Additionally, the metro logged $599 million in office sales last year. This figure represents a considerable increase, nearly doubling the amount registered in 2023, but still the lowest investment volume among gateway markets.

The city also strengthened its position as one of the most active life sciences markets across the country, ranking seventh by its construction activity in the sector. Between 2019 and October 2024, more than 1.8 million square feet of life science space across nine projects broke ground in the metro.

More office projects to come online

Last year, Seattle’s office sector saw the delivery of 11 properties, accounting for 4 million square feet—about 2.2 percent of the metro’s total inventory. Compared to 2023, this figure increased by more than a third.

Among gateway markets, Boston took the lead with almost 6.4 million square feet completed, while Seattle was close behind. Chicago (1.0 million square feet) and Los Angeles (955,510 square feet) were at the opposite pole.

In the second quarter of last year, Office Properties Income Trust completed the renovations of Unison Elliott Bay, a three-building, 300,000-square-foot life science lab, R&D and office space. The project began in March 2022.

In terms of pipeline, more than 5.1 million square feet of office space across 10 projects were under construction at the end of December, which will add about 2.8 percent to the market’s stock. Of them, two developments totaling 691,700 square feet broke ground in 2024.

One of the largest projects under construction that is scheduled to come online this year is Amazon’s Tower 1 at Bellevue 600. The 43-story building will comprise more than 1.1 million square feet and is the first phase of a development that is set to also include a 31-story high-rise.

Government agencies focus on office-to-residential conversions

With the trend of converting office spaces into residential units gaining momentum, CommercialEdge has launched a tool designed to evaluate the feasibility of repurposing properties across different markets. According to its Conversion Feasibility Index, Seattle ranks high, with around 4.7 million square feet of office space demonstrating strong potential for conversion.

Last summer, the Seattle City Council enacted a legislation aimed at removing regulatory obstacles by granting extensive exemptions from dimensional and design development standards. This initiative is intended to address the issue of vacant office spaces across the city, with a particular focus on the downtown area.

In August, Orton Development proposed a conversion plan for the almost 100-year-old Joseph Vance Building. If approved, the project would generate about 155 residential units. The building’s CFI score stands at 92, according to CommercialEdge, making it a strong candidate for repurposing.

Office sales register new heights

Seattle reached $599 million in office investment volume last year, almost double the figure registered in 2023. Although assets traded at an average of $260.45 per square foot, significantly surpassing the national average of $175.97, the market experienced the lowest transaction volume among gateway metros.

Manhattan registered the highest sales nationally, with $3.9 billion in assets changing hands. Washington, D.C. ($2.6 billion) and Los Angeles ($1.9 billion) trailed behind.

In September, Alexandria Real Estate Equities sold 1165 Eastlake Ave. E, a 100,086-square-foot life science building for $150 million. Fred Hutch Cancer Center acquired the asset completed in 2021. The developer also formed a joint venture with the buyer for two adjacent buildings, where it will maintain a 30 percent ownership.

A month earlier, the first skyscraper in Seattle, The Smith Tower, changed hands. A group of local investors led by GT Capital bought the 42-story property from Goldman Sachs. The 268,700-square-foot tower dates from the 1910s and was renovated in 1990s and 2010s.

Completions lead to surge in vacancy rates

Seattle’s office vacancy rate at the end of December clocked in at 26.3 percent, rising 380 basis points year-over-year. During the same month, the national average was 19.8 percent.

Among gateway markets, only San Francisco posted a higher rate, reaching 28.8 percent. Miami (15.2 percent) and Los Angeles (16.0 percent) were at the opposite end.

In one of the largest office leases in the area in recent years, Pokémon signed a 374,000-square-foot lease at Skanska’s The Eight, a 26-story mixed-use development in Bellevue, Wash. The building totals about 729,000 square feet, out of which 541,000 are destined for office use.

In June, TikTok decided to expand its office presence in the market and signed an additional 150,000-square-foot lease in downtown Bellevue, Wash. The tenant will occupy seven floors at Kemper Development’s Lincoln Square North Tower, where it had already committed to 132,000 square feet across six floors in January.

Coworking sector remains on par with national trends

As of December, Seattle’s coworking sector consisted of more than 3 million square feet, accounting for 1.9 percent of the market’s office stock. Among gateway metros, only Boston (1.8 percent) and Washington, D.C. (1.6 percent) had a smaller percentage of shared space out of total inventory, while Miami (3.8 percent) took the spotlight.

In the first quarter of last year, CENTRL Office took over the former WeWork shared space at the Kelly-Springfield Building in Seattle. The firm will operate the 53,365-square-foot space under a management contract with landlord Legacy Cos., after WeWork vacated the offices in February, filing for Chapter 11 bankruptcy.

Regus (445,380 square feet) became the largest flex office provider in the Emerald City as of December, followed by WeWork with 339,476 square feet. These operators were followed by extraSlice (296,437 square feet) and Industrious (189,675 square feet).

The post Seattle Office Maintains Values, But Trades Are Few appeared first on Commercial Property Executive.

Retail Opportunity Investments Corp.’s shareholders have approved the proposed merger with Blackstone Real Estate Partners X. The all-cash deal, valued at about $4 billion, is expected to close this week.

ROIC and Blackstone affiliates had entered the merger agreement back in November, under which Blackstone would acquire all outstanding shares of ROIC’s common stock at $17.50 per share. The transaction represents a 34 percent premium over ROIC’s closing share price in July 2024.

The retail REIT‘s portfolio included 93 grocery-anchored properties totaling around 10.5 million square feet across Los Angeles, San Francisco, Seattle and Portland, Ore., at the end of September.

Blackstone’s interest in ROIC underscores the positive outlook of necessity-based, grocery-anchored retail. This type of assets will continue to draw attention from both investors and developers, according to Commercial Property Executive‘s 2025 retail outlook.

The Blackstone-ROIC merger, up close

Following the merger’s completion, ROIC will become a privately held entity under Blackstone’s management.

The deal will involve a two-phase process. First, Montana Merger Sub II LLC will merge with ROIC’s operating partnership, Retail Opportunity Investments Partnership LP, according to the Trading Calendar. Then, Montana Merger Sub I Inc. will merge with ROIC, which will remain under Blackstone’s control.

The agreement also includes measures for handling ROIC’s restricted stock awards and long-term incentive program units, ensuring that eligible employees receive fair compensation as the company undergoes a change in ownership.

However, the transaction might still be subject to change, the same source shows. Should a superior offer emerge, ROIC’s board has the right to accept the new proposal and pay Blackstone a $78 million termination fee. On the other hand, Blackstone has guaranteed a $239 million reverse termination fee if it fails to complete the deal under the terms of the agreement.

The post Blackstone’s $4B Retail Deal Gets Green Light appeared first on Commercial Property Executive.

Bridge Industrial has purchased a two-building industrial portfolio totaling 315,422 square feet in Kent, Wash. An entity affiliated with Link Logistics sold the assets for $64.2 million, according to King County public records.

The buyer also secured a $46.7 million originated by PGIM Real Estate, the same source shows. CBRE brokered the deal on behalf of the seller.

The portfolio includes two industrial buildings dubbed Kent Valley DC II and Kent Valley DC IV, at 6111 S. 228th St. and 6205 S. 231st St. Built between 1995 and 1997, the two properties feature clear heights between 24 and 30 feet, ample column spacing, sky lights, ESFR sprinkler systems, office build-out components, dock levers and bumpers and a total of 397 vehicle parking spots, according to CommercialEdge.

Located some 18 miles from downtown Seattle, Kent Valley DC II and Kent Valley DC IV occupy approximately 15 acres close to Interstate 5, as well as to state routes 167 and 516. Seattle-Tacoma International Airport is 5 miles away, while King County International Airport is 14 miles away.

CBRE Executive Vice Presidents Paige Morgan, Andrew Stark and Andrew Hitchcock, together with Vice Chairman Brett Hartzell, represented the seller.

Seattle attracting significant deals

As of November, Western industrial markets continued to occupy top positions for industrial investment volume, six of them recording year-to-date figures above $1 billion, according to a recent CommercialEdge report.

Sales in Seattle totaled $1 billion—more than double the 2023 amount. The market also posted one of the highest sale prices per square foot in the nation, at $208 per square foot, ranking sixth among the most priciest metros in the U.S.

Recent industrial deals in the area include EQT Exeter’s $81.5 million purchase of a 202,464-square-foot building in Tukwila, Wash. Amazon fully occupies the metro Seattle property.

The post Bridge Industrial Makes $64M Purchase in Seattle appeared first on Commercial Property Executive.

International private equity firm Cabot Properties has selected Kidder Mathews Asset Services to manage an industrial portfolio of eight properties totaling 984,218 square feet in the Greater Seattle area.

The portfolio is a key assignment for Kidder Mathews because of its quality assets and scale and the fact that large portfolios in the 1 million-square-foot range rarely come to market for third-party management. The selection of Kidder Mathews expands the commercial real estate firm’s footprint in the market and its reputation for managing high-profile properties in the Western U.S. like Starbucks’ Seattle headquarters.  

According to a company statement, Kidder Mathews has built a strong relationship with Boston-based Cabot Properties through its brokerage division. Extending the collaboration into property management highlights the synergy between the firm’s divisions.

READ ALSO: Industrial Demand Slips, But Avoids a Slump

Kidder Mathews Senior Vice President & Market Leader Shelley Ryan will oversee the portfolio with Senior Property Manager Lorna Faxon.

The properties in the portfolio are:

• 4156 B Place NW, Auburn, Wash., 17,630 square feet;
• 875 A St. Auburn, 31,210 square feet;
• 25811 74th Ave. S., Kent, Wash., 32,064 square feet;
• 4620 B St. NW, Auburn, 65,555 square feet;
• 2606 16th St. NW, Puyallup, Wash., 170,592 square feet;
• 4417 192nd E., Tacoma, Wash., 281,181 square feet;
• 3941 and 3703 I St., Auburn, Wash., 385,986 square feet.

More management roles

Kidder Mathews Asset Services had its highest revenue to date in the last year and now manages more than 57 million square feet of space across 800 assets. In July, Lift Partners appointed Kidder Mathews to manage 530,384 square feet of property in Northern California. Kidder Mathews now manages about 1.2 million square feet of industrial space for the San Francisco-based company. That assignment added four assets in San Francisco and one each in Menlo Park, Calif., Mountain View, Calif., and Burlingame, Calif.

Logistics-focused fund

The management deal comes nearly a year after Cabot closed Value Fund VII with a total of $1.57 billion in equity commitments. The vehicle, including leverage, is being used to acquire, develop and redevelop $3.5 billion of logistics assets in the U.S., Europe and Asia Pacific, with most of the capital being deployed in the U.S.

Fund VII focuses on acquiring, developing and redeveloping high-quality infill industrial assets in dynamic supply-constrained markets across top logistics markets. The fund will target investments mainly in multi-tenant buildings between 50,000 and 250,000 square feet. When the fund closed in February, it had already closed or committed $1.2 billion of capital across 30 markets, including Seattle, Chicago, Atlanta, Amsterdam and Sydney.

The post Kidder Mathews to Manage 1 MSF Industrial Portfolio appeared first on Commercial Property Executive.

BentallGreenOak and Urban Renaissance Group LLC have secured a refinancing loan for Plaza 600, a 209,256-square-foot office building in downtown Seattle. The ownership secured a committed capital of over $10 million and will reposition the property.

Urban Renaissance Group has owned Plaza 600 since 2012, when it acquired the property from The Vance Corp. for $54.8 million, with the help of a 10-year $68.9 million loan originated by CIBC Bank USA. URG recapitalized the tower in partnership with BGO in 2019.

Completed in 1969, the office building at 600 Stewart St. rises 20 stories and features 5,063 square feet of retail space. The property underwent renovations multiple times, with the latest completed in 2023. These last upgrades focused on the main lobby area, as well as the amenity spaces, adding a bike room with showers and a conference center for the tenants. The building’s roster comprises Regus, Hoffman Construction Co., Washington Council for Behavioral Health, MBI Seattle and HKM Employment Attorneys LLP.

JLL Managing Director Cleita Harvey, Director Tim Jones and Associate Broker Charlotte Evans are handling leasing at the property.

A well-positioned property in downtown Seattle

Plaza 600 is between the Retail Core and the South Lake Union neighborhood. The Amazon Headquarters campus and The Spheres corporate offices are adjacent to the property. The office tower is near metro, bus and light rail stops, as well as Interstate 5. Plaza 600 also holds a walk score of 100.

The office sector is still struggling, with the national vacancy rate hitting 19.4 percent at the end of October, up 160 basis points year-over-year, according to a recent CommercialEdge report. Tech markets hold the highest rates, including Seattle, which registered a 390-basis-point jump since October 2023, hitting a 25.8 percent vacancy rate.

The post BGO JV Secures Refi for Seattle Office Tower appeared first on Commercial Property Executive.

Key life science clusters continue to thrive, even amid general economic challenges, because of their dependence on direct research and face-to-face collaboration.

“Unlike other industries where companies can operate remotely, life sciences rely heavily on hands-on research and in-person collaboration—lab work simply can’t happen over Zoom. This commitment to physical spaces has kept demand in established life sciences clusters,” Sonia Taneja, managing director for King Street Properties, told Commercial Property Executive.

While the life science construction pace has slowed in 2024, with only 2.2 million square feet breaking ground compared to 11.4 million square feet in 2023 and 16 million square feet in 2022, the sector has recorded substantial deliveries in previous years. Between the start of 2019 and October 2024, some 36.6 million square feet of lab space came online, including 10.5 million square feet in 2021 and 7 million square feet in 2020. This historical context underscores the robust foundation of the life sciences sector, which continues to support established clusters despite the general sluggishness.

“The life science real estate sector is at a crossroads, with challenges but also signs of recovery. Venture capital deployment is expected to increase as macro conditions improve. However, we should expect varied recovery timeline across different markets and submarkets,” said Maddie Holmes, senior research analyst at JLL.

Following the wave of new supply in 2024, Holmes added, “the new supply outlook improves significantly for 2025 and beyond. This respite in new supply will hopefully give the market some breathing space and the ability to absorb the current oversupply.”

