,000 per year until the tower is completed, and just over $1.65 million per year after completion.

Troy Block, also occupied by Amazon, formally opened this month – just days after the announcement of Amazon’s full building lease at the new Rainier Square site. The 800,000+ square foot Troy Block, combined with the 722,000 square feet at Rainier Square, is slightly larger than that of Columbia Center, Seattle’s largest office building. Speculation on whether or not Touchstone, Troy Block’s developer, will sell the building has neither been confirmed nor denied by Touchstone officials.

Skanska has poured the foundation for 2+U, its new 38-story office tower, in an endeavor that took 23 hours and 11,000 cubic yards of concrete. The foundation, which is 40,000 square feet total and 12 feet deep, includes 2.8 million pounds of reinforced steel and began pouring at 2 AM on September 30th, stretching through the day and well into the night. The tower is scheduled to be complete in Q2 of 2019.

Down on Fifth Avenue and Marion Street, Madison Centre has officially opened its doors. The gorgeous multi-tenant office tower, developed by Schnitzer West and Barings LLC, was built to recruit exceptional talent through location and amenities. Officials are tight-lipped on the cost of the building, but it’s estimated to be around $430 million. A first look at the new tower can be found here.

BUILDING SALES

Unico Properties bought World Trade Center North from an entity of TIAA for $65 million. It had previously sold for $71 million in 2007, making this newest sale 8% less than when TIAA purchased it. The five-story 133,177 square foot building is one of three built on Port of Seattle land. WTC North is currently 75% leased, housing PMI, Comtech TeleCommunication Systems and Stanley Thermos.  According to Unico officials, the building was bought with the expectation that the Pike Place waterfront area is about to go through “a dramatic transformation,” and they are eager to integrate the property into this new waterfront.

OFFICE LEASES

Wright Runstad has said that construction will begin at the new Rainier Square development, after officially confirming that Amazon will be taking the entire office portion. The Amazon deal is the largest single lease in Wright Runstad history, and the skyscraper is the largest they have built. The mixed-use skyscraper will contain 200 luxury apartments and retail space in addition to the 722,000 square feet of office that Amazon will occupy.

While Amazon remains king in Seattle, Oracle is also boosting its presence in the Emerald City with a lease of 167,000 square feet at Russell Investments Center. In addition, Oracle is also taking 10,000 more square feet at Century Square, its current location. Oracle is seeking to broaden its cloud business, planning to hire over 5,000 engineers, sales and support people, in an effort to compete with Amazon and other cloud based companies.

The top six floors of Starwood Capital Group’s Macy’s building on Third and Pine have officially been leased by Amazon. The 475,000 square feet of office space will fill Amazon’s ever-growing space requirement in the downtown core while they wait for Rainier Square to open in 2020. This historic building once housed Macy’s on all seven floors, plus the basement, but the retailer has now shrunk to just the basement and ground floor.

Co-working company Thinkspace has leased 20,000 square feet in the Lake Union Building, hoping to open up space for tech startups next year. Thinkspace’s new location will include shared space, co-working, meeting rooms, event space, and even a lake view balcony overlooking Lake Union. The new office will do a soft opening in February or March of next year, and its theme is “grit and resilience,” fostering an environment where startups and entrepreneurs can push their limits and achieve their visions.

ECONOMY

Seattle remains the nation’s hottest real estate market, shattering yet another record this month and maintaining its title as the nation’s top market for an entire year. The rate of growth in home values rose 13.2% from last August, more than double the national rate of 6.1%. Seattle is now the fastest-growing big city in the country, adding 57 people a day on average to the swelling population. This influx of people hints at a tech company exodus from San Francisco, whose housing market is growing at half the rate of Seattle.

Despite the intense housing market, millennials are not “giving up” on buying a home. The Zillow Group Report states that up to 42% of people looking for a home are looking to buy their first. The typical news characterization of the forever-renter millennial is unfounded, as plenty millennials still see real estate as one of the most valuable investments they can make.

Home prices aren’t the only things that are rising in Seattle, however. Wage growth is also growing fast, and Seattle lead the country in growth for human resources, finance and food service jobs. Wages increased 2.1% from last October, and Seattle’s median base pay is $60,333 per year – though it lags behind San Francisco’s $68,023. More information on the fastest growing wages can be found here.

