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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