Seattle Office Space News – December 2013

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of December 2013.

OFFICE LEASES

Two integral organizations within the Seattle startup community are moving from South Lake Union to the University District.  Founder’s Co-op and Techstars will be located at Condon Hall on the University of Washington campus.  It will be interesting to see if this is the beginning of a trend for startups and other technology companies locating in the submarket.

BUILDING SALES

A joint venture between Talon Private Capital and Prudential Realty Group sold 1800 9th Ave in December for $150.4 million to Chicago based Heitman America.  The value of the building increased dramatically this year after Amazon.com leased more than half of the 312,000 square foot building that was built in 1990.  The purchase price equates to roughly $481 per square foot.

Holland Partner group purchased most of a block bordered by Westlake Ave and Dexter Ave and Galer Street and Highland Drive for $79.5 Million.  Holland plans a mixed use development for the site near the growing South Lake Union submarket, but does not plan to demolish the 82,000 square foot office building at 1300 Dexter built in 1986.  The seller was an affiliate of Equity Office and Blackstone Group.

The 82,000 square foot office complex located at 2, 4 & 6 Nickerson in Seattle’s Fremont submarket were sold by Columbia West Properties.  The buyer, an LLC led by Stephen Grey & Associates, paid $13.6 Million for the three half empty buildings built in 1986. The price per square foot for the sale equates to $166/SF.

PROPOSED DEVELOPMENTS

Progress was announced by Touchstone Corp regarding their proposed 820,000 square foot office project at 307 Fairview Ave N in Seattle’s South Lake Union submarket.  The USAA Real Estate Co joined the Seattle development company as equity partner.  Construction for the first building of the two phase project will begin in Q1 2014.  General contractor Lease Crutcher Lewis will start the 12 story 380,000 square foot first phase, which will be followed by another 13 story 440,000 second phase.

Urban Visions released plans for a 77 story skyscraper in the central business district bordered by 2nd & 3rd Avenues and Marion & Columbia Streets.  If approved and constructed, the building would be the tallest in the city.  Urban Visions is partners with Martin Smith Inc and a few others on the project that will include a redeveloped Metropolitan Grill.

Schnitzer West continues to hint that they will begin construction soon on Madison Center, a 37 story 750,000 office building at 5th & Madison in Seattle’s central business district.  The project is one of several proposed developments in the southern part of the CBD that likely need significant pre-lease in order to break ground.

In addition to a Bellevue project and a medical redevelopment on Seattle’s First Hill, Trammell Crow Co. is planning a 14 story office project at 1007 Stewart Street in downtown Seattle.  The project on Stewart could be ready for occupancy by Q2 2016.

Seattle’s Department of Planning and Development approved the design of the three sphere biodome that will be the most iconic aspect of Amazon.com’s proposed 3.3 Million square foot campus project in South Lake Union.

TUNNEL/VIADUCT

Progress on the drilling of the Highway 99 tunnel that will replace the viaduct along Seattle’s waterfront continues to experience delays.  In addition to discovery of unidentified object clogging the pathway, the project has also experienced delays due to labor disputes.  As of the end of December, Bertha had been stuck for 25 days. So far contractors have been able to build 1/8th of the tunnel for half of the budgeted cost.

ECONOMY

In 2013, Seattle’s commercial real estate market had, literally, a record year.  Downtown Bellevue saw record prices for land at $535/SF then $808/SF for sites that can accommodate high-rise development.  The price per square foot for a building sale in Seattle was set at $749/SF when 202 Westlake Ave traded.  The Bravern, a two tower apartment project that sold in downtown Bellevue, set the price per unit record at $676,923. The record sale price for warehouse buildings in South Seattle was also broken at $120/sf.  Generally, the regional commercial real estate market has been bolstered by strong job growth mostly led by the high-tech industry.  52,000 jobs were added in 2013 and economic forecasters are projecting another 52,000 jobs in 2014.   Money chasing commercial real estate projects in the region has been and will continue pouring in from all over the world.

OTHER NEWS

Dan Flinn, founder of prominent Seattle tenant representation firm Flinn Ferguson, offers his take on the Seattle office market.  Flinn expresses that there is still an abundance of commodity vacancy for companies that occupy less than 20,000 square feet although the demand for space for creative companies in locations with amenities has increased.  So far, more traditional companies located in Seattle’s downtown core still aren’t ready for to sign a lease that will kick off significant new office development.

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