Leveraging CommercialEdge data and expert insights, we delve into the dynamics driving these thriving markets, highlighting how their life science pipelines shape the broader landscape of U.S. commercial real estate.

Boston

Boston solidified its reputation as a leading life sciences hub, boasting a significant volume of construction activity that keeps it at the forefront of the industry.

Between 2019 and October 2024, developers broke ground on 16.8 million square feet of life science space across 60 properties, 5.7 percent of its existing inventory, CommercialEdge data shows.

The market’s strong life science development pipeline reflects ongoing demand, with over 680,000 square feet in construction starts in 2024 alone. In recent years, Boston has significantly expanded its pipeline, with developers breaking ground on 2.5 million square feet in 2023 and 6.7 million square feet in 2022.

From 2019 to October 2024, Boston saw the delivery of more than 10.5 million square feet of new lab inventory, including 2.8 million square feet in 2024, 2.1 million square feet in 2023 and 2.6 million square feet in 2022. This consistent development makes Boston an attractive option for life sciences companies seeking high-quality lab space, particularly as construction slowed in other markets.

Boston’s leadership in life sciences is bolstered by its exceptional talent pool and dynamic innovation ecosystem. World-class research institutions like Harvard and MIT attract top-tier professionals and encourage collaboration with cutting-edge research teams, making the city a natural choice for companies across the life sciences spectrum.

“Innovation tends to cluster around major research and educational institutions, which is why markets like Boston, San Francisco, San Diego and Raleigh-Durham continue to attract lab and bioscience companies,” Taneja noted.

San Francisco

San Francisco maintains its role as a top-tier life sciences market, driven by strong development and demand for lab and biotech space. Between 2019 and October 2024, life science construction starts totaled close to 9.1 million square feet across 37 properties, accounting for 4.8 percent of its total inventory. Recent development has seen steady groundbreakings, with 190,000 square feet started in 2024 and 2.5 million square feet in 2023 as well as in 2022.

CommercialEdge data highlights that lab space deliveries in San Francisco totaled 6.7 million square feet across 30 properties from 2019 to October 2024, accounting for 3.6 percent of total inventory. In 2024 alone, nine properties totaling 1.6 million square feet was completed, following deliveries amounting to 2 million square feet in 2023 and 2022.

A key factor in San Francisco’s growth is the ongoing shift toward high-quality, purpose-built lab spaces, Taneja elaborates. Companies are increasingly seeking facilities designed to meet the specific demands of life sciences operations, from structural reinforcements to specialized HVAC systems, rather than relying on converted office space. This trend, combined with anticipated growth in pharma research funding, suggests a favorable outlook for absorption in the metro.

San Diego

Third on our list with 5.7 million square feet of life science construction starts across 33 properties as of October—accounting for 5.1 percent of total inventory—San Diego is strengthening its position as a major hub in the life sciences sector.

The market has maintained a steady development pace, totaling 68,500 square feet in new lab space construction starts in 2024, following 1.7 million square feet across nine properties in 2023 and 400,000 square feet in 2022.

With life science deliveries totaling 3.6 million square feet between 2019 to October 2024—3.2 percent of the market’s inventory—San Diego continues to expand its offerings for biotech and life sciences tenants, with 2.1 million square feet completed in 2024, 310,000 square feet in 2023 and 343,000 square feet in 2022.

Its supply-to-demand ratio, measured by active tenant demand and total availability, stands at 4.0 percent, reflecting a tightening pipeline amid high interest from life sciences firms, JLL research shows.

Additionally, Los Angeles and Orange County are emerging as vital life sciences hubs, particularly in medtech, bolstered by robust healthcare networks and top research institutions. While these areas face supply constraints that limit immediate expansion, the high demand suggests strong potential for future growth.

Philadelphia

Philadelphia is emerging as a significant player in the sector, with 3.1 million square feet of lab space construction starts across 12 properties as of October, or 1.4 percent of existing inventory.

The market saw a strong year in lab space development in 2023, when 1.2 million square feet across three properties broke ground. According to CommercialEdge data, three properties totaling 900,000 square feet broke ground in 2022.

Life science deliveries totaled 1.1 million square feet across seven properties in the 2019-October 2024 interval, representing 0.5 percent of the market’s inventory. Three projects totaling 750,000 square feet came online in 2023, while 2022 saw the completion of four assets encompassing 369,000 square feet.

The market’s growth is driven by strengths in gene therapy and biomedical research. Its access to top research institutions like the University of Pennsylvania and Children’s Hospital of Philadelphia draws biotech firms and talent. Strong venture capital investment and relatively affordable real estate further boost its appeal, making Philadelphia an attractive alternative to pricier markets like Boston.

Raleigh-Durham, N.C.

The North Carolina metro is making strides in the life science arena, amassing more than 2.6 million square feet in construction starts across 18 properties as of October, accounting for 2.9 percent of its total inventory.

The market has seen a total of 517,165 square feet initiated year-to-date in October, alongside significant lab space construction starts in prior years, including 224,000 square feet in 2023 and 823,000 square feet in 2022.

Life science project completions totaled 1.3 million square feet across 10 properties from 2019 to October 2024, accounting for 1.5 percent of the market’s inventory. In 2024, deliveries encompassed 224,000 square feet across two properties, following a 100,500-square-foot asset in 2023 and two properties totaling 363,249 square feet in 2022.

One of Raleigh-Durham's key advantages is its affordable cost of living combined with a growing talent base, making it an attractive destination for life sciences companies.

“As early-stage companies receive funding and established firms expand, they are more likely to grow within their current markets or seek out additional life sciences hubs to support their work,” said Taneja.

Seattle

An already established player in the life sciences sector, Seattle recorded 1.8 million square feet of lab space construction starts across nine properties between 2019 and October 2024, 1.0 percent of its total inventory. While no new projects broke ground in 2024 or 2023, 2022 saw developers start on 1.1 million square feet across five properties.

Meanwhile, developers delivered a total of 1.8 million square feet of lab space across eight properties from 2019 to October 2024, accounting for 0.9 percent of the market’s inventory. In 2024 alone, 393,000 square feet was completed across two properties, while two properties totaling 443,000 square feet were delivered in 2023.

A significant advantage for Seattle lies in its fast-growing and affordable biotech labor pool, which attracts companies looking for skilled talent at competitive costs, Holmes pointed out. This emerging workforce, coupled with the metro’s strong focus on innovation and research, positions Seattle as an appealing destination for life sciences firms aiming to establish or expand their operations in a supportive environment.

The post The Most Active Life Science Markets in the US appeared first on Commercial Property Executive.

Unico Properties has secured a $35 million refinancing loan for 1201 Pacific, a 305,000-square-foot Class A office tower in Tacoma, Wash. Gantry’s insurance-arm Genworth Life Insurance Co. provided the 10-year, fixed-rate, non-recourse note, which replaces the previous 10-year loan that expired in September.

Gantry Principal Mike Taylor and Senior Director Jeff Ballaine arranged the deal on behalf of the borrower.

Unico acquired the property in 1997 from WPAS for $28.8 million, with the help of a $36 million loan originated by Genworth Financial, according to CommercialEdge information. The building’s current assessed value is at $39 million, the Puget Sound Business Journal reported.

Completed in 1969, the LEED Gold-certified office tower rises 25 stories, making it the tallest building in Tacoma. The tenant roster includes Regus, Merrill Lynch, WSP, Vandeberg Johnson & Gandara, RBC Wealth Management and Panattoni Development, CommercialEdge data shows. The property had a 15 percent vacancy rate at the time of the transaction.

Seattle office vacancy rate climbs

Located at 1201 Pacific Ave., the building is across the street from a T Line light rail stop and 1 mile from Tacoma train station, which connects the city to downtown Seattle, some 33 miles north.

Seattle’s office market has been facing significant challenges this year, according to a recent CommercialEdge report. The metro, along with the Bay Area, Austin and San Francisco, had one of the highest vacancy rates across all U.S. markets as of October. Climbing 390 basis points year-over-year, Seattle’s rate reached 25.8 percent that month. This significant increase was in part due to a number of large projects being delivered.

The post Unico Lands $35M Refi for Tacoma High-Rise appeared first on Commercial Property Executive.

Lightstone intends to invest $10 million in capital improvements and tenant upgrades, as reported by Shopping Center Business. FFO Real Estate Advisors will oversee outlet leasing, while Spinoso Real Estate Group will handle leasing for big-box stores and mall tenants.

WPG had acquired the property back in 1995, according to CommercialEdge data. Formerly known as SuperMall of the Great Northwest, the shopping center came online in 1995 and was rebranded as The Outlet Collection Seattle in 2012.

Anchored by Burlington, Nordstrom Rack, Dave & Busters and FieldhouseUSA, the mall features a diverse mix of regional and national retailers such as Adidas Outlet Store, Ashley HomeStore, American Eagle, Best Buy Outlet, Claire’s, Coach, Columbia’s, H&M, GAP, Famous Footwear, Nike and Vans, among others. At the time of sale, the property was 98 percent leased.

READ ALSO: Retail’s Post-Pandemic Recovery

The Outlet Collection Seattle occupies some 90 acres at 1101 Outlet Collection Way, near the intersection of highways 18 and 167. The mall has roughly 4.9 million visits per year.

CBRE Senior Vice President Dino Christophilis and Senior Associate Daniel Tibeau, together with Executive Vice Presidents Richard Frolik and George Good, led the team that brokered the transaction on behalf of the seller.

Last month, WPG sold Waterford Lakes Town Center, a 976,000-square-foot grocery-anchored lifestyle center in Orlando, Fla., for $322 million. Kimco Realty purchased the signature asset.

Seattle’s stable retail market

Seattle’s retail market has seen a significant investment uptick in 2024, with nearly $1 billion in transactions across 215 sales year-to-date through September, according to a Kidder Mathews report. This marks a 40 percent increase compared to the first three quarters of last year. Additionally, more neighborhood centers changed hands this year.

The market’s vacancy rates remained low and stable, with a direct vacancy rate of 3.0 percent at the end of September. The value was the lowest on the West Coast and among the lowest in the nation, the report showed.

The post Lightstone Pays $82M for Seattle-Area Mall appeared first on Commercial Property Executive.

Blackstone Real Estate Partners X has entered an agreement with Retail Opportunity Investments Corp. to acquire all of its outstanding common shares and debt for $4 billion. The deal is set to be an all-cash transaction and represents a 34 percent premium to ROIC’s closing share price in July of this year.

ROIC’s portfolio is made up of 93 grocery-anchored retail properties. They are located in Los Angeles, San Francisco, Seattle and Portland and total 10.5 million square feet.

In prepared remarks, Jacob Werner, co-head of Americas acquisitions at Blackstone Real Estate, said that the deal reflects the company’s bullish outlook on necessity-based, grocery-anchored retail. Specifically, the company is optimistic on demand for these types of assets in densely populated areas where there are very low levels of new supply.

READ ALSO: Will CRE Market Conditions Improve?

Pending customary closing conditions, including the approval of Blackstone common stockholders, the deal is set to close in the first quarter of next year. ROIC’s Board of Directors has already approved the transaction.

ROIC’s financial advisor was J.P. Morgan and its legal counsel was Clifford Chance US LLP. BofA Securities, Morgan Stanley & Co. LLC, Newmark and Eastdil Secured were Blackstone’s financial advisors while Simpson Thacher & Bartlett LLP was the company’s legal counsel.

The deal is the latest in a series of major Blackstone real estate acquisitions this year. In April, the firm signed a $10 billion deal to acquire Apartment Income REIT. The portfolio comprised 76 multifamily communities primarily in coastal markets.

Also, Blackstone-owned QTS expanded its presence recently with plans for a 3 million-square-foot data center campus in Phoenix. It is set to include 16 buildings of 180,000 square feet each.  

The post Blackstone to Acquire Retail Opportunity Investments Corp. for $4B appeared first on Commercial Property Executive.

Tesla plans to open a 32,338-square-foot office in Bellevue, Wash., according to the Puget Sound Business Journal. The company filed plans to renovate the space at Overlake 520, a two-building office campus totaling 145,578 square feet.

Innovatus Capital Partners has owned the property since 2020, when it purchased the asset for $63 million, according to CommercialEdge information.

Overlake 520 includes a pair of two-story office buildings, dubbed West and East, located at 14335 and 14475 NE 24th St. Completed in 1985 and last renovated in 2014, the property features passenger elevators, a fitness center, outdoor seating area with collaborative spaces, signage options and 582 covered parking spots.

Tesla will take a first-floor space at the East Building, where filings show that two office suites will be remodeled, with plans to add a server room and EV charging stations.

CBRE’s team of First Vice President Lennon Atteberry, Executive Vice President Scott Davis and Senior Vice President Tim Owens are the leasing brokers in charge of Overlake 520.

The approximately 9-acre office campus is close to multiple bus stations and the Overlake Light Rail Station, while being 5 miles from downtown Bellevue. The location is 15 miles from downtown Seattle and within 20 miles of Seattle-Tacoma International Airport.

Notable deals in the Bellevue submarket

Significant office leases closed in the city include Skanska’s 68,880-square-foot deal at The Eight, a 729,000-square-foot development. The tenant is an advertising technology company and is expected to move to the tower next year.

Another notable deal is TikTok’s 150,000-square-foot expansion at the 550,000-square-foot Lincoln Square North Tower. The social media giant’s total footprint at the property is now 282,000 square feet.

The post Tesla to Open New Seattle-Area Office appeared first on Commercial Property Executive.

A joint venture between Trammell Crow Co. and MetLife Investment Management wrapped up construction on Seattle Metro Logistics, a two-story, 702,429-square-foot industrial facility in Seattle. Bank OZK funded the development with a $105 million construction note, CommercialEdge data shows. CBRE handles leasing.

NELSON Worldwide provided architectural services, while Lease Crutcher Lewis served as general contractor. Construction began in 2022, and by September 2023 the project was in full swing, with the crew setting up the development’s 156 concrete tilt-up wall panels. Fast forward about seven months and the team topped out on the project.

The facility is Seattle’s second multi-story industrial building, Mark Netherland, managing director for Trammell Crow Co.’s Seattle office, said in prepared remarks. Seattle’s first—and also the nation’s—was Prologis’ Georgetown Crossings, a three-story, 589,615-square-foot industrial property also designed by NELSON.