Aside from Seattle’s rising home prices and wages, the bustling restaurant scene here is facing a staffing crisis. With housing prices skyrocketing, many employees are moving further and further away from the city center, resulting in incredibly high rates of turnover for both front and back of house staff. Restaurateurs gathered at a panel hosted by Yelp to try and address these concerns, suggesting strategies to recruit and retain talent. Stronger leadership in the kitchen and the ability for employees to set more flexible work schedules were just two of many potential solutions to this daunting problem in the Seattle restaurant industry.

ARENA

The City of Seattle may be moving forward with their plans to partner with Oak View Group on the KeyArena renovation, but Chris Hansen’s group isn’t done yet. Hansen, who is trying to get a new area built in SoDo, has begun a campaign to make the KeyArena project public instead of private. This tactic, which had been used against Hansen in previous years, would delay the environmental-impact statement (EIS) and force the city to consider alternative sites. This could very likely push the city and Oak View Group over their deadline to complete the project in October 2020. While Hansen has claimed he does not intend to litigate against the KeyArena renovation, the stage is set for a potential legal challenge on the KeyArena project.

In addition to this potential legal battle, Chris Hansen’s land use lawyer, Jack McCullough, has challenged the city council’s assertion that the SoDo arena plan hasn’t been resubmitted due to Hansen’s failure to respond to transportation department emails. The city claims that emails were sent out last March and April, but nothing is mentioned on whether or not those emails were received, or to whom they were sent. It is estimated that it would take Hansen’s group and the transportation department three to four months to complete the required presentation to allow the SoDo project to move forward in attempts for approval.

Despite delays and deterrents, Hansen and his group continue to push for a SoDo area, going so far as to champion a two-arena setup with KeyArena downsizing to a concert venue, and the SoDo location hosting an NBA team. He plans to be “in it to the end” despite being the obvious underdog at the most recent city council hearing. Only time will tell whose plan will ultimately win approval, but both sides of the aisle are eager to court the return of an NBA franchise to Seattle.

OTHER NEWS

Construction began on Seattle iconic Space Needle, with architects Olson Kundig releasing a series of images highlighting the changes to the Needle’s restaurant and observation deck. One of the main highlights? A rotating restaurant full of glass: glass tables, glass chairs, and glass floors that showcase the jaw-and-stomach dropping 500-foot elevation. More photos can be seen here.

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Seattle Office Space News – September 2017

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of September 2017.

OFFICE DEVELOPMENTS

September brought news of Amazon continuing the expansion of their high-rise campus in downtown Seattle after it received a permit to begin excavating the site for its fourth tower block. The planned development includes a 24-story building at Eighth and Bell and an 8-story building at Seventh and Blanchard, connected by an elevated walkway. Graphite Design Group will take over architectural design for Block Four, which at completion will contain 835,000 square feet of office space and 26,000 square feet of ground level retail. While not unexpected, Amazon’s continued expansion in Seattle brings calm to initial worries after the tech titan announced its search for a second U.S. headquarters location this month.

Skanska USA submitted a proposal to put a new office building at 318 Fairview Avenue North in South Lake Union – a site which currently houses the SLU Streetcar barn. The development proposes that Skanska quickly build a new streetcar barn and parking structure beneath an 11-story office building at the site, leasing the barn to the city for $10 per year. Since the project must be finished before the new streetcar line arrives at the barn (2020 as current estimates go), Skanska hopes to streamline the project by skipping parts of the normal review process. However, Skanska’s proposed deal also includes the acquisition of two independently owned parcels directly south of the barn, which could slow the process significantly.

Trinity Real Estate and a private Seattle family paid $15.8 million for 6 of the 11 floors at the Seaboard Building this summer, and are planning an upgrade and renovation to both the retail and office portions of the building. The space, which totals nearly 58,200 square feet, will be brought into the 21st century with modern finishes and expects rental rates to be $41.00 per square foot, fully serviced.

Martin Selig’s new project at 3rd and Lenora begun shoring and excavation work in Belltown. The 36-story building will feature 365 residential units in addition to 176,000 square feet of office space and 5,500 of retail, both operated by WeWork. In addition, five levels of garage parking beneath the building will provide 221 stalls to tenants and residents. The tower is scheduled to open in the spring of 2020.

