Seattle Office Space News – March 2014

News

Below are comments and links to news articles and other topics relevant to the Seattle office space market from the month of March 2014.

BUILDING SALES

The office investment market in Seattle remains one of the most robust in the country.  The F.X. McRory’s building located at 418 Occidental Ave S and built in 1906 was purchased by Manchester Capital Management for $17.55 Million.  Intracorp sold the 85,725 square foot building near Century Link field after generating interest from over 100 potential buyers.  The price per square foot equates to $205.

Principal Real Estate Investors of Des Moines sold the Broderick Building at 615 2nd Ave and the Miken buiding at 1417 4th Ave to Hannay Realty Advisors out of Phoenix. The prices paid for the historic buildings were announced to be $13.75 Million for the Broderick Building and $9.3 Million for the Miken Building or $196 per square foot and $198 per square foot respectively.

Vulcan sold one of their first developments in South Lake Union located at 401 Terry Ave N for $106.1 Million to Kilroy Realty.  The 104,605 square foot building is mostly occupied by the Institute of Systems Biology and the price per square foot equates to $755.

After reports of being under contract, it was revealed that Greg Smith’s Urban Visions and Richard Nimmer were unable to finalize the transaction to purchase the Eitel building at 2nd & Pike.

OFFICE LEASES

Leasing news this month was dominated by co-working or shared working spaces geared towards housing small and startup companies.  First, it was announced that Makers expanded their space from 7,000 to 11,000 square feet at 92 Lenora near Seattle’s Pike Place market.

Next, news broke that SURF Incubator will be relocating to the 5th floor of 999 3rd and taking more space.  SURF previously occupied roughly 16,000 square feet at the Exchange Building and now will be leasing 21,400 square feet.

SOUTH LAKE UNION DEVELOPMENT

Schnitzer West will start construction without prelease on two office projects in Seattle and Bellevue later this year.  The Seattle building, located at 501 Fairview, will be called Urban Union and will have roughly 278,000 square feet of office space in 12 stories.

Vulcan has applied for a land use permit to develop a full block in South Lake Union between Westlake & 9th Ave N to the East & West and Denny & John to the North & South.  Zoning for the land, currently home to Denny Park and the South Lake Union Discovery Center, would allow for a 400 foot tall residential tower and a 240 foot tall office building.

Holland Partner Group announced their plans to begin construction this summer of a mixed use development at 1101 Westlake Ave North.  The development, called Westlake Steps, will have a hotel, 570 apartment units and 150,000 square feet of office space.

Vulcan is developing a 51,200 square foot administrative office building for Seattle’s EMP Museum that will be Seattle’s first ‘salmon safe’ building.  Located at 120 Sixth Ave N, the building will have a rain water collection system that uses 75% less water than a traditional building of the same size.

This article provides perspective from a general contractor on the dynamics of building in South Lake Union considering all of the construction happening there.

OTHER OFFICE DEVELOPMENT

Urban Visions has filed plans to build a up to a 77 story office building at Second & Marion in Seattle’s central business district.  The preliminary plans presented a conceptual model of how the tower, which could have between 1.5 -2 million square feet of office space, will look. Despite the planning, Urban Visions won’t start the project until at least 2018.  Should the building be completed at 77 stories it would be one story taller than Columbia Center, which is currently Seattle’s tallest building.

Chophouse Row, a boutique office project on Seattle’s Capitol Hill on Pike street between 11th & 12th Avenues, is under construction.  Developer Liz Dunn announced that 40% of the office space has already been leased.

Citing a lack of office space in Ballard, Henbart LLC is creating a mixed use project at 5601 22nd Ave NW.  The two building complex will have 21,000 square feet of office space, an equal amount of retail, 80 apartment units and 4 large townhomes.

TUNNEL/VIADUCT

News was dominated in February by the stall of Bertha, the machine responsible for boring the tunnel that will replace the Alaskan Way viaduct along Seattle’s waterfront.  In March, Brierly Associates was selected to design the rescue shaft that will be used to access and repair Bertha.

To make matters worse, a new inspection by the Department of Transportation revealed that the viaduct has new and widening cracks causing safety concerns for the 85,000 vehicles that use the viaduct daily.

ECONOMY

Seattle’s housing market saw a 5% drop in sales between February 2013 and February 2014.  The drop is a signal of a slowing housing market, although it is less than the national average of a 10% drop as analyzed by online real estate company Redfin.

Zillow, another online real estate company, released a report indicating that Seattle is the nation’s fifth-best market for home sellers as values have increased 10% in the past year.  The top four residential markets were San Jose, San Francisco, San Antonio and Los Angeles.

OTHER NEWS

Seattle held ‘Waterfront Week’ in March which was expected to draw more than 1,000 people and had festivities celebrating plans and designs for the transformation of the city’s waterfront area after the removal of the Alaskan Way viaduct.  Different ideas for how to access the waterfront included an elevator and a gondola.

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