READ ALSO: Staying Busy When Industrial Momentum Hits the Brakes

Seattle Metro Logistics encompasses roughly 350,000 square feet of industrial space on each of its floors. The two levels feature identical specifications, including 30-foot clear heights, 50- by 50-foot column spacing and a live load of 350 pounds per square foot.

Additionally, the warehouse’s depth reaches 289 feet while the truck courts range from 131 to 135 feet. To reach the second level, a wide earthen ramp measuring between 36 and 56 feet at a 6 percent slope was installed. Other features include 701 parking spaces and a solar-ready roof.

Located at 44 S. Nevada St., Seattle Metro Logistics is the largest logistics facility within 15 miles of downtown Seattle, according to Trammell Crow. The property is less than 3 miles from the Port of Seattle’s terminals and about 3 and 10 miles from the King County and Seattle Tacoma international airports, respectively.

CBRE Executive Vice Presidents Andrew Stark and Andrew Hitchcock handle marketing and leasing for Seattle Metro Logistics.

The Port of Seattle’s approach to incentivizing business

In 2021, the Port of Seattle Commission approved a long-term ground lease to Trammell Crow for the port-owned land upon which the facility rose. The deal also aided the port in its Century Agenda—an economic development partnership program.

The agenda served to provide local support through two-year grants awarded to fund projects and initiatives. The capital was set aside for projects that benefit small and emerging businesses, create jobs and foster business growth, among others.

Metro Seattle industrial deliveries to stall as vacancy rises

During the third quarter, developers brought online 2.1 million square feet of industrial space, according to a report by Cushman & Wakefield, as several major construction projects in Seattle wrapped up. This included the 783,000-square-foot Building E of Crow Holdings Capital and Panattoni Development Co.’s FRED310. Last year, the duo landed $252.3 million in construction financing for the 2.2 million-square-foot project.

The fourth quarter is set to witness the delivery of 1.5 million square feet of industrial product, Cushman & Wakefield adds, leaving 13.8 million square feet of industrial space in the planning and permitting stages. Much of the latter is unlikely to break ground beyond 2024, as rising construction costs hinder the feasibility of many shovels hitting dirt.

The post Trammell Crow, MetLife Deliver Multi-Story Industrial Building Near Seattle Port appeared first on Commercial Property Executive.

EQT Exeter has acquired a 312,604-square-foot, three-building infill industrial portfolio in Seattle and Portland, Ore., for $49.9 million. Prologis sold the assets, public records show, with the assistance of CBRE.

Northwest Corporate Park Building 11 is the largest asset in the portfolio. Prologis had acquired the 207,082-square-foot distribution center in Portland for $26.5 million in 2018, CommercialEdge data shows.

The distribution center features 54 dock-high and 13 rail doors, four grade ramps and 27,971 square feet of office space, as well as an optional 7,300 square feet of showroom and 25,000 square feet of cooler space.

READ ALSO: Infill Logistics Demand to Last

Carrying the address 3601-3621 NW Yeon Ave., the last-mile facility is about 4 miles northwest of downtown Portland, while Portland International Airport operates some 14 miles northeast.

EQT also purchased two buildings in Greater Seattle, dubbed Kent 36 and 39. The former is a 63,500-square-foot distribution center and the latter a 42,022-square-foot shallow-bay industrial property.

Located at 7620 S. 192nd St. and 8041 S. 228th St. in Kent, Wash., the duo is roughly 3 miles from one another. The Seattle-Tacoma International Airport is less than 8 miles away and downtown Seattle is about 20 miles northwest.

CBRE Vice Chairman Brett Hartzell and Senior Vice President Cara Nolan, together with Executive Vice Presidents Paige Morgan, Andrew Stark and Stuart Skaug, represented Prologis.

EQT Exeter’s industrial expansion

Last July, EQT Exeter closed its Industrial Value Fund VI at $4.9 billion, exceeding its target of $4.0 billion. The investment vehicle recently financed the acquisition of about 5.1 million square feet throughout metro Minneapolis-St. Paul. Prologis was the seller in that deal as well and the industrial portfolio commanded more than $285 million.

Later that year, EQT launched EQT Exeter Real Estate Income Trust Inc. The REIT targets mainly investments in industrial and life science properties, with only 20 percent of its funds to be allocated for multifamily or self-storage assets.

Earlier this month, EQT Exeter REIT paid some $82 million for an Amazon-leased property also located in metro Seattle. Dermody Properties sold the last-mile asset.

Investors all in on Western industrial markets

As of August, Western industrial markets claimed eight of the top 10 national spots for per-square-foot prices, a CommercialEdge report shows. The Bay Area topped the charts with assets trading for $483 per square foot. Both Seattle and Portland made the list with $207 and $173 per square foot, respectively, ahead of the national average of $132 per square foot.

In terms of industrial transaction volume, Seattle and Portland witnessed $679 million and $252 million year-to-date through August, respectively, the same source shows. Once again, the Bay Area occupied the first position, with more than $2.7 billion in sales.

Should market conditions hold, the total industrial deal volume in 2024 is expected to overshadow last year’s, according to CommercialEdge. Moreover, 18 of the 120 markets already surpassed their 2023 volume in August. Denver—also a Western market—was one of them, with $818 million in industrial transactions during the first eight months of the year, as opposed to 2023’s total figure of $523 million.

The post EQT Exeter Pays $50M for Western Industrial Portfolio appeared first on Commercial Property Executive.

The purchase of 2871 S. 102nd St. in Tukwila, Wash., represents the REIT’s fourth property acquisition since the fund was created, bringing its total capital deployed to approximately $390 million since inception.

Completed in 2021, the building features rare Class A specifications for its infill South Seattle location. The property provides proximate access to Seattle’s growing population. Nearly 4 million people are within a one-hour drive, and more than 200,000 industrial workers are within a 45-minute drive.

READ ALSO: E-Commerce Growth Revives Industrial Market

Its location connects customers and suppliers via closely located interstate freeways, the Port of Seattle and Seattle International Airport. Interstate 5 borders the South Seattle submarket and runs from Vancouver, B.C., to Mexico, providing access to major West Coast population centers.

Last week, EQT Exeter acquired Gateway Commerce Center, a 434,171-square-foot, Class A industrial property in Streetsboro, Ohio, from a joint venture between Westminster Capital and GEIS. According to CommercialEdge data, the asset traded for $40.2 million. JLL represented the seller.

Attraction of Seattle’s industrial market

Chris Spofford, executive managing director, heading up the industrial team for JLL in Seattle, told Commercial Property Executive that while total industrial vacancy for the Puget Sound region exceeded 8 percent for the first time since 2010, JLL is reporting a notable uptick in touring activity particularly between the ports, giving the market reasons for cautious optimism.

“The most recent activity has been in the 25,000 to 50,000 square foot range on average, as owners of second-generation properties have grown more open to subdividing larger blocks,” Spofford said. “The market is expected to remain tenant-favorable with a continued flight to quality, evidenced mostly within core markets in Kent Valley and Pierce County.”

Of the submarkets within the Kent Valley, Spofford said Tukwila has maintained one of the lower overall availability rates within existing product at 6.1 percent in the third quarter, and has been minimally impacted by the region’s recent swell in sublease space.

Nick Menghini, research manager at JLL, told CPE Tukwila is a relatively small industrial market of 7.2 million square feet and has surprising resilience.

“While the Puget Sound region has a vacancy rate of 8.2 percent and the Kent Valley’s vacancy stands at 9.2 percent, Tukwila vacancy sits at just 6.2 percent with just one small project under construction and no new deliveries since this project that traded was delivered,” Menghini said. “Tukwila has enjoyed solid rent growth in the past few years and still offers compelling economics for the companies looking for modern, Class A industrial facilities.”

The post EQT Exeter Pays $82M for Last-Mile Industrial Asset appeared first on Commercial Property Executive.

The market’s transaction volume increased threefold on a year-over-year basis. Despite that, the average price per square foot remains one of the lowest among peer metros. The Emerald City is also facing vacancy-related struggles, with 24.9 percent of its office space remaining unoccupied, more than 5 percent higher than the national average.

Development increases have posed increasing concerns, as the office sector continues to hurt. As a result, office-to-residential conversions picked up as a means of providing housing stock in urban markets while resolving some of the concerns of office owners. CommercialEdge introduced a tool to assess the viability of repurposing properties in various markets. According to the data provider’s Conversion Feasibility Index, Seattle falls top range, with approximately 2.4 percent of its office inventory showing strong potential for conversion.

Second-largest delivery total nationwide

Year-to-date through August, Seattle’s office sector saw almost 3.8 million square feet of office space delivered across 10 properties, a fourfold increase year-over-year. These completed projects also accounted for 2.1 percent of the metro’s total stock.

Among gateway markets, Boston was the only one to surpass the Emerald City, recording roughly 4.3 million square feet in office completions. Los Angeles (731,234 square feet), San Francisco (1.9 million square feet) and Manhattan (2.9 million square feet) were at the opposite end.

Recently, Skanska delivered The Eight, a 729,000-square-foot office building in Bellevue, Wash. Expected to achieve a LEED Platinum certification, the 25-story tower was more than 80 percent preleased prior to its completion, showing that leasing transactions are still closing for Class A assets with high-end amenities.

Seattle sees fewer developments underway

Seattle’s office sector had almost 2.1 million square feet under construction as of August, accounting for 1.4 percent of total stock. The rate was slightly above the 1.0 percent national average.

The metro lagged behind other gateway markets, with Boston (11.2 million square feet) taking the spotlight once again. Miami (2.8 million square feet), Manhattan (2.7 million square feet) and Washington, D.C. (2.2 million square feet) also performed better.

Microsoft is still working on the redevelopment of its main campus in Redmond. The company is replacing 12 older office buildings with 17 new ones that would total about 3 million square feet, with completion scheduled in 2025. Originally, plans called for a 1.1 million-square-foot expansion as well, but that fell through last year.

Higher transaction volume for fairly low prices

Year-to-date as of August, Seattle’s office sector registered $399 million in investment volume. Assets changed hands for $190 per square foot on average, commanding one of the lowest prices among gateway metros.

Los Angeles led with $437 per square foot, followed by Manhattan ($386 per square foot) and San Francisco ($278 per square foot). However, the metro did surpass the $173 per square foot national average.

Last month, The Smith Tower, the first skyscraper to be built in Seattle, changed hands. Goldman Sachs sold the 42-story tower to a group of local investors led by GT Capital. The building measures about 268,700 square feet and was completed in the 1910s.

Office vacancies keep climbing

Seattle’s office vacancy rate continued to grow this year, reaching 24.9 percent at the end of August. This figure was more than 5 percent higher than the U.S. average. San Francisco fared the worst among gateway markets, with 27.6 percent of vacant space, while Manhattan (16.6 percent), Los Angeles (16.7 percent) and Chicago (19.0 percent) performed better.

In June, TikTok decided to expand its office space at Lincoln Square North Tower, a 27-story tower in downtown Bellevue. The social media giant will add 150,000 square feet to the 132,000 square feet it already committed to in January. The new space was previously leased by Microsoft, which relinquished the offices last December.

Additionally, tech companies are still looking to expand their space. Last month, an AdTech firm signed a 68,880-squre-foot lease at The Eight, one of Skanska’s buildings in Bellevue. Move-in is expected in the second quarter of next year.

Coworking rate on par with the national figure

As of August, Seattle’s coworking sector comprised 2.9 million square feet of shared space, accounting for 1.9 percent of the metro’s total inventory. Among peer markets, the Emerald City surpassed only Washington, D.C. (1.6 percent), while Manhattan (2.3 percent) and Los Angeles (2.1 percent) were at the opposite pole. However, the metro’s figure was slightly bigger than the 1.8 percent national average.

The flex office providers with the largest footprints in Seattle remained WeWork with 447,121 square feet and Regus with 420,608 square feet. These operators were followed by extraSlice (269,403 square feet) and Industrious (151,740 square feet).

The post Seattle Office Assets Trade for Low Prices appeared first on Commercial Property Executive.

Alexandria Real Estate Equities has completed the sale of 1165 Eastlake Ave. E, a life science building in Seattle’s Lake Union submarket, to long-term tenant Fred Hutch Cancer Center. The asset sold for $150 million. Alexandria delivered the property in 2021 as a 100,086-square-foot Class A+ facility.

The developer has also formed a joint venture with Fred Hutch regarding two buildings—1201 and 1208 Eastlake Ave. E—through an affiliate, using a transfer of partial interests from its prior joint venture partner. Alexandria maintains a 30 percent ownership in these assets, which total 206,031 square feet.

Alexandria, which entered Seattle’s life science market in 1996, will use proceeds from the 1165 Eastlake disposition for its development and redevelopment projects.

Seattle’s life science real estate market has recorded significant growth in recent years, driven by advancements in biotechnology, increased venture capital funding and a strong talent pool, Daniel Maldonado, managing director, life sciences for the Americas at Unispace, told Commercial Property Executive.

READ ALSO: What Will Future Lab Space Look Like?

“Prominent players in the biotech and pharmaceutical sectors, such as the Fred Hutchinson Cancer Center … along with major companies like Bristol Myers Squibb, AstraZeneca, Moderna, Gilead and Seagen, have firmly established Seattle as a leading life sciences hub,” Maldonado added. “This status is further enhanced by the city’s proximity to a major research institution, the University of Washington.”

He also said that South Lake Union, a focal point for biotech innovation, has seen much of the demand for space. Still, neighboring areas including the Eastside and First Hill are also emerging as important sites for expansion.

“Although venture capital funding has seen a significant decline in value and number of deals in 2024, the potential for an upcoming interest rate cut could stimulate investment and improve the current market conditions. With more than 9 million square feet of available space and a vacancy rate still above 11 percent, there is substantial opportunity for growth and development in Seattle’s life science real estate sector.”

Early renewals executed

Alexandria has also closed on early renewals at both above-mentioned properties, including a 15-year extension at 1201 Eastlake, for the entire building.

In June, a top-20 pharmaceutical company took over 127,300 square feet in a 10-year lease with Alexandria, including expansion options at 10075 Barnes Canyon Road Building C, a 253,000-square-foot life science building under construction in San Diego. Upon completion in 2025, the space will be used as a new R&D facility, upping the company’s footprint in San Diego by more than 50 percent.