The Ainsworth and Dunn Building, long known as The Old Spaghetti Factory, is ready to begin its redevelopment project. The historic 1902 site will now be turned into 32,377 square feet of office space by Meriwether Partners, adding a third story and a roof terrace, with a pedestrian walkway between the A&D building and a new apartment building directly south. Construction is set to be completed in 2019.

BUILDING SALES

Two more floors in the Macy’s Building at 300 Pine Street have sold. The deal was announced in June, but the buyer has now been released as an LLC related to Starwood Capital, who already owns floors 5-8. The two new floors, 3 and 4, add another 160,000 square feet to the available space, bringing the total availability at 300 Pine to 460,000 square feet.

A Blackstone Group entity has purchased the Exchange Building from Beacon Capital Partners for $156 million ($523 per square foot). The 299,000 square foot Art Deco landmark building was recently renovated prior to the sale, earning a LEED platinum certification and new amenity facilities. At the time of its last sale in 2013, the building was about 77% vacant. Now, it has only 37,011 square feet available, a mere 12% total vacancy.

OFFICE LEASES

An outside source has reported to GeekWire that Amazon is set to sign leases at four new locations, totaling more than 1.5 million square feet. 300 Pine, the new Rainier Square development, 9th & Thomas and the former Pemco headquarters will all house the online retailer, who shows no sign of slowing down in Seattle despite recent “HQ2” news.

Co-working giant WeWork continues to grow, opening another Seattle location at 1099 Stewart Street, or Hill7, in the Denny Triangle. This new office is WeWork’s fifth location in Seattle, with plans to move into two other locations throughout the city in the next several years. The company recently raised $4.4 billion from SoftBank, and has 160 locations in 16 countries.

ECONOMY

In the biggest news of the month, Amazon shocked Seattle by announcing that they are looking to open a second headquarters in the US that would house over 40,000 employees. Dubbed “HQ2,” this new headquarters search has sparked a huge bidding frenzy throughout the country as cities court the tech giant.  Some wonder whether or not Amazon’s new headquarters could slow or stop Seattle’s rapid housing and development boom, which has largely been driven by Amazon’s epic appetite for office space.  However, despite hand-wringing over the fate of the market, Amazon board member and venture capitalist Tom Alberg insists that Amazon will continue to grow in Seattle.  This sentiment was also echoed by Vulcan Real Estate President Ada Healy and real estate developer Martin Selig. Both business leaders insist that the boom is showing sign of slowing down. Indeed, Healy thinks that Amazon’s second headquarters could take some pressure off the market and let everyone “take a bit of a breath,” opening up room for smaller tech companies to grow and operate.

Seattle’s housing market continues to be red hot, with more than half of Seattle homes sold in July fetching more than the listing price.  Indeed, it’s a seller’s market out here; GeekWire reports that Seattle is among the top US cities for sellers to get the best return on investment. In 2016, Seattle sellers gained on average 53.1% or $185,000 on the sale of their home in which they lived for approximately 9 years. The return on investment for sellers doesn’t seem to be slowing, with King County home prices surging 18% in the last year alone. In southeast King County, prices have increased even higher at 20%, and Shoreline jumping an enormous 33%! Seattle has topped the nation in home price growth, nearly double that of any other US city, and has continued to claim the title of Nation’s Hottest Housing Market for the 11th-straight month.  Much of this steep increase is due to the large lack of supply in relation to demand, with the Seattle area home inventory hitting its lowest point in 10 years.  As prices rise, mortgage lenders are becoming more lenient, making it easier to purchase a house. Fannie May and Freddie Mac are loosening some of the strict standards developed after the housing crisis in the mid-2000’s to encourage homeownership.

ARENA

Oak View Group has set a proposed completion date for their Key Arena renovation, planning to spend $600 million to renovate the area by October 2020. The LA-based group plans to commit $40 million to improve traffic, transport and parking in the area. Both sides are hopeful that the draft Memorandum of Understanding (MOU) is approved by December 31 of this year.

OTHER NEWS

The Seattle Space Needle is officially getting a makeover. The $100 million project is now underway, though there is no official end date and is expected to last for multiple years. The SkyCity Restaurant has closed, but is set to reopen in June 2018. The Needle’s observation deck remains open to visitors.

