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.

Advertisements
Posted in News | Leave a comment

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.

Posted in News | Leave a comment

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.

Posted in News | Leave a comment

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.

Posted in Miscellaneous | Leave a comment

Seattle Office Space News – May 2017

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

OFFICE DEVELOPMENTS

This month Geekwire took a look at how Amazon, Paul Allen, and Clise properties have worked together to change the landscape of Seattle and its real estate footprint forever. Clise properties is a multi-generational real estate firm that originally purchased properties in the Denny Triangle after the depression. Those properties are now home to the massive Amazon world headquarters. Similarly, Paul Allen had control of a large swath of land in South Lake Union that he wanted to donate to the city for a park, when the vote failed; Allen began to develop the land, the majority of which would be occupied by Amazon. At the end of 2016, Amazon had approximately 8.5 million square feet in Seattle and it is estimated they will occupy 12 million by 2022.

Also in May, Amazon announced that Mary’s Place, a Seattle based homeless shelter, will occupy 47,000 square feet in Amazon’s new 24 story office development on the block bound by Seventh Ave, Blanchard Street, Eight Ave, and Bell Street.

Another massive development by Vulcan has started in South Lake Union. This time, the anchor tenant will be Google, which will occupy about 600,000 square feet of office space on the two block site directly to the south of MOHAI in South Lake Union.

BUILDING SALES

Two buildings were reported to have traded hands in Seattle in May. The first is the Frank Gehry designed home to Facebook in south lake union.  The ten story 351,731 square foot building known as Dexter Station sold for $286 million or $813/sf and it is not immediately clear who the new owner is.

The second building that traded hands in May was Freemont Village Square, a 42,840 square foot building in the Fremont Neighborhood at 3601 Fremont Ave N. Local investors Eric Guenther, Dan Ederer, and Colin Madden paid about $16.6 million for the property that is approximately 70% vacant.  The group plans major upgrades to the building and will be aggressively looking for tenants.

OFFICE LEASES

In a surprising move to many, F5 networks announced that they will be leasing all 516,000 square feet of office space in the new Mark Tower being developed by Daniels Real Estate at 801 5th Ave.  The name of the new tower will change to “F5 Tower”. The tower will also contain a luxury SLS hotel on floors 3-15. Here is a statement from F5: “Our move to F5 Tower will provide current and future F5 employees with an iconic, modern corporate headquarters that aligns with our growth as a company and showcases our significant place in Seattle’s technology industry. The new space will provide a dynamic work environment that will help attract top talent, while giving us room for continued growth.”

ECONOMY

Once again, Seattle topped the nation in population growth, rental increases and average home prices.  Seattle is now the nation’s fastest growing city and has just hit a population of over 700,000.

In relation, Seattle continues to have the nation’s fastest rising home prices with the year over year increase in March hitting a record 12.3%; the second place city was Portland at 9.2%. Seattle’s housing market also tops the nation in the number of number of bidding wars where 90% of homes have multiple offers with escalation clauses bumping the average single family home price to $722,000.

Not surprisingly the rental rate asking prices in Seattle also topped the nation with an average growth of 5.4%.

With a huge population boom, construction continues to be at an all-time high in the Emerald City. Construction labor cost here is now the third highest in the world behind only Zurich and New York.

Finally, with all of the existing and new intellectuals in Seattle, it is no surprise that Seattle was recently ranked one of the top 10 cities in the U.S. for innovation by the publication Innovation Leader.

TUNNEL/VIADUCT

Now that Bertha has finished digging it is being cut apart and hauled away. There were no other significant tunnel updates in May.

ARENA

Key Arena is currently being considered a national historical landmark, due to its construction during the 1962 world fair. If the Arena is designated then it may entitle the group whom renovates the structure up to $70 million in federal funds. There continues to be debates in the city council on whether to build a new arena in SODO for potential NHL and NBA teams, or renovate the existing Key Arena structure.

OTHER NEWS

In May Geekwire took a look through the Sonos’ engineering office on Capitol Hill. Photos of the space can be found here.

Posted in News | Leave a comment

Seattle Office Space News – April 2017

News

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

OFFICE DEVELOPMENTS

Early this month, the Seattle City Council unanimously approved an upzone of Downtown and South Lake Union to allow for taller buildings. In exchange for the ability to go taller, developers will be required to contribute towards affordable housing. The City Council estimates that the most recent upzone will generate around 2,100 rent restricted apartments.