READ ALSO: BioMed’s Gateway of Pacific: Where Life Sciences, Tech and ESG Meet

The building is part of SD Tech by Alexandria Mega Campus, a development of Alexandria Real Estate Equities in the Sorrento Mesa submarket of San Diego.

In April, Alexandria closed on an early renewal and six-year extension with Intro, a machine learning-powered drug discovery and development company, for 143,188 rentable square feet in the Alexandria Center for Advanced Technologies, South San Francisco campus. The six-year extension now carries the lease through August 2034.

Recent market activity and milestones

Seattle’s lab market displays a supply-demand imbalance that provides tenants with favorable opportunities in the near term, mentioned Nick Menghini, research manager with JLL.

The Puget Sound market’s foundational growth drivers remain healthy, boosted by the area’s research institutes, which are key sources of startup firms, Menghini continued. These research groups continue to receive significant NIH funding, totaling $800 million year-to-date.

READ ALSO: National Demand for Lab Space Hits 10-Year Low

JLL reported four move-ins of 10,000 square feet or more in the second quarter of 2024 in the market, which lifted quarterly absorption to 88,000 square feet, the most since the third quarter of 2020. Most of the positive absorption came within the downtown Seattle R&D cluster. The Allen Institute for Brain Science closed the largest lease year-to-date through the second quarter, claiming 24,000 square feet at Dexter Yard North in South Lake Union.

“While availability slightly decreased, overall levels remained historically high, with 2 million square feet on the market as pandemic-driven deliveries coincided with a slowdown in demand and increased givebacks,” Menghini pointed out.

“Three projects remained under construction at quarter-end, all within the city of Seattle and scheduled to deliver by year-end 2025. Given the historic levels of availability in both new development and purpose-built, second-generation products and additional groundbreakings are unlikely for the foreseeable future.”

The post Alexandria Cashes In $150M for Seattle Asset appeared first on Commercial Property Executive.

Skanska has inked a lease agreement totaling some 68,880 square feet at The Eight, a 729,000-square-foot Class A+ office development in Bellevue, Wash. The long-term commitment includes roughly 47,360 square feet of office space and about 21,520 square feet of parking. The tenant, an advertising technology company, is expected to move in sometime in the second quarter of next year.

This agreement marks the second leasing deal at The Eight. The first closed earlier this year, when The Pokémon Co. committed to 526,350 square feet at the upcoming office tower. That transaction—Skanska’s largest single lease—also included 152,300 square feet of parking space. The development is now 82 percent preleased.

READ ALSO: Tenants Are Leasing More Office Space in Prime Buildings

Construction on The Eight began in 2021, with Pickard Chilton and Adamson Associates providing architectural design. The development topped out last year and completion is expected later this year.

Upon delivery, the 26-story tower will feature 23,000-square-foot floorplates, 14-foot floor-to-floor heights, floor-to-ceiling windows, a 3,190-square-foot rooftop deck, as well as 11,000 square feet of ground-level retail.

With a focus on health and well-being in the workplace, the office building is slated to include indoor and outdoor fitness spaces, saunas and locker rooms on the second floor. EV charging and bike parking will also be available.  

The Eight achieved WiredScore Platinum, Fitwel Level Two, SmartScore and Samon-Safe certifications. Additionally, the development is pursuing LEED Platinum. According to Skanska’s first-quarter reports, the company has reduced its carbon footprint by 58 percent since 2015.  

Located at 10660 NE Eight St., the development is proximate to several parks and transit stops, as well as within walking distance of downtown Bellevue, where a 1.3 million-square-foot shopping center can be found.

Skanska’s Puget Sound developments

The Eight is Bellevue’s first speculative office building to be developed in six years. The project is Skanska’s second in the city, its first being Alley 111, a 260-unit multifamily project completed in 2015.

The office development also marks Skanska’s sixth development in the Puget Sound region. One of its earlier projects was 2+U, a 686,000-square-foot waterfront tower in Seattle. Skanska topped out the project in 2018 and sold it for $704 million to Hana Financial Group in 2020.

Seattle office leasing activity booms

Greater Seattle’s office market witnessed a surge in leasing activity during 2024’s second quarter, according to a Savills report. Some 2 million square feet were leased, double the amount of last year’s second quarter.

Bellevue’s Central Business District contributed 600,000 square feet of leased office space, making up 29.7 percent of all leasing deals of this quarter, the report goes on to show.

However, despite the robust office leasing activity, the metro’s vacancy rate stood at 27.7 percent in June, marking a 260-basis-point increase year-over-year. Bellevue’s CBD fared better, with a vacancy rate of 21.2 percent in June, aided by strong demand for prime office space, Savill’s report goes on to mention.

The post Skanska Lands 2nd Tenant at Bellevue Office Tower appeared first on Commercial Property Executive.

The Smith Tower, built more than a century ago as the first skyscraper in Seattle, has changed hands. A group of local investors led by GT Capital bought it from Goldman Sachs, according to CommercialEdge information. The property rises 42 stories above the Pioneer Square district and was acquired together with the nearby Butler Garage.

The new ownership includes “prominent Seattle families,” according to Freestone Capital Management, which is also a part of the joint venture along with Evergreen Ventures, the alternative investment arm of Evergreen Gavekal.

GT Capital Founding Principal Joe Razore said, in prepared remarks, that the investors’ new cost basis will mean the building will be in a strong position to compete for tenants. 

The 268,700-square-foot tower at 506 Second Ave. dates from the 1910s, when industrialist L.C. Smith tasked New York architects Gaggin & Gaggin to design the tallest building west of the Mississippi. Completed in 1914, the high-rise has been predominantly office since then, but also includes ground-floor retail and an observation deck that is a popular tourist destination.

READ ALSO: Top Projects That Will Reshape Seattle

A previous owner, Unico Properties, renovated the property in the 2010s, including changes to the observation deck. Unico had acquired it in 2015 for $74 million, then sold it to Goldman Sachs in 2019 as part of a portfolio of 27 buildings in Seattle and Denver for $710 million. Smith Tower was also renovated in the late 1990s.

The LEED Gold-certified high-rise has floorplates averaging 11,351 square feet, as well as such amenities as a 22nd floor tenant lounge and roof deck, fitness center and cardio studio. Butler Garage is across the street.

Current tenants include tech companies, law firms and a publisher, among others. Damon McCartney and Lauren Hallgrimson with Broderick Group handle the office leasing activity at Smith Tower.

Seattle office market, sluggish

The greater Seattle office sector is showing the same kinds of weak fundamentals as the ones of other U.S. markets, with vacancy increasing for the 10th quarter in a row, according to a Kidder Mathews second-quarter 2024 report.

The Puget Sound vacancy rate at the end of June was 15 percent, marking a 280-basis-point jump over the year and a 900-basis-point climb since the onset of the pandemic in 2020. The value also indicated the highest rate since 13.4 percent in 2010, the report showed. Seattle’s index clocked in at 18.7 percent, up 30 basis points over the quarter.

Meanwhile, office sales totaled more than $215 million year-to-date as of June, with the majority of transactions involving small-size assets averaging 30,000 square feet. The largest property that changed hands in the first 6 months of 2024 was the Boeing Longacres 25-01 Building, a 617,262-square-foot asset acquired by Alaska Airlines for $85.8 million.

The post Historic Seattle Tower Has New Local Owners appeared first on Commercial Property Executive.

While still strong, industrial real estate markets near major U.S. ports have recently recorded cooling demand, along with rising vacancy rates and sluggish rent growth, or even rent contractions.

In that, the port markets are much like the broader American industrial market in the post-pandemic era, though port markets have extra factors to worry about—wild cards, in some respects—such as the potential for supply-chain disruptions, geopolitical tumult such the attacks on shipping in the Red Sea, and labor challenges.

“A couple of things are going on, especially at the larger port markets,” Jason Price, Cushman & Wakefield’s head of logistics for the Americas and for industrial research, told Commercial Property Executive. “Those markets saw some of the most substantial increasing in prices until early ’23. Now they’re the first to see rental rate declines, especially Southern California, where rents really skyrocketed, and were pretty much among the highest in the nation.”

In the wake of a historic industrial boom

As the pandemic waned in 2021 and ’22 and imports boomed, logistics companies and other users ramped up their industrial capacity in hopes of needing that in the future, Price added. That was especially the case in port markets, as healthy consumer demand (“revenge spending”) spurred imports to record levels. In many markets, the pipeline and industrial completions followed.

“But now, with more normalized import totals, we’re finding that some of these occupiers are not needing that space, so they’ve been putting some of it on the market,” Price also said.

During the first quarter of 2024, the largest U.S. port industrial markets recorded 436,000 square feet of negative absorption, compared with 13.3 million square feet of positive absorption the same quarter a year earlier, according to Cushman & Wakefield data. Vacancy rates have been edging up slowly in recent quarters for those markets, coming in at 5.5 percent in this year’s first quarter, or roughly comparable to all U.S. industrial markets, whose first-quarter vacancy average was 5.7 percent.

Goods still flowing through U.S. ports

Though demand for port industrial space is down, that isn’t the case for the volume of goods flowing through U.S. ports. The first-quarter TEU (20-foot equivalent units) volume to U.S. ports was 11.4 million, the highest since the third quarter of 2022, Cushman & Wakefield reported.

That dynamic—higher shipment volume but lower demand for industrial space—seems counterintuitive, but Price pointed out that tenant inventory management is becoming more efficient, which enables doing more with less to cut costs amid today’s high-rent environment.

READ ALSO: Mastering Supply Chain Challenges

Though port-market industrial is still relatively healthy, various exogenous shocks will continue to impact global container shipping even as the worst of the pandemic-era shocks fade, according to Brian Marks, a senior lecturer in the Economics and Business Analytics Department at the University of New Haven, and a logistics expert. One looming possibility later this year is the possibility of a strike impacting East Coast ports.

“You also have issues in the Middle East severely impacting shipping transit time, and a weather issue, a drought, impacting the Panama Canal,” Marks added. “The shocks have increased not only transit time, but also costs.”

One way for shippers to deal with higher costs is to continue their drive to use space more efficiently, which could pose a continued headwind for absorption of port-market industrial space.

Who’s winning next?

Another open question for U.S. port markets is whether East or West Coast ports will have the relative advantage as international shipping and manufacturing patterns change. The ports of Southern California are still by far the largest in terms of volume, Newmark Managing Director, National Industrial Research, Lisa DeNight pointed out, and even as manufacturing shifts from China to other east Asian nations, that part of the country will maintain its connections across the Pacific.

Southern California industrial markets aren’t the only ones that will benefit from the steady flow from east Asia to the U.S., however, DeNight said.

“There has been a clear connection between that hyperinflationary rent growth in Southern California and an ascendancy of these more attractively priced but very easily accessible inland intermodal hubs in the Southwest, such as Salt Lake City, Las Vegas and Phoenix,” DeNight said.

READ ALSO: Extreme Weather and Industrial Resiliency

Even so, East Coast port markets are poised for long-term growth as well for different reasons, she noted. One is the diversification of sources for manufactured goods, and the U.S. ports to which they go. Businesses learned all too well during the pandemic that putting all of one’s logistics eggs in one basket is a recipe for trouble. More goods from south Asia or even Africa will mean more shipments to East Coast ports, especially the Southeast.

Also, the growth of U.S. manufacturing in the Midwest and Southeast will support port growth in those regions, as those operations need imported parts and ports from which to export their goods.

“The ecosystem that’s emerging in the Southeast and Midwest favors both kinds of an import and export emphasis on Southeast ports,” DeNight said. “But I’m also bullish New York and New Jersey as a safe shore for industrial investment in particular, because of the extreme supply constraints there.”

The post Cracks Show in Port Industrial Markets appeared first on Commercial Property Executive.

Seattle’s commercial real estate scene is defined by robust expansion and sustainable development. The metro’s strong economy—fueled by tech giants that support employment and population growth—is spurring demand for all types of properties.

Despite inherent challenges, construction projects pushed through last year, with Seattle ranking among the top U.S. metros for office deliveries in 2023, with nearly 3 million square feet. Additionally, 6.9 million square feet of office developments were underway across the metro as of April, with many of them having the potential to not only alter the city’s skyline and reshape its infrastructure, but also enhance its overall appeal. Some of these projects mirror the metro’s commitment to green building practices, while others support its urban development and revitalization.

“The Puget Sound region has much to look forward to when it comes to big infrastructure projects coming online—light rail extensions, community amenities and business footprint expansions—and we have a once-in-a-lifetime opportunity with FIFA World Cup coming in 2026,” Rachel Smith, president & CEO of the Seattle Metropolitan Chamber of Commerce, told Commercial Property Executive. “All of these will have a significant, lasting, positive impact on making our region a more desirable place to live, work, recreate and raise a family.”

This year, two major public projects are set to be completed: the East Link Starter Line, a 6-mile light rail route connecting South Bellevue to Microsoft’s headquarters in Redmond, and the pedestrian improvements between Pioneer Square and Waterfront Park as part of the City’s Waterfront Seattle Program that aims to create more green spaces and optimize traffic operations. Meanwhile, the 20-acre Waterfront Park is slated for completion next year, and work is well underway at the Federal Way light rail expansion—which includes the construction of a bridge stretching more than three football fields in length.

Besides these publicly funded enhancements, CPE has identified several major private developments in the metro, which have the potential to redefine its neighborhoods and alter its skyline.

1. Bellevue 600

Bellevue is one of the Seattle submarkets that is bound to change most, with multiple major projects expected to come online in the upcoming years. Amazon’s Bellevue 600 is among the biggest projects currently under construction in the metro. When complete, the two towers will add more than 1.5 million square feet of office space to its inventory.

The tech giant broke ground on the east tower in 2021, with plans calling for a 43-story, 600-foot-tall mixed-use high-rise that would join 555 Tower as the tallest buildings in Bellevue.

The second tower at Bellevue 600 is set to rise 31 stories and include 764,400 square feet of office, 21,200 square feet of retail, along with an exhibition space on the ground floor and a daycare center. Spanning 3.5 acres from 110th Ave. NE to 108th Ave. NE, the project aims to support more than 7,000 Amazon employees.