Biotech company Juno Therapeutics has taken matters into its own hands and built itself a custom headquarters in South Lake Union. The building at 400 Dexter Avenue has 176,000 square feet of office and 65,000 square feet of lab space over 9 stories. A full gallery of images can be found here.

Now that Bertha has been officially dismantled, the new post-viaduct waterfront has started to become more reality than dream. New drawings and concepts for the waterfront show naturalistic landscaping, artistic glass-and-steel kiosks and inventive walkways. More information can be found here.

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Seattle Office Space News – August 2017

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of August 2017.

 

OFFICE DEVELOPMENTS

Two new proposals for large Seattle office developments emerged this month. BioMed Realty out of San Diego plans to build a two tower, 14-story building on the block of 700 Dexter Avenue North. The project is still in early stages but has listed an early design meeting with the city, and is planned to have nearly 350,000 square feet of office space. The second development revolves around the old Pemco headquarters campus off of I-5. Unico Properties is in early plans for a six-to-eight story building on the site at 330 Yale Avenue North. Amazon is reported to have leased the old Pemco main building, which has just undergone a new paint job complete with Amazon orange detailing..

 

BUILDING SALES

In this month’s largest acquisition, Clarion Partners bought Tableau Software’s new headquarters, NorthEdge, for $157.85 million. The New York-based company purchased the four-story building from Touchstone and AIG Global Investment group, adding the brand new location to their portfolio of Puget Sound properties. Tableau inked an 11 year lease with Touchstone before the building sold, with two 7-year extension options.

Also, one of Seattle’s oldest commercial brick buildings at 1012 First Avenue sold again this month for $15.5 million just three years after being purchased for $4.3 million. The once ill-reputed location is a perfect example of the power of renovation and new tenant affiliation. The building is now home to Cone & Steiner General Store, office tenants on the upper floors, with trendy boutique Moorea Seal set to move in soon.

 

OFFICE LEASES

Amazon is showing no signs of slowing down in its endless Seattle land grab. The ever-growing tech giant is now close to leasing the entire office portion of the new high-profile Rainier Square project in downtown Seattle. The project includes 52 stories of office along with 12 stories of hotel, totaling 710,000 square feet. Construction on the new building is set to begin in the next few months.

Fast-growing Seattle startup Outreach has moved its headquarters into a former Tableau building in Fremont. The 26,000 square foot space is located on the ground floor of 1441 North 34th Street, and gives the company the room it needs to house its ever-expanding headcount.

Female-focused co-working space The Riveter has leased its second location less than six months after opening its first location in Capitol Hill. The company, which won this year’s GeekWire “Newcomer of the Year” Award, has leased new space on North Northlake Way in Fremont. After raising a $760,000 seed round earlier this year, The Riveter is riding their success with further plans to continue its growth. Their new location is officially set to open on September 11.

 

ECONOMY

Amazon now occupies 8.1 million square feet in Seattle – as much as the next 40 biggest companies combined. The tech company’s success has turned Seattle into America’s largest “company town,” drawing talent from across the country and rapidly changing the face of the city. Even with this enormous footprint, Amazon isn’t done. Within the next five years, Amazon is set to occupy over 12 million square feet in Seattle.

Construction costs in Seattle continue to climb, though two new reports indicated that the market may be slowing down. Component costs and construction employment have finally leveled out this quarter. Still, the remainder of 2017 is set to see overall construction costs increase another 3.5 to 4 percent.

As summer winds to a close, the Seattle housing market has remained red-hot, leading the nation in home price growth for the last ten months.

The Seattle area now has 38 “$1 Million Dollar Neighborhoods.” According to GeekWire, this Zillow criterion requires at least 10% of homes in a zip code to be valued at over seven figures. This news puts Seattle amongst the top hottest markets in the US.

The median home price in the Seattle area is $450,900, having risen almost 13% in the past year. At the peak of the housing bubble before the Recession, it was $380,200.

These skyrocketing prices, however, are not indicative of a bubble economy according to Zillow experts, as they are being caused by a lack of supply and a sharp increase in demand.  The report suggests increases are not infinitely sustainable, and have already showed signs of slowing, especially in the higher end market.

 

TUNNEL/VIADUCT

The giant tunnel-boring machine Bertha has officially been completely dismantled and removed. Cranes lifted the final pieces out at the end of August, bringing an end to the journey that began over four years ago in 2013. Now, crews can continue working on the the new double-decker freeway. The tunnel is estimated to open in 2019. You can watch a video of Bertha’s final disassembly here, and a time-lapse of the entire dismantling process here.