Amazon has released renderings of its newest office project at 2205 Seventh Ave. Designed by Graphite Design Group; the 17 story 405,000 square foot building is designed to look like an urban treehouse. A timeline for completion was not released to the press.

New aerial photos shown here illustrate just how much impact Amazon has had on the Denny-Triangle neighborhood. Amazon has built (or has plans to build) over 4 million square feet in the once lowly populated area.

BUILDING SALES

There were no significant building sales reported in April.

OFFICE LEASES

Although it has not been confirmed, there are rumors swirling in the commercial real estate world that Amazon has its eyes on the 58 story Rainier Square tower. The 1.1 million square foot project on the corner of fourth and union is scheduled to open in 2019. Amazon has been on a leasing spree lately bringing its total footprint close to 12 million square feet in Seattle.

ECONOMY

The Seattle housing market continues to be on fire as area home-price hikes once again lead the nation. The typical single family price rose 12.1 percent as of February (compared to a year ago); more than doubling the average national home price increase of 5.8%.

The new median sale price in Seattle reached a record of $630,800, as a frenzy of well-paid tech workers continue to move into the Seattle region.

In research by Seattle based Zillow, the average renter in Seattle needs a raise of $1,248 per year to keep up with rising rents. The average rent for the Seattle area was $2,100 according to the report.

In a similar report, Axiometrics concluded that the Seattle multifamily market is “solid and stable”. Occupancy rates in the area have continued to remain flat at 95.6 percent even with a continuous supply of units coming online, keeping in tune with rapid population growth.

TUNNEL/VIADUCT

The giant tunnel boring machine Bertha, finally reached daylight this month at Sixth Ave North and Thomas Street where it broke through a five foot thick concrete wall. Bertha will now be slowly disassembled in the rescue pit. Bertha initially began digging its 9,270 foot path in July of 2013 but was plagued with a myriad of delays. Construction on the double decker highway in the tunnel that has now been excavated is expected to finish in 2019. The WSDOT released video and drone footage of the breakthrough of Bertha here.

ARENA

Two groups have submitted proposals for a renovation of Key Arena to the City. The first, proposed by AEG and Hudson Pacific Properties offered a $520 million dollar renovation of the existing structure and would have a maximum seating capacity of 19,200. Oak View Group has also submitted a redevelopment plan with a price tag of $564 million and a maximum capacity of 19,000.  A community advisory panel will review the plans and make a recommendation to Mayor Ed Murray in June. The goal is to have a deal by years end. Further details on the groups proposals can be found here and here.

OTHER NEWS

This month during Facebook’s developer conference, Geekwire noticed that many of its latest innovation can be traced back to the Seattle office. Facebook has now been in Seattle for seven years and has surpassed more than 1,000 employees in the Northwest.

Geekwire is also currently holding voting for this years “Geekiest Office Space” which will be announced at the annual Geekwire Awards.  The contenders include: Chef, Facebook, Payscale, Salesforce, and Vicis. Photos and voting can be found here.

Finally, the daily Journal of Commerce took a look at the new office for DLR Group at 51 University Street that embraced the open design concept in a historical building. Photos of the space can be found here.

Posted in News | Leave a comment

Q1 Seattle Office Market

General Conclusion: Seattle’s office market stayed flat in the beginning of 2017 with vacancy rates increasing slightly to 7.3% in Q1 2017 up from 7.1% in Q4 2016. Year to date Net Absorption for the Downtown Seattle Office Market was negative (201,626) square feet in Q1 with over 6.3 Million square feet under construction. Even with a slight increase in vacancy, the market is still very healthy as there continues to be strong demand for Seattle commercial real estate investment product. Landlords continue to be bullish on rental rates and concession packages across all submarkets and building classes when compared to historical trends in Seattle. Market fundamentals are expected to be in favor of landlords until vacancy crosses the 10% threshold.

Economy:  The Seattle/Bellevue/Everett area has continued to see significant Job growth with preliminary seasonally adjusted unemployment decreasing to 3.5% in February of 2017 down from 4.3% in Q4 2016 according to The Washington State Employment Security Department.  The Bureau of Labor Statistics is reporting a slightly higher rate of 3.9% for the Seattle-Tacoma-Bellevue area.