NBBJ designed Bellevue 600 with sustainability and employee wellness in mind, targeting LEED Gold certification. The development will not only provide extensive office space but also include meeting rooms and informal gathering areas to foster collaboration and well-being in the office.

Additionally, the employees will have access to a ground-floor coffee bar and a 16-foot-wide park-like walking path connecting the two towers, as well as an outdoor plaza and garden with over 40 plant species.

2. 555 Tower

At the heart of Bellevue’s central business district, right next to Amazon’s Bellevue 600 development, the NBBJ-designed 555 Tower is well underway after a two-year construction pause caused by the pandemic-induced uncertainty surrounding work dynamics.

Rising 600 feet, the 42-story office tower developed by Vulcan Real Estate is being built using a $598.6 million construction loan from Wells Fargo Bank, CommercialEdge data shows. Right after Vulcan broke ground on the tower in 2020, it landed Amazon as its tenant.

Also known as Sonic, 555 Tower welcomed its first 1,000 employees in late 2023. They currently have access to half of the building, meaning 400,000 square feet of office space across 19 floors. Once completed, the tower will also encompass 24,675 square feet of amenity and retail space, along with a two-story pavilion and 967 parking spaces, outdoor terraces, a dog deck, quiet rooms, cafes and bike storage.

“At ground level, a thoughtfully scaled retail pavilion building and engaging outdoor public spaces create inviting connections for workers and the community to the street and the Grand Connection,” said NBBJ Principal & Design Leader Dale Alberda. “The Pavilion building’s sustainable green roof, viewed by many tall, neighboring buildings, reflects Bellevue’s rich agricultural history,” he added.

The building’s design conceptually connects the city with the sky, featuring a striking curtain wall inspired by cascading rainfall.

“The 555 Tower with its colorful, rainfall-inspired exterior serves as an urban anchor and a new landmark on the Bellevue skyline,” said Alberda. “The tower’s collaborative working spaces, adjacent to south-facing terraces, connect inside to out and take full advantage of dramatic city and mountain views across the Puget Sound region,” added Alberda.

With its design centered around sustainability, the tower has a dedicated outdoor air system for heating and cooling, as well as enhanced ventilation systems, extensive landscaping and biophilic elements, aiming for LEED Gold certification.

3. The Spring District

Bellevue’s BelRed Corridor is home to another massive project: the 36-acre Spring District, a new urban neighborhood in the making. A joint venture between Wright Runstad & Co. and Shorenstein Properties started work on the $2.3 billion masterplan in 2013, with expected completion in 2028. NBBJ handles overall design, with individual properties designed by GGLO.

“The Spring District is a sustainable mixed-use transit-oriented development at an ambitious scale,” said Andy Bench, president of Wright Runstad & Co. “What was once a low-density industrial site is now home to a vibrant LEED-ND-certified neighborhood with millions of square feet of office space, hundreds of apartment units, and a growing collection of retailers, all concentrated around a new regional light rail station,” Bench added.

Upon completion, the Spring District will encompass more than 3.3 million square feet across 19 buildings, ranging from three to 12 stories. Several buildings have already been delivered, including three residential ones totaling over 790 units, the Meta-owned Hemlock building with an adjacent market hall and park, as well as Blocks 24 and 16, purchased by Brookfield Properties for $565 million in 2021.

The Spring District also houses the Global Innovation Exchange building, an educational center focused on technology innovation that opened in 2017 as a result of the collaboration between the University of Washington and Tsinghua University of Beijing, and supported by Microsoft.

Moreover, the district’s masterplan also includes a retail pavilion, along with Block 12 which is now a brew pub operated by Bellevue Brewing Co.

In addition, local landscape architecture firm GGN designed a park that will accommodate a variety of activities, including informal sports and evening movies, contributing to the overall walkable environment that Spring District aims to achieve.

4. FRED310

One of the biggest industrial developments in the metro, FRED310, is set to add almost 4 million square feet of space to the Frederickson, Wash., area, spanning 310 acres. Developed through a joint venture between Panattoni Development Co. and Crow Holdings Capital, and funded by a $252.3 million construction loan provided by PCCP last year, FRED310 was designed to meet the needs of modern industrial users.

Strategically located near the Port of Tacoma, rail lines and major highways, this development is poised to become a central hub for distribution and logistics in the Pacific Northwest.

“Seattle has long been a core coastal market, and we view the Frederickson industrial pocket as an equally mature submarket that is home to a ‘who’s who’ list of Fortune 500 companies,” Chase Furr, director in the industrial group of Crow Holdings Capital, told CPE.

The partnership has focused on offering flexibility on building configurations and amenities and that is reflected in how the project was received as 64 percent of it is already pre-leased, according to Furr.

Among the buildings in the industrial campus that have found a tenant is the 782,875-square-foot building for Harbor Freight Tools, which marked one of the largest industrial leases in the region in 2023. Building C, comprising 1.2 million square feet, is leased to Floor & Decor, while GE Appliances will partially occupy the 753,069-square-foot Building D.

As for the project’s impact, Furr believes that household brand names will provide incredible economic benefits to the greater community for years to come, both directly through job creation and indirectly through increased supply chain efficiencies to the end consumer.

5. The Net

Rising 36 stories in the heart of downtown Seattle, The Net is set to redefine the city’s skyline while creating a work environment that puts a high emphasis on tenant wellness and sustainability. The NBBJ-designed skyscraper will encompass 807,600 square feet of rentable space, with floorplates averaging 24,000 square feet. Urban Visions broke ground on the project in 2021, after partnering with Mitsui Fudosan America and selling the development site into the new partnership for $127.7 million.

“Known as the anti-high-rise, the project prioritizes tenant, business and environmental health over the building systems that tend to drive a tall structure,” Ryan Mullenix, partner & co-leader of NBBJ’s corporate design practice, told CPE. “Access to nature, encouragement to take the stairs, strong team connectivity and a highly adaptable floorplan are primary principles guiding the tower’s innovative design,” he added.

When completed in 2027, The Net will feature 13-foot clear heights, providing open environments for its occupants, as well as 10,000 square feet of dedicated retail space, along with 392 parking stalls. Tenants will have access to a marketplace on the second level, a childcare center, a conference center, as well as a cafe and bar. One of the project’s standout features is its outdoor space, specifically Seattle’s first Sky Park, which will span over three floors and comprise 16,000 square feet of connected terraces with panoramic views of the Pacific Northwest.

Another interesting aspect of the project is the structural ingenuity behind it.

“The project features a perimeter-braced frame, which allows the main core to be moved away from the center of the floor,” Mullenix explained. “Compared to a center core building, the unobstructed floorplates offer 25 percent higher visibility per floor, keep 20 percent more of a tenant’s teams closer and yield over 30,000 square feet of additional space that is contiguous and more configurable.”

The efficiency of its design does not require the building to extend into the basement, thus optimizing parking and resulting in 25 percent less excavation, he added.

6. KANON

Another major project underway in Bellevue is Beam Reach Partners’ KANON, a 740,000-square-foot office development designed by Gensler. The developer signed a ground lease for the site with Wallace Properties in 2022, with the expected completion of the project in mid-2026.

KANON is set to comprise two 16-story connected towers with an outdoor plaza, and extensive outdoor green areas such as terraces and decks on every tenant floor, which will extend beyond the tower’s footprint and will double in depth, according to Gensler Studio Director & Senior Associate Brian Di Maggio. Plans also call for a 1-acre central park, which will be the largest outdoor green space in downtown Bellevue, as well as rooftop decks, a pedestrian connection to the light rail line, along with bike rooms and lockers.

“The Wi-Fi-equipped park amenity will feature native landscaping, an amphitheater and a variety of outdoor work, social and eating areas,” Di Maggio revealed.

Sustainability is a core element of the development, which targets LEED Platinum, Fitwel and Salmon Safe certifications. When evaluating structural options, the design team even conducted a carbon impact analysis, trying to track the carbon footprint against its decisions.

“It will undoubtedly make a positive impact on downtown Bellevue and will act as the new gateway to Fourth Street. The development is designed to meet the evolving needs of tenants—specifically for more spaces that emphasize health and wellness,” said Di Maggio.

7. Dexter Yard

At the intersection of South Lake Union’s tech corridor and one of Seattle’s most sought-after neighborhoods, Dexter Yard is a major life science development that is set to add 522,486 square feet of office and lab space to the metro’s inventory.

BioMed Realty completed the first phase of the project in 2022 and is now working on the second phase, which consists of adding four levels of space to the North Tower. Spaces will range from 10,000 to 200,000 square feet. Once completed, the development will encompass two 15-story towers and 20,000 square feet of retail and amenity spaces.

“Dexter Yard features The Field House, a one-of-a-kind, 5,500-square-foot multi-use space hosting sporting events, company gatherings and community events, an array of shared facilities like lockers, showers, a rooftop deck, conference rooms, bike storage and purposeful pedestrian blocks connecting the surrounding neighborhoods,” said Mike Ruhl, vice president of leasing at BioMed Realty.

The development also includes Velocity Labs, the company’s move-in ready lab space. Designed by SkB Architects, Dexter Yard provides access to onsite retail spaces, as well as dining options such as SLU BRU. The development’s proximity to major freeways like Interstate 5 further enhances its accessibility. The site is also strategically located near a bike expressway on Dexter Ave. N. Currently, Genoa Healthcare, Parse Biosciences and Shape Therapeutics are among the tenants at Dexter Yard.

The project is being built in accordance with BioMed Realty’s sustainability practices, and it was recently awarded with a Fitwel 2 Star Rating by the Center for Active Design and is targeting LEED Gold certification.

8. The Eight

Another Skanska project currently under construction is The Eight, a 540,000-square-foot office and retail development in Bellevue. The 25-story project aims to blend into the neighborhood’s urban fabric while offering a dynamic and wellness-centric environment for its tenants.

With floorplates at approximately 23,000 square feet, The Eight was designed to accommodate a variety of tenant needs. Plans also call for 11,000 square feet of ground-level retail space with a 1,900-square-foot standalone pavilion that will enhance the pedestrian experience with engaging public spaces.

At the beginning of this year, Skanska leased more than 70 percent of the building—specifically 374,000 square feet of office space and 152,300 square feet of parking—to Pokémon, which is expected to move into the tower at the beginning of 2025.

“By integrating state-of-the-art health and wellness features, providing expansive indoor-outdoor spaces, and creating a hospitable lobby environment, we strive to help our tenants redefine their workplace, reinvigorating post-pandemic office models, while simultaneously enhancing the life of the neighborhood as a whole,” said Charlie Foushée, executive vice president & regional manager with Skanska.

Besides the green spaces, the project is also set to include a gathering area, seven private decks and a rooftop deck. But Skanska’s vision for The Eight and its surroundings extends beyond aesthetics and functionality.

“We set out to enrich neighborhoods with both great design and great spaces where people want to be. The Eight is a testament to that philosophy, bringing the Puget Sound region a pioneering mix of wellness-oriented flexible workspaces and an engaging ground plane with retail designed to meet the evolving demands of modern workers, modern businesses and cohesive communities,” Foushée added.

The Eight will include touchless technology, alternating indoor and outdoor balconies and 100 percent fresh air ventilation, targeting LEED Platinum, WiredScore Platinum and Fitwel certifications. It will also have 128 bike stalls, car charging stations and easy access to transit options.

The post Top Projects That Will Reshape Seattle appeared first on Commercial Property Executive.

Social media giant TikTok has expanded its office footprint in downtown Bellevue, Wash., by an additional 150,000 square feet, The Registry reported.

The tenant, owned by Beijing-based ByteDance, will occupy seven floors at Lincoln Square North Tower, an office building where it had already committed to 132,000 square feet across six floors in January.

Microsoft had previously occupied the space, alongside another 13 floors at the 27-story tower. The company relinquished the offices in December 2023, according to the Downtown Bellevue Network.

ByteDance expanded its presence in another Bellevue building as well in the first quarter of this year. The company leased some extra 45,000 square feet at Key Center, where it already occupied some 110,000 square feet.

READ ALSO: Office Sector Adapts Amid Market Shifts

Seattle’s office market has shown signs of improvement, particularly in the case of completions—as 2.5 million square feet came online in the first four months of the year. Current economic conditions have affected U.S. tech markets, leading rises in vacancy—in Seattle, the rate was up 400 basis points year-over-year through April.

High-rise near downtown Seattle

Lincoln Square North Tower came online in 2005. The 550,000-square-foot, Class A building became subject to a $220 million loan in 2015, originated by TIAA Insurance Bank, with a maturity date set for 2025, according to CommercialEdge data.

The high-rise features three floors of retail, 22,000-square-foot floorplates, eight passenger elevators, along with 1,424 car parking spaces. Amenities include a workout facility, a swimming pool, bike lockers, shower facilities and six electric charging stations, among others.

Located at 700 Bellevue Way NE, the property provides access to interstates 90 and 405, U.S. Route 520, as well as to the Bellevue Transit Center. Downtown Seattle is some 10 miles away.

The post TikTok Adds 150 KSF to Seattle Footprint appeared first on Commercial Property Executive.

Despite some positive signs, U.S. tech markets were the most affected by the current economic conditions. These challenges impacted Seattle’s office sector figures on several levels; for instance, the vacancy rate witnessed a 400-basis-point increase year-over-year as of April.

The under-construction pipeline dropped year-over-year as of April from 6.9 million square feet to 3.3 million square feet. However, the metro fared better than Manhattan (2.7 million square feet), Chicago (1 million square feet) and Los Angeles (1.6 million square feet).

Less office space being built as deliveries peak

As of April, the Emerald City had some 3.3 million square feet—2.3 percent of total stock—of office space under construction. This represents a 50 percent drop from the previous year, when 6.9 million square feet—5.0 percent of total stock—was underway.

The metro’s share of office space in the under-construction and planning phases stood at 9.8 percent of existing stock. Other gateway markets like San Francisco (13.1 percent) and Boston (11.6 percent) surpassed Seattle, while Washington, D.C. (4.7 percent) and Manhattan (2.9 percent) lagged behind.