 

ARENA

The KeyArena renovation project is in first position for approval, with the Memorandum of Understanding (MOU) for the project due on September 12th. Oak Venture Group and the City are hopeful that they will have a final deal achieved before the year’s end, and that KeyArena will be properly renovated for NBA and NHL use.

However, Chris Hansen’s group is still fighting to keep their SoDo stadium project alive. A recent study claimed that the SoDo project would provide 3 times more tax revenue than a KeyArena renovation, though it failed to take into account opportunity costs of each project. Hansen’s SoDo stadium is likely a long shot, especially with the Port of Seattle so avidly against another stadium in the SoDo district, and his MOU depending on the acquisition of an NBA team. However, it’s still too early to tell whether or not the project is officially dead.

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Seattle Office Space News – July 2017

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of July 2017.

OFFICE DEVELOPMENTS

The long saga of the Civic Square redevelopment seems to be moving in the right direction again. Ed Murray sent legislation to the City Council that would authorize the City to sell the development site to Bosa. Bosa has plans for a condo tower, street level retail, and a 25,000 square foot public plaza. Construction is expected to begin in 2019.

In the real estate hotbed of South Lake Union, two midrise options have emerged for the site at 235 ninth Ave that recently sold for $625/sf. The first option for the 14,400 square foot site is a seven story office tower and the second is for an eight story hotel.

 

BUILDING SALES

Just one office building traded hands this month, with the Amazon leased 428 Westlake fetching $81.5 million. An affiliate of Vulcan sold the 88,000 square foot building for just over $923 per square foot to an affiliate of Commonwealth Realty Trust.

 

OFFICE LEASES

In other Amazon news, the e commerce giant is listed on permits for improving the former Pemco headquarters building at 301 Eastlake Ave East. The existing buildings total 168,300 square feet and there is the ability to add an additional 500,000 square feet of office space on the site. Amazon officials declined to comment and it is unclear how much space Amazon has leased at the site.

 

ECONOMY

The Seattle economy continues to be one of the most prosperous in the nation. Washington State was recently ranked first on CNBC’s America’s Top States for Business. The state recorded the largest economic growth in the nation at 3.7 % in 2016 nearly 2.5 times the national average.

Another ranking put Seattle as the second best tech city in the U.S. behind only the Bay Area. Real Estate Company CBRE issued the report based on metrics such as number of tech employees, population trends, wages, education levels, housing and business costs. Seattle is the most educated market in the country with 62.1 percent of people over 25 holding at least a bachelor’s degree.

With an influx of capital pouring into the city, Seattle continues to be at an all-time high construction boom. There are currently 74 major construction projects from South Lake Union to Sodo, totaling nearly $5 billion in project cost. The previous record was 65 buildings under construction last year, that number is more than 60 percent higher than the peak of last decade’s boom. About two thirds of that construction is apartment buildings with 40% of those being “luxury” apartments.

The housing market also continues to be hotter than ever. In May the regions single family home price increased 13.3 percent year over year more than double the national average of 5.6&. The May price increases was the ninth month in a row that Seattle saw the largest year over year price increase in the nation. Experts agree that as long as job growth continues and interest rates remain low, there is no sign of a slowdown anytime soon.

Even with rising home prices, Seattle has not quite caught up to the Bay Area in terms of cost of living. Currently in Seattle the average cost of living is $45,744 with the median income at $75,301. Over the next twenty years the City is expected to grow by more than 200,000 which will continue to push the cost of living higher and higher

 

TUNNEL/VIADUCT

Crews are more than halfway done disassembling the tunnel boring machine Bertha. There have been no delays in the project for several months and the new four-lane tolled Highway 99 is expected to open in early 2019.

 

ARENA

There was no significant update this month regarding a potential redevelopment of Key Arena or a new site in Sodo. However, the city did create a community group of thirteen that will work with the city and Oak View Group to evaluate and recommend on the potential key arena redevelopment.

 

OTHER NEWS

Geekwire took a look at Qualtrics Seattle office which has grown to be the largest outside of its headquarters in Utah.

The PSBJ also took a look through the new office of Seattle’s newest public company, Redfin.