Office Construction: While many projects that were under construction last year have delivered, Seattle continues to be at an all-time high construction boom with the following developments all currently under construction:

  • Amazon II, and Amazon Phases VI, VII & VIII totaling:~ 2,094,000 square feet (100% preleased)
  • Block 20 : ~1,100,000 square feet (100% preleased to Amazon)
  • Troy Block :~817,000 square feet (100% preleased to Amazon)
  • Madison Centre:~750,00 square feet (23% preleased to Davis, Wright Tremaine & others)
  • 333 Dexter:~650,000 square feet
  • The Mark:~528,000 square feet
  • Tilt 49:~307,296 square feet (100% preleased to Amazon)
  • The Alexandria Center: ~288,850 square feet (100% preleased to Juno Therapeutics)
  • Hawk Tower:~208,840 square feet (64% preleased to Avalara)
  • 15th & Market:~204,000 square feet
  • Arbor Blocks East: ~196,208 square feet

Office Developments:  The following office developments are currently being proposed:

Amazon revealed further expansion plans…again. The E Commerce giant has filed permits to build a 17 story office building at 2205 7th Ave, where the Days Inn currently sits. Amazon recently surpassed 341,000 employees globally and nearly 40,000 in Washington state.

The Seattle City Council unanimously voted to “up zone” the University District neighborhood in Seattle, allowing developers to build much higher than current limits if they contribute to the City’s affordable housing initiatives (HALA).  Several parcels currently zoned between 65-85 feet can now reach heights of 85-320 feet. In addition, several single family parcels are now zoned for low rise multifamily uses. Many community members think that the University District could be the next big “tech hub”, given its proximity to the University of Washington, walkability, and the spur of new developments that will likely follow the upzone vote. Using the same HALA framework, a similar plan is currently in the works for both South Lake Union and the Downtown core. The Seattle City Council will vote in April whether to approve this measure.

Earlier this year it was announced that Big Fish Games will be moving to the renovated Maritime Building on Seattle’s waterfront at 911 Western Ave. The developer has now filed plans showing that the project will be complete for occupancy by mid-2018, just a year before the new waterfront promenade is estimated to be completed.

Unico Properties acquired a 60,000 square foot building at 701 Dexter in South Lake Union a little over a year ago and have just filed plans for a renovation. Due to height restrictions in the area, Unico plans to extend the building envelope over what is currently a surface parking lot to create 40,000 additional square feet of office space. Unico has not released a timeline for construction to begin.

At the corner of Second and Union, crews have begun to demolish several small buildings to make room for Skanska’s 2+U project. The 650,000 square foot office project is expected to be completed in the second quarter of 2019.

Office Sales:  In general, building sales in the greater Puget Sound region saw a slight uptick from the fourth quarter of 2016. However, only one building traded hands in the downtown Seattle market during Q1:

  • New York based TriStar and RFR Holdings purchased the 290,647 square foot Urban Union building located at 501 Fairview Avenue in South Lake Union and 100% leased by Amazon. Schnitzer was the seller fetching $268.9 million or $925.32 per square foot, setting the new highest per-foot sale record.

Office Leases:  Office leasing activity in the first quarter of 2017 increased slightly from Q4 2016, mostly fueled by technology companies.  The following office leases were completed in Q1:

  • Once again, Amazon made headlines in office leasing news. The ecommerce giant has just leased all 300,000 square feet of the Tilt 49 office building in South Lake Union. The developer, Touchstone, has been working on the project since 2015 and expects to be complete near the end of this year. It is estimated that Amazon will occupy 12 million square feet in Seattle by 2020.
  • Facebook announced in January that they leased the entire 150,621 square foot 1101 Westlake building, which brings their total footprint in the region to nearly 1 million square feet.
  • Delta Dental will fill the last remaining vacancy at 400 Fairview in South Lake Union. Delta plans to move from Northgate to the new 61,000 square foot facility this summer.
  • Google revealed that they will be taking over the 50,000 square foot former Sound Mind and Body gym that was previously converted to office and occupied by Tableau
  • Snap Inc, (better known as Snapchat) leased nearly 50,000 square feet at the Market Place Tower. The space that Snapchat will move into was just recently vacated by Redfin.
  • Apple has expanded by approximately 20,000 square feet in downtown Seattle at 601 Union street.
  • Kaiser-owned Group Health stated that about 100 employees will be moving from its Westlake Terry building to Two Union square at the expiration of its lease. The remainder of the employees in Seattle will be relocated to a new facility currently under construction in Renton.
  • Sound Transit continues to expand in Pioneer Square, adding just under 50,000 square feet at 705 Union Station.
  • Finally Local Company Zillow is also expanding. The online real estate company leased the top two floors (38,000 square feet) for expansion at the company’s headquarters in downtown Seattle at 1301 2nd Avenue.
Posted in Market Reports | Leave a comment