One of the largest projects currently under construction that will reshape Seattle’s office sector is Amazon’s Tower 1 at Bellevue 600, a more than 1.1 million-square-foot tower in Bellevue, Wash. The 43-story property, scheduled for completion this month, is set to be LEED Gold-certified. The development will also comprise a phase two, a 31-story project that will measure 764,400 square feet.

Additionally, Skanska is nearing completion of The Eight, a 541,000-square-foot speculative development also in Bellevue. The company topped out the 25-story building in May last year and aims for LEED Platinum certification.

Seattle sees surge in office deliveries

Year-to-date through April, Seattle’s office sector saw 2.5 million square feet coming online across six properties, amounting to 1.4 percent of total stock. This figure is almost nine times larger than in the same interval of 2023, when only about 287,000 square feet were completed.

Among peer markets, the Emerald City saw the highest increase in deliveries compared to the first third of last year. Washington, D.C. (435,428 square feet) posted a 50.9 percent decline, while Chicago’s completion figure (875,110 square feet) rose only by 13.3 percent. Boston ranked second in terms of growth, with almost 1.4 million square feet completed, a 110.3 percent increase.

At the end of April, Office Properties Income Trust completed renovations at Unison Elliott Bay, a three-building mixed-use campus near downtown Seattle. The park, which features 300,000 square feet of office, lab and R&D space, is expected to achieve LEED Gold certification.

The month before, Vulcan Real Estate completed the more than 1 million-square-foot West Main campus in Bellevue, Wash. The developer financed the construction of the three-building property with a $706 million loan originated by U.S. Bank in September 2020.

Larger sales volume, smaller prices per square foot

Seattle’s sales volume year-to-date as of April reached almost $160 million, according to CommercialEdge data. Seven assets totaling 732,663 square feet changed hands during this period. This represents a considerable increase year-over-year when the sales volume stood at $54.7 million.

However, office properties in the metro traded for $241.26 per square foot on average in the first four months of this year, about $46 less than 2023’s same period. Among gateway markets, Los Angeles ($359 psf) was the priciest, followed by Manhattan ($351 psf) and Washington, D.C. ($345 psf). Chicago was at the opposite end of the spectrum, with $81 per square foot.

In February, a joint venture between Sabal Investment Holdings and Palisade Group purchased 1000 & 1100 Dexter Ave., a two-building office campus in Seattle, for $47.5 million—or $231 per square foot. SBC and Stockbridge sold the 223,233-square-foot property that came online in 1996 and was renovated in 2003.

A month earlier, Anchor Health Properties partnered with Australian Retirement Trust for the acquisition of a three-property medical office portfolio in the Seattle and Charlotte, N.C., metros for $62 million. The Emerald City asset is a 41,000-square-foot MultiCare Health System property in Auburn, Wash.

More vacant space in the Emerald City

With tech markets being the most affected by recent economic challenges, Seattle’s vacancy rate rose 400 basis point year-over-year as of April, reaching 23.0 percent. This figure is also 4.2 percent higher than the national average. San Francisco (25.9 percent) had the most vacant space among gateway metros, while Washington, D.C. (16.8 percent), Manhattan (17.6 percent) and Chicago (19.1 percent) fared better.

In January, Skanska signed one of the largest recent office deals in the Puget Sound area, agreeing to lease 526,595 square feet to Pokémon. The firm will occupy 72 percent of The Eight’s capacity, a 729,000 square feet office building.

A few months later, Commencement Bank expanded its presence in the Seattle area after committing to 18,000 square feet at 1313 Broadway Plaza in Tacoma, Wash. The company’s headquarters and Tacoma branch are less than half a mile from their new location, which will open next year.

As of April, Seattle’s office sector had an average listing rate of $37.02 per square foot, a 6.8 percent decline year-over-year. The national figure during the same month was $37.66.

Coworking remains steady

As of April, Seattle’s coworking sector consisted of more than 3.0 million square feet of coworking space, outperforming only Miami (2.9 million square feet). Across peer markets, Manhattan led with almost 12.7 million square feet, followed by Los Angeles (6.6 million square feet), Washington, D.C. (6.3 million square feet) and Chicago (6.2 million square feet).

Seattle’s shared space volume represented 2.0 percent of all leasable office space, 20 basis points higher than the national average. The Emerald City surpassed Chicago (1.9 percent), Boston (1.8 percent) and Washington, D.C. (1.6 percent).

In March, CENTRL Office took over 53,365 square feet of coworking space at the Kelly-Springfield Building. Previously operated by WeWork before filing for Chapter 11 bankruptcy, the space will reopen in July.

The post Seattle’s Office Sector Sees Surge in Deliveries appeared first on Commercial Property Executive.

Amazon has leased the entirety of Industrial Realty Group’s 33815 Weyerhaeuser Way S. in Federal Way, Wash., in the southwest corner of King County. The property will provide the e-commerce giant about 225,800 square feet of industrial space.

Woodbridge Corporate Park is the redevelopment of the former headquarters campus of forestry products specialist Weyerhaeuser, which left the property for downtown Seattle in 2016. Los Angeles-based IRG bought the Federal Way property for about $70 million that same year, rolling out development plans soon after.

READ ALSO: The Case for Last-Mile Facilities

The Amazon lease is in one of two industrial buildings that IRG recently completed at Woodbridge, which together total about 440,000 square feet. The second building is currently vacant, with Colliers handling leasing and marketing efforts.

The owner invested about $3.5 million to make various infrastructure improvements at the former Weyerhaeuser campus, including new sidewalks, lighting, roadway, landscaping, bike lanes and stormwater systems. IRG expects the two newly developed buildings will generate $6.8 million in tax revenue for the City of Federal Way.

IRG is also pursuing separate entitlement approvals for development of a new business park at the 425-acre former Weyerhaeuser site, but has not committed to a timetable, noting that it will depend on market conditions.

Seattle industrial still slowing down

The lease was larger than most Seattle-area industrial agreements so far in 2024, according to a first quarter Savills report. Frito-Lay’s 307,000-square-foot agreement at 51st Ave. N.E. in the Snohomish County submarket was the largest.

According to the latest CommercialEdge industrial report, Seattle’s vacancy rate clocked in at 6.8 percent as of April, 160 basis points higher than the U.S. figure. Compared to other Western markets, Seattle recorded the second-highest vacancy, as only metro Denver fared worse, at 7.1 percent.

Still, average in-place rates for industrial assets continued to rise at a decent clip—at $11.07 per square foot, up 8.8 percent over a 12-month period ending in April. Meanwhile, national rates stood at $7.96, up 7.4 percent over the same time frame, CommercialEdge data shows.

The post Amazon Leases 225 KSF Building in Suburban Seattle appeared first on Commercial Property Executive.

EQT Exeter has purchased four industrial buildings totaling 365,000 square feet, part of Gayteway Business Park in Arlington, Wash. GS Venture Partners sold the Class A assets for $70.6 million, according to CommercialEdge information. CBRE and the Broderick Group represented the seller.

The traded assets include Buildings B & C, totaling 130,315 square feet, alongside the 117,060-square-foot Building F and the 117,800-square-foot Building G.

GS Venture Partners broke ground on the 54-acre Gayteway Business Park in 2019, four years after purchasing the land for $4.2 million from Trinity Partnership.

READ ALSO: Why 2024 Is the Year to Invest in Industrial Real Estate

Buildings B and C were the first to rise inside the development and came online in 2020. Buildings F and G launched in 2023 and 2024, respectively. The project may include five more buildings totaling 496,144 square feet, currently in the planning and permitting stages, according to CommercialEdge data.

The purchased assets feature dock-high and grade-level loading, concrete truck courts and 24- to 30-foot clear heights. Moreover, Buildings B & C include nearly 10,000 square feet of office space.

The park was fully leased at the time of the acquisition. Tenants include Quantum Windows and Doors, which leased the entire Building F, and C&C Packaging Services, which occupies 31,621 square feet at Building C.

Located at 20101 and 19927 67th Ave. NE, the facilities are less than 2 miles away from the Arlington Municipal Airport and some 5 miles away from Interstate 5.

CBRE Vice Chairman Brett Hartzell alongside Executive Vice President Paige Morgan and Broderick Group Co-Founder Al Hodge represented GS Venture Partners.

EQT bullish on the industrial market

Following EQT Exeter’s closure of a $4.9 billion industrial fund last year, the firm went on a shopping spree—just last month the firm purchased a 5.1-million-square-foot industrial portfolio in metro Minneapolis-St. Paul for more than $284.6 million. Prologis sold the facilities.

The month before, EQT acquired a 641,906-square-foot Phoenix-area industrial asset from Developer BET Investments for $60.1 million. Also in April, the firm purchased an 819,004-square-foot industrial facility in Fontana, Calif., for $197 million.

Seattle’s industrial trading scene

Year-to-date as of April, investors traded more than $15 billion worth of industrial assets nationwide, with properties changing hands at an average $146 per square foot, according to a CommercialEdge report.

Metro Seattle’s industrial volume totaled $310 million in the same period, assets selling for $241 per square foot, the same report reveals. The sales price was 65 percent higher than the national average.

The post EQT Exeter Pays $71M for Washington Industrial Assets appeared first on Commercial Property Executive.

Prologis has signed a lease extension at its 228,256-square-foot logistics facility in Sumner, Wash., near the Port of Tacoma. East Bay Logistics will continue to use the entire facility as its distribution center. Cushman & Wakefield negotiated on behalf of the tenant.

Prologis acquired the industrial asset in 2019 for $36.1 million, from Exeter Property Group, according to CommercialEdge.

East Bay Logistics’ Sumner facility is at 4800 E. Valley Highway. Completed in 2004, the Class A industrial warehouse features 35-foot clear heights, T-5 motion sensor lights, 56 dock high doors, dock levelers and bumpers and 200 vehicle parking spots. The tenant provides distribution services for coffee, sugar and cocoa products for the Seattle, Los Angeles and the Bay Area markets.

READ ALSO: Mastering Supply Chain Challenges

The 12-acre property is close to Interstate 5 and State Route 167. It is also 13 miles from Tacoma, Wash., 23 miles from Fort Lewis, Wash., 24 miles from Seattle-Tacoma International Airport and within 34 miles of Seattle.

Cushman & Wakefield Executive Managing Directors Jay Hagglund, Patrick Mullin and Scott Alan represented East Bay Logistics in the lease negotiations.

Among the priciest Western industrial markets

Seattle’s vacancy rate reached 6.7 percent as of March, a recent CommercialEdge report shows. Average in-place rents grew 8.5 percent year-over-year, to $11.13, with Seattle ranking fifth nationwide among the priciest metros.

Earlier in 2023, the same Cushman & Wakefield team were involved in another full-building lease near Seattle. Toysmith secured a 159,055-square-foot lease, relocating its headquarters to Pacific 167 Logistics, an industrial warehouse owned by Davis Property & Investment.

The post Prologis Inks Seattle-Area Full-Building Deal appeared first on Commercial Property Executive.

Dalfen Industrial has acquired five industrial outdoor storage sites on the West Coast. Two of the purchased properties are in San Francisco’s East Bay, two are in metro Seattle and one is located in Southern California.

Richard Weiss, Dalfen Industrial’s regional senior vice president, West investments, told Commercial Property Executive that the gross capitalization across the five deals was around $26 million.

The assets were purchased from five unique sellers and were acquired into a venture with Centerbridge Partners L.P. The venture is rapidly expanding its portfolio within infill industrial markets and near ports and key logistics infrastructure.

Property specifics

In separate transactions, Dalfen acquired two properties in Hayward, Calif.: 847–877 Industrial Parkway and 23422 Clawiter Road. At acquisition, 847–877 Industrial Parkway was some 70 percent leased. Dalfen quickly secured a new tenant following closing and brought the property to full occupancy. 232422 Clawiter was acquired fully leased with significant capital upgrades planned.

Both sites offer access to Highway 238, Interstate 880, I-580 and the Port of Oakland.

Dalfen also acquired two IOS sites in Washington State: 214 21st St. SE in Auburn and 8328 S. Tacoma Way in Lakewood. The Auburn site was purchased with highly accretive seller financing and is fully leased to one tenant. A 10-year lease with a large regional landscaping company was signed concurrent with closing on the Lakewood site.

In Southern California, Dalfen acquired a fully paved and fenced yard at 12371 Los Nietos in Santa Fe Springs, Calif. The property is less than 3 miles from the I-605/I-5 interchange. Select capital improvements are planned before offering the site for lease.

Weiss said that the types of capital improvements Dalfen has planned are typical for IOS properties: parking lot upgrades, building refurbishments and deferred maintenance.

A popular niche

Dalfen isn’t the only player actively pursuing IOS assets.

In April, Catalyst Investment Partners closed its Catalyst IOS Fund II at $186.9 million in LP commitments, handily surpassing its $150 million target. Commitments to the fund included domestic and international institutional investors, endowments, foundations, wealth managers, family offices and high-net-worth individuals.

So far, the fund has acquired IOS properties in metro Baltimore, Savannah, Ga. and Pennsauken and Fairfield, N.J.

The post Dalfen Picks Up 5 IOS Assets on the West Coast appeared first on Commercial Property Executive.

The Seattle market has gained 300,000 square feet of life science lab, R&D and Class A office space with the completion of renovations at Unison Elliott Bay, a three-building mixed-use campus located at 351, 401 and 501 Elliott Ave. West.

Renovations began at the property, which is owned by Office Properties Income Trust and managed by The RMR Group, in March 2022. Located in the Uptown submarket, the property is within 2 miles of downtown Seattle.

The lab space includes speculative suites as well as customizable space. The campus already has one tenant, biotechnology firm Sonoma Biotherapeutics Inc., which signed a 10-year lease for more than 83,000 square feet in August 2022. Sonoma Biotherapeutics occupies three floors of office and lab space in the 501 building for its R&D and Manufacturing Center, intended for the development of engineered regulatory T cell therapies for autoimmune and inflammatory diseases. The biotech company has moved its Seattle operations to Unison and plans to hire an additional 100 employees.