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Seattle Office Space News – June 2017

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of June 2017.

OFFICE DEVELOPMENTS

Eagle Rock Ventures just put the finishing touches on a conversion of the historic Harvard Exit Theatre at 807 Roy Street to office. The 17,000 square foot structure underwent significant renovations including new utilities and seismic work.  A tenant for the space has not been announced and CBRE is listing the space as available.

Weyerhaeuser’s new headquarters on Occidental Square has received LEED platinum certification for the core and shell. The building at 200 Occidental in Pioneer Square has high efficiency HVAC systems, solar panels, salvaged building materials, operable windows and storm water collection systems which all contribute to its energy efficiency.

This month Expedia received the OK from the city of Seattle for its development plan of the former Amgen facility on the Elliott Bay waterfront.  Expedia has entitlements for fifteen years to build up to 1.9 million square feet of office space. The travel company bought the site for $229 million in 2015 and will begin moving into the new campus in 2019 but will still keep a small presence in Bellevue.

Also this month, Los Angeles based Kilroy Realty Corp formally broke ground on its $370 million 630,000 square foot office development at 333 Dexter in South Lake Union. Kilroy did not comment on whether or not they have pre-leased any of the space, but no leases have been announced.

BUILDING SALES

In the largest deal of the year, Amazon-occupied Midtown 21 at 1007 Stewart Street in the Denny Triangle sold for $330 million. Union Investment Real Estate of Germany purchased the 365,000 square foot tower from Trammell Crow and Met Life for $905 per square foot.

Also, Macy’s announced that it has reached a deal to sell two more stories of its building in downtown Seattle at the corner of 4th & Pine Street. The buyer was not immediately announced but it is likely Starwood Capital who owns the other four floors in the building that Macy’s sold recently as a commercial condo. Once renovations are complete there will be approximately 468,000 square feet of office space available in the building.

OFFICE LEASES

It was officially announced this month that Airbnb has inked a lease for a large engineering office in Seattle. The San Francisco based company leased 40,000 square feet at 8th & Olive, giving the short term rental company room for at least 300 employees.

In addition, Oculus has leased a full floor (approximately 40,000 sf) at Home Plate Center in Sodo directly across from the 51,000 square foot space they leased last year at the Stadium Innovation Center.

ECONOMY

Once again Seattle maintains the title for the nation’s hottest housing market with a 12.9 percent year over year price increase, marking eight months in a row with the top spot.  A new report from Redfin also stated that in the ultra-completive housing market nearly one third of new homebuyers purchased a house sight-unseen.  Seattle is also ranked eighth in the country for the largest increase in number of million dollar or higher listing prices.

The condo market has also seen a similar trend of rising prices and decreasing vacancies, the average price per square foot for a highrise condo has increased 7.3% year over year. Seattle also continues to add apartments with developers expecting to open 12,700 new units this year – the most since 1989. The University of Washington was ranked as the most influential university in the technology industry by career website Paysa. The UW beat out Carnegie Mellon with the highest number of graduates employed at technology companies.

TUNNEL/VIADUCT

The WSDOT released a time lapse video of the disassembly of tunnel boring machine Bertha that can be found here. Construction of the double-decker highway that will replace 99 is ongoing and the first traffic is expected on the roadway in January of 2019.

ARENA

This month brought a wave of news regarding the potential Key Arena renovation. The City of Seattle chose Oak View Group of Los Angles as its pick for their proposal of $564 million to complete the project. An earlier report showed that the other group bidding, AEG, had pulled its offer due to a lack of confidence in the City’s process, however documents obtained by the Seattle Times show that the City had recommend Oak View Group four days before AEG had pulled its offer. The Key Arena has also been nominated as a City Landmark; the designation would not be a major blow for OVG as they plan to maintain the exterior façade of the building. It now seems that it is up to the City on whether to move forward with the Key Arena renovation or give the nod to Chris Hansen’s SODO arena. In a press conference, Tim Leiweke the CEO of OVG stated that: “We wouldn’t have jumped into this if we thought either the NHL or the NBA has or was about to make a deal with Chris for a team… We did our homework and we talked to everyone.” Leiweke expressed optimism that OVG and the City would reach a memorandum of understanding by the end of the year. He also mentioned that the time is right for Seattle to land a hockey team but that a NBA franchise is not realistic in the immediate future.

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