Campus Features, Amenities

In addition to the Class A office space, Unison Elliott Bay has 200,000 square feet of 14-foot floor-to-floor heights in two dedicated lab buildings which include move-in ready lab and R&D space with suites ranging from 12,500 to 25,000 square feet. The property includes dedicated mechanical infrastructure supported by standby generator power to accommodate demanding lab and technological power requirements. It integrates energy-efficient systems and green features such as green walls of preserved moss that are installed in the reception areas to add vitality to the lobbies and connect occupants to the natural surroundings. Felt matrix ceilings offer enhanced sound attenuation.

READ ALSO: AI Will Probably Boost Office Demand. And CRE at Large.

Unison Elliott Bay has indoor and outdoor meeting areas, conference and training rooms, fitness and changing room facilities, as well as a landscaped courtyard. Covered and surface parking are available along with secure bike storage and EV charging stations. Tenants will also be able to dine at a chief-driven café or a rotating mix of food trucks.

The campus, which is on track to achieve LEED Gold, Fitwel and Wired Score certifications, is situated along Elliott Bay with views of Puget Sound and the Olympic Mountains. Occupants will have access to 15 acres of nearby trails, beaches and open space at Myrtle Edwards and Centennial parks.

Managing Director Joe Gowan and Senior Vice President Tim Jones of JLL’s Life Sciences Team are leading leasing efforts for the campus.

Unison is managed by RMR, a leading alternative asset management company which is responsible for providing all aspects of management services and strategy for more than 2,000 properties across the United States including life science, office, industrial, medical office, retail, hotel, multifamily and senior living assets.

Late last year RMR and OPI unveiled the redeveloped 20 Mass in Washington, D.C. Formerly a government office building, OPI converted the asset into a 10-story, 427,191-square-foot mixed-use tower with office, retail and amenity spaces and a hotel in a $200 million renovation project.

RMR manages OPI, which owns or leases 152 properties totaling approximately 20.5 million square feet in 30 states and D.C.

The post Renovations Wrap Up at Seattle Mixed-Use Campus appeared first on Commercial Property Executive.

CenterPoint had acquired the property back in 2020 from Parts Plus for $18.9 million, according to CommercialEdge data.

Completed in 1987, Pike Distribution Center features 25-foot clear-heights, 23 exterior docks, three drive-in doors, fenced trailer parking and approximately 70 parking spaces. KRL Legacy will operate part of the property.

Located at 1701 Pike St. NW, in the Kent Valley industrial hub, Pike Distribution Center is near the major confluences of Interstate 5, State Route 167 and Highway 18, which allow easy access to the Seattle metropolitan area. The property is also near the Port of Tacoma and SeaTac Airport.

Executive Vice Presidents Kraig Heeter and Mike Newton worked on behalf of the buyer, while the seller was represented by Kidder Mathews Executive Vice President Matt Murray along with KBC Advisors Partner Matt Wood.

Seattle recorded $201 million transaction sales in the first quarter of 2024, according to a recent CommercialEdge report. The metro also registered double-digit lease rates, at $11.13 per square foot.  

The post CenterPoint Sells Seattle-Area Industrial Building for $27M appeared first on Commercial Property Executive.

Commencement Bank has signed a 18,000-square-foot, long-term lease at 1313 Broadway Plaza in Tacoma, Wash., a Seattle suburb. The company will relocate its headquarters to a full floor of the 93,000-square-foot building early next year. X2Capital is the owner.

The bank’s HQ and Tacoma branch are currently at 1102 Commerce St., less than half a mile from their future location. Commencement has been occupying four of the building’s six floors for the past 12 years.

READ ALSO: Top 10 Markets for Office Deliveries in 2023

X2Capital acquired 1313 Broadway in 2018 for $12.5 million from PF Financial Services, according to CommercialEdge information. In 2021, the asset became subject to a $5.8 million loan originated by Wells Fargo Bank.

Dating back to 1976, the six-story building was completely renovated in 1992, the same source shows, and went through cosmetic improvements in 2017. Currently, the Class A property is undergoing further renovations, including a new lobby, common area and storefront.

The office building features floorplates between 17,109 and 21,867 square feet, four passenger elevators and about 80 parking spaces. Tenants include Northwest Hardwoods and Merit Harbor Capital.

Located in downtown Tacoma, the facility is close to several dining and retail options and some 24 miles from Seattle–Tacoma International Airport.

Kidder Mathews Senior Vice Presidents Drew Frame and Ray Schule, along with Executive Vice President Will Frame, brokered the transaction on behalf of the tenant.

Seattle’s office sector faces headwinds

The Seattle market’s office vacancy rate clocked in at 22.5 percent in February, 460 basis points higher than the national average, according to the latest CommercialEdge office report. The metro’s listing rate was $37.87, close to the $37.83 U.S. average, but 2 percent lower year-over-year.

In one of the largest deals since the beginning of the year, Pokémon signed a 526,595-square-foot, long-term lease at Skanska’s The Eight development in Bellevue, Wash. The company is expected to move in starting January next year.

The post Commencement Bank Eyes HQ Relocation Near Seattle appeared first on Commercial Property Executive.

Flexible office provider CENTRL Office has taken over the former WeWork space at the Kelly-Springfield Building, comprising 53,365 square feet of coworking space in Seattle. The firm will operate the space under a management contract with landlord Legacy Cos. WeWork vacated the offices in February, after it filed for Chapter 11 bankruptcy. CENTRL plans to open the location in July.

Originally completed in 1917 as an industrial property, the building underwent a conversion to retail use in 1963, followed by an office repurposing in 2019, according to CommercialEdge data. In 2018, it became subject to a $49 million construction loan from Bank of America, the same source shows.

Rising five stories, the building now spans 85,991 square feet of office space. It features an on-site bike locker, rooftop terrace, showers and a conference room. Kidder Matthews Vice President James Yalowitz represented the tenant in the transaction.

Located at 1525 11th Ave., the Kelly-Springfield building is about a mile from downtown Seattle and is adjacent to the Cal Anderson Park. It is also within walking distance of multiple public transit options.

As of February, the average listing rate in Seattle clocked in at $37.87, after registering a 2 percent year-over-year decrease, and on par with the national figure of $37.83, according to a recent CommercialEdge report. The vacancy rate in the metro reached 22.5 percent, rising by 4.3 percent over 12 months and considerably surpassing the 17.9 percent U.S. rate.

The post CENTRL Takes Over Former WeWork Location in Seattle appeared first on Commercial Property Executive.

Bridge Industrial has obtained a $150 million mezzanine loan from funds managed by Mesa West Capital and Morgan Stanley Real Estate Investing to finance a logistics project in Tacoma, Wash.

The mezzanine loan, along with a $263 million first mortgage construction loan originated by Bank OZK, provides total loan-to-cost financing of 65 percent.

The five-year interest-only mezzanine loan was co-originated by MWC, a debt investment manager, and MSREI, the global private real estate investment management business of Morgan Stanley.

The construction project is Bridge Point Tacoma and is a 2.5 million-square-foot Class A logistics campus on 136 acres off of I-5, within 6 miles from the Port of Tacoma. Plans call for three cross-docked warehouse/distribution buildings ranging from 520,000 to 960,000 square feet and a 335,000-square-foot rear-load warehouse. Each building will feature 40-foot clear heights, 130-foot trailer court depths, as well as ample dock-high doors and trailer parking.

The financing was arranged by James Muhlfeld of Eastdil Secured.

Bridge Industrial is active on both coasts

The overall industrial space vacancy in Pierce County has been trending upward, hitting 6.2 percent at the end of 2023, in comparison to 2.6 percent 12 months earlier, according to a fourth-quarter report from Kidder Mathews.

Absorption has been up and down, positive in the second and third quarters, but negative for the fourth quarter and for 2023 overall. Over that time, more than 3.4 million square feet were added to the county’s industrial inventory. Further, seven projects under construction at the end of last year will add 4.2 million square feet, of which only a quarter is preleased.

Bridge Industrial has been staying active in multiple markets across the U.S.:

•  In early January, Bridge secured $53.5 million in financing from Mesa West to develop Bridge Point 999, a 291,758-square-foot industrial building in South Brunswick, N.J.

•  Last July, the developer acquired the 13-acre site of a former aluminum smelter in Kent, Wash., where it will build Bridge Point Kent 180, a 180,000-square-foot warehouse/distribution asset.

The post Bridge Industrial Obtains $150M Loan for Logistics Park appeared first on Commercial Property Executive.

A joint venture between Sabal Investment Holdings and Palisade Group has acquired 1000 & 1100 Dexter Ave., a two-building office campus in Seattle, for $47.5 million. SBC and Stockbridge sold the 223,233-square-foot asset with the assistance of Newmark.

In 2021, the property became subject to a $55 million note from The Hartford Financial Services Group, according to CommercialEdge data. Through the loan assumption, the buyers managed to acquire the property at roughly $213 per square foot, below the current market rates.

READ ALSO: Office Trends in 2024: How Much Will the Sector Change?

The five-story campus features 23,000-square-foot floorplates and a parking ratio of 2.7 spaces per 1,000 square feet. Built in 1996, 1000 Dexter Ave. was completely upgraded in 2003, while 1100 Dexter Ave. was completed in 1998 and underwent a cosmetic renovation in 2016. Amenities encompass showers, lockers, bike storage and outdoor decks. Tenants include CrossCountry Mortgage, Riviera Finance and Genemod, the same source shows.

Located near Aurora Avenue North, the campus is less than 2 miles from downtown Seattle. The office buildings are also within walking distance of the Museum of History & Industry and the Space Needle, as well as directly connected to multiple bike paths.

Seattle office market’s mixed performance

Newmark Co-Head of U.S. Capital Markets Kevin Shannon, Managing Director Rachel Jones and Associate Director Liam Ogburn, along with Vice Chairmen Nick Kucha and Michael Moll, represented SBC and Stockbridge in the transaction.

Throughout 2023, the Seattle office market registered $226 million in investments, at a per-square-foot price of $267 as of December, considerably above the national average of $196, according to a recent CommercialEdge report. However, the vacancy rate in the metro stood at 22.5 percent, up 4.1 percent year-over-year and above the national figure of 18.3 percent.

The post Sabal JV Pays $48M for Seattle Office Asset appeared first on Commercial Property Executive.

Cleaning supplies and equipment manufacturer Walter E. Nelson Co. has acquired The Cascade Building, a 184,000-square-foot industrial facility in Bonney Lake, Wash., in a $41 million 1031 exchange. Owner-occupier Teeter sold the asset, while Wells Fargo Bank provided a $27.3 million acquisition loan, according to CommercialEdge.

Kidder Mathews facilitated the leaseback transaction on behalf of the seller. The new owner will move from its current facility in Auburn, Wash.

The 2019-completed, Class A building features 13 dock-high loading doors and two drive-in doors, as well as a 30-foot clear height and 53-by-60-foot column spacing.

The 10-acre property is at 9713 233rd Ave. E., some 42 miles from downtown Seattle and 18 miles from the Port of Tacoma, while Seattle-Tacoma International Airport is 32 miles northwest. The facility is also 20 miles from FRED310, an industrial park under construction, expected to encompass 4 million square feet upon full build-out.

The Kidder Mathews team that represented the seller included Executive Vice Presidents Matt McLennan and Kraig Heeter.

Seattle’s industrial sector shows mixed signals

According to a recent CommercialEdge industrial report, Seattle saw some $481 million in assets change hands last year for an average of $198 per square foot, well above the $129 national average. The market’s vacancy rate, however, clocked in at 5.3 percent, 70 basis points higher than the country’s average.

In July, Dermody Properties purchased Bridge Point Lacey, a 717,544-square foot industrial campus for $132.1 million. The three-building park is now rebranded as I-5 Logistics Center.

A few months earlier, Formost Fuji acquired a 65,344-square-foot facility in Everett, Wash. The 2017-completed asset changed hands for $20.1 million.

The post Walter E. Nelson Co. Buys 184 KSF Facility Near Seattle appeared first on Commercial Property Executive.

EvergreenHealth has renewed and expanded its lease at Woodlands Medical Plaza in Bothell, Wash. The health-care provider has now committed to 26,000 square feet and will occupy the first floor of the three-story, 83,000-square-foot building owned by Anchor Health Properties.

Senior Vice Presidents Todd Battison and Keith Honsberger, alongside Executive Vice President Gary Guenther with Kidder Mathews represented the owner. CBRE worked on behalf of the tenant.

Anchor Health acquired the asset for $31.5 million in 2018 from SteelWave, CommercialEdge data shows. The medical center, converted from an office building, is also currently subject to a loan provided in 2022 by Capital One, with a maturity date set for 2029.

EvergreenHealth provides a range of medical services within the clinic, such as preventive care, orthopedic care, gynecological care, newborn and pediatric care and lab services.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

Completed on 6.5 acres in 2007, the LEED Silver-certified building features 28,300-square-foot floorplates. The facility has two passenger elevators, controlled access, on-site showers and locker rooms and 298 car spots at a parking ratio of 3.5 spaces per 1,000 square feet. The property’s tenant roster includes Pacific Medical Centers and Western Washington Medical Group, among others.

Woodlands Medical Plaza is some 20 miles north of downtown Seattle at 1909 214th St. SE, having access to U.S. Route 527 and Interstate 405. Other medical providers in the surrounding area include MultiCare Indigo Urgent Care, Bothell Health Care and Pacific Institute of Medical Sciences.

Other Anchor Health investments

Anchor Health kicked off 2024 with the acquisition of a three-building medical office portfolio in the Seattle and Charlotte, N.C., markets. The $62 million deal closed in a joint venture with Australian Retirement Trust.

At the end of last year, the company also broke ground on HonorHealth Medical Campus at Peoria, a 100,000-square-foot medical office center some 20 miles from downtown Phoenix. The project is slated for completion in 2025.

The post Anchor Health Inks Expansion at Seattle-Area MOB appeared first on Commercial Property Executive.

In one of the largest office leases in the Puget Sound area in recent years, Skanska has landed a long-term tenant for The Eight, a 26-story mixed-use development currently underway in Bellevue, Wash. According to The Registry, Pokémon has agreed to occupy 526,595 square feet, of which more than 374,000 square feet will be used as office space and about 152,300 square feet will be for parking.

The agreement accounts for 72 percent of the building’s space, marking the largest lease in the company’s history. Skanska broke ground on The Eight in June 2021 and celebrated its topping out in May 2023. The developer plans to complete the development in 2024, with Pokémon expected to take occupancy starting in January 2025.

The Eight totals approximately 729,000 square feet, including about 541,000 square feet of office space with average floorplates of 23,000 square feet. Skanska is constructing the building with 14-feet floor-to-floor heights and 10-foot drop ceiling with floor-to-ceiling glass. The Class A office tower’s common amenities will include a rooftop deck, ground-level plaza, fitness center, gathering space, seven private decks and as much as 9,147 square feet of retail space. Skanska will also include four levels of parking, which total approximately 152,000 square feet of space.

READ ALSO: How Much Will the Office Sector Change in 2024?

“It’s an exciting time as The Eight delivers in 2024 and we feel fortunate that a number of different companies continue to show interest in The Eight,” Charlie Foushée, executive vice president & regional manager for Skanska USA Commercial Development’s Seattle region, told Commercial Property Executive. “We designed The Eight for companies re-envisioning how they work and to give people an environment they want to come back to.”

Skanska is targeting LEED Platinum, Fitwel and SmartScore certifications for The Eight, which has already achieved WiredScore Platinum and Salmon-Safe certifications. Foushée also told CPE that the building was designed to meet the demands of the modern workplace, offering flexible workspaces, ground-floor hospitality and competitive amenities.

Coast-to-coast developments

For Skanska, The Eight represents its largest single investment in its portfolio, while also being its sixth development in the Puget Sound region. Skanska first began operations in the Washington state market in 2011, with The Eight in downtown Bellevue marking its second project in the market.

On the other side of the U.S., Skanska is working on several projects outside of the office sector. In September, the company topped out its 240,000-square-foot development for New York City’s Public Health Laboratory that will include offices, lab space and clinical facilities. Prior to its New York City project, Skanska announced plans to build an approximately 398,000-square-foot research center for Simmons University in Boston. The university’s Living and Learning Center is scheduled for delivery in September 2026.

The post Skanska Lands Legendary Lease appeared first on Commercial Property Executive.

The Auburn, Wash., facility is part of the MultiCare Auburn Hospital Campus. Image courtesy of Newmark

Anchor Health Properties, in a joint venture with Australian Retirement Trust, has acquired a three-property medical office portfolio in the Seattle and Charlotte, N.C., markets for $62 million. Newmark facilitated the transaction.

Known as the Novant & MultiCare On-Campus collection, the portfolio comprises a total of 166,000 square feet, and was 94 percent occupied at the time of the sale. The properties are within regional and flagship hospital campuses, providing a variety of medical services, including primary care, orthopedics, cardiology, pediatrics, heart and vascular, physical therapy, neurology, oncology, cardiac rehabilitation, OB/GYN, bariatrics and urology.

READ ALSO: Medical Office Real Estate Trends to Watch in 2024

Anchor Health Properties has more than 9 million square feet of health-care real estate assets under management and it continues to add to its portfolio at a rapid pace. Recently, the firm broke ground on a 100,000-square-foot medical office center in Peoria, Ariz.

Part of medical campuses

The Novant & MultiCare On-Campus portfolio includes a 41,000-square-foot MultiCare Health System property in Auburn, Wash., and two Novant Health outpatient facilities: An 89,000-square-foot building in Matthews, N.C., and a 36,000-square-foot medical office building in Charlotte.

Located at 202 N. Division St., with access to U.S. Route 18, the Auburn facility is some 26 miles south of downtown Seattle. The property is surrounded by other medical providers, including Auburn Regional Medical Plaza and Franciscan Medical Group.

The Matthews facility is adjacent to the Novant Health Matthews Hospital Campus at 1500 Matthews Township Parkway, 12 miles from downtown Charlotte. The third asset in the portfolio is located on the Novant Health Presbyterian Hospital Campus at 200 Hawthorne Lane, less than 2 miles from downtown Charlotte.

The Newmark team that brokered the deal included Executive Managing Director Ben Appel, Senior Managing Directors Jay Miele, John Nero and Michael Greeley, Associate Director Ron Ott and Associate Conor Hilton, alongside Vice Chairman Bert Sanders and Senior Managing Director Cavan O’Keefe.

The post Anchor Health JV Pays $62M for MOB Portfolio appeared first on Commercial Property Executive.

Three of FRED310’s six buildings are already preleased, encompassing roughly 2.2 million square feet. Image courtesy of Cushman & Wakefield

A joint venture of Panattoni Development Co. and Crow Holdings Capital has broken ground on a 782,875-square-foot industrial facility in Frederickson, Wash., a Seattle suburb. The build-to-suit asset will be constructed for Harbor Freight Tools. Completion is expected in the second quarter of 2024.

Building E is part of FRED310, an industrial development planned to encompass around 4 million square feet across six buildings. Four of them are already underway, totaling 3.3 million square feet.

Another build-to-suit project at the industrial park includes the 1.1 million-square-foot Building C, which is constructed for Floor & Décor.

The developer acquired the 310-acre site in 2021 from The Boeing Co. for $200 million. Earlier this year, the joint venture secured a $252.3 million construction loan from Pacific Capital Coast Partners for the first phase of the project. The second phase will include two buildings—A and B—encompassing approximately 539,300 square feet. FRED310 is set to feature 36- to 40-foot clear heights and 130-foot trailer courts, along with ESFR sprinkler systems.

The development team includes general contractors Sierra Construction and Alston Construction, architecture firm NELSON and engineers AHBL, Kimley-Horn and Terra Associates. Cushman & Wakefield represented the owner in the lease transaction with Harbor Freight Tools.

The facility is taking shape at the intersection of Canyon Road E and 176th St. E, 9 miles from Interstate 5 and some 16 miles from Port of Tacoma. Downtown Seattle is 45 miles north, while Port of Seattle is 46 miles away. Seattle-Tacoma International Airport is 36 miles northeast.

Panattoni grows Washington inventory

Earlier this year, Panattoni partnered with PGIM Real Estate for the construction of a 243,000-square-foot industrial complex in Bothell, Wash. The three-building project is slated for completion in the summer of 2024.

In January, the firm announced a 243,000-square-foot speculative warehouse in Covington, Wash., expected to come online this year. Another project, in partnership with PCCP, involves the development of two infill industrial parks in Vancouver, Wash., set to encompass some 625,000 square feet.

The post Panattoni JV Breaks Ground on Seattle Project appeared first on Commercial Property Executive.

FRED310’s first phase will total nearly 2.2 million square feet. Image courtesy of PCCP LLC.

Crow Holdings Capital and Panattoni Development Co. have obtained $252.3 million in construction financing for the development of three industrial buildings totaling 2.2 million square feet in Fredrickson, Wash. PCCP LLC provided the financing, while Eastdil Secured worked on behalf of the joint venture to secure the funds.

FRED310 is an industrial campus set to ultimately include five buildings totaling 3.6 million square feet. The master-planned project occupies 310 acres at the intersection of Canyon Road East and East 176th Street. The developers received the State Environmental Policy Act approval for the project last year.

Cushman & Wakefield is handling marketing and leasing efforts for FRED310.

READ ALSO: Industrial Sector Navigates Growth Challenges

The Class A development’s first phase consists of two speculative buildings—the 611,206-square-foot Building G and the 753,069-square-foot Building D—along with the 782,875-square-foot, built-to-suit Building E. Features include 40-foot clear heights, ESFR sprinkler systems, 3,000 amps of electrical power and 130-foot trailer court depths, as well as ample trailer and vehicle parking.

Leasing activity at the campus

Building E will be a build-to-suit for Harbor Freights Tools, which signed the lease this March. Another future tenant at the industrial park will be Floor & Décor, which committed to the upcoming 1.1 million-square-foot Building C in August 2022 in one of the largest industrial leases in the Seattle area of that year, according to a Cushman & Wakefield report.

FRED310 will provide easy access to the area’s major transportation arteries, including Interstate 5 and Washington State Route 512. The development site is 18 miles from Port of Tacoma, 35 miles from Seattle-Tacoma International Airport and within 49 miles of Port of Seattle. Additionally, FRED310 has the potential for rail service.

In September, Panattoni and PGIM Real Estate broke ground on North Creek Commerce Center, a 243,000-square-foot Class A industrial campus coming to Bothell, Wash. The three-building business park is scheduled for completion in July 2024.

The post Crow Holdings, Panattoni Secure $252M for Seattle-Area Megaproject appeared first on Commercial Property Executive.

Kidder Mathews and JSH Properties will market the flex industrial project for lease. Image courtesy of Kidder Mathews

Panattoni Development Co. and PGIM Real Estate have commenced construction on North Creek Commerce Center, a 243,000-square-foot, Class A industrial campus in Bothell, Wash.

The three-building business park will be the Eastside market’s largest new industrial project, with completion scheduled for July 2024. Kidder Mathews and JSH Properties have been tapped as exclusive leasing agents for the development.

The partnership picked up the land in August from McClure & Sons, Inc., paying $17.5 million, and has also landed $38.5 million in construction financing from Fifth Third Bank, with maturity set for 2026, according to Snohomish County public records.

READ ALSO: Construction Spending to Rise in H2 2023

North Creek Commerce Center will rise at 18712 Bothell Everett Highway and its buildings will include 30-foot clear heights, dock and grade level loading, a 130-foot truck court and ample parking space. The flex industrial project will be composed of the 22,971-square-foot Building A, the 104,610-square-foot Building B and the 115,400-square-foot Building C.

The 29-acre property will provide easy access to interstates 5, 405 and to U.S. State Route 9, while also being 17 miles from Bellevue, Wash., 24 miles from Seattle and within 32 miles of Seattle-Tacoma International Airport. Kidder Mathews’ Executive Vice President Zach Vall-Spinosa, with JSH Properties’ Brokers Ernie Velton and Reese Velton will be leading the project’s leasing activities.

Focusing on development

Earlier this year, Panattoni has secured a full-building tenant at another industrial project in Washington. In a joint venture with Crow Holdings Capital, the developer signed a long-term lease with Harbor Freight Tools, which will occupy a 782,875-square-foot building within FRED310, an industrial campus currently underway in Frederickson, Wash.

In January, the developer announced plans to build a 243,000-square-foot facility in Covington, Wash., on one of the last parcels of land available for industrial development in the area. Kidder Mathews will be providing leasing services for Covington 18.

The post Panattoni, PGIM Break Ground on Seattle-Area Industrial Campus appeared first on Commercial Property Executive.

Toysmith will relocate its headquarters to this building. Image courtesy of Davis Property & Investment

Toy and gift manufacturing and distribution company Toysmith has signed a full-building, 159,055-square-foot lease in Pacific, Wash. The firm will relocate its headquarters from Sumner, Wash., to Pacific 167 Logistics, a recently completed industrial property owned by Davis Property & Investment. Cushman & Wakefield represented the tenant, while JLL negotiated on behalf of the landlord.

Pacific 167 Logistics is a one-story industrial facility at 541 W. Valley Highway S. The warehouse features 32-foot clear heights, ESFR sprinkler systems, a 7,500-square-foot office component, 30 dock-high doors, two grade-level doors and 154 parking spots.

The 8-acre property, located just west of Highway 167, is 9 miles from the Port of Tacoma and 20 miles from Seattle-Tacoma International Airport. The Port of Seattle is 30 miles away.

Cushman & Wakefield’s Scott Alan and Patrick Mullin negotiated on behalf of Toysmith. JLL’s Chris Spofford and David Cahill, the property’s leasing agents, assisted the landlord during negotiations.

After witnessing a cooldown in demand during the second quarter of this year, the Seattle industrial market saw small signs of improvement in July, according to a recent CommercialEdge report. The metro’s vacancy rate reached 4.2 percent, down 20 basis points over the month; meanwhile, the average asking rate registered modest gains, with rents growing only 8 percent year-over-year.

In one of the more significant deals of the second quarter, Tesla signed a full-building lease in Marysville, Wash. The electric vehicle manufacturer will occupy a 245,000-square-foot industrial property for its first facility in the Pacific Northwest area.

The post Davis Property Inks Full-Building Lease Near Seattle appeared first on Commercial Property Executive.

Rendering of Bridge Point Kent 180. Image courtesy of Bridge Industrial

Bridge Industrial has purchased a 13-acre site from a private seller in Kent, Wash. The parcel changed hands for $8.5 million, according to King County public records. The buyer plans to develop a 180,000-square-foot Class A industrial building, which would mark its third warehouse in the Kent Valley area.

Construction on Bridge Point Kent 180 is expected to start in the first quarter of 2024, with completion scheduled for early 2025.

At full buildout, Bridge Point Kent 180 is set to include 36-foot clear heights, three grade level doors, 27 dock high doors, 12 trailer parking spots and 219 vehicle parking spots. The development site housed an aluminum smelting plant for more than four decades. Bridge Industrial plans to demolish the existing structure, while also conducting an extensive environmental remediation program and cleanup.

Located at 7730 S. 202nd St., the upcoming facility will be close to U.S. Highway 167 and Interstate 5, some 9 miles from Seattle-Tacoma International Airport, 15 miles from downtown Bellevue, Wash., and within 17 miles of downtown Seattle.

Newmark Senior Managing Director Taylor Hoff and Vice Chairman Thad Mallory represented the seller and will be providing leasing services for the upcoming property.

Focus on Kent Valley

Bridge Point Kent 180 will follow Bridge Point Kent 300 and Bridge Point Kent 100 in the latest series of Bridge acquisitions and developments in the Seattle area.

Justin Carlucci, partner for the Northwest Region at Bridge, noted in prepared remarks that industrial facilities with more than 150,000 square feet of warehouse space are in high demand.

According to the latest CommercialEdge industrial report, western markets recorded strong fundamentals as of May. The vacancy rate in Seattle was 4 percent, with 6.4 million square feet under construction. One of the developments that is expected to be delivered later this year is Panattoni Development Co.’s speculative Covington 18 project, which is set to bring 243,000 square feet to the market. In Frederickson, Wash., Panattoni and Crow Holdings are working on FRED310, a 4 million-square-foot industrial development that already secured a 1.1 million-square-foot prelease.

The post Bridge Industrial to Build 3rd Seattle-Area Warehouse appeared first on Commercial Property Executive.

Bridge Point Lacey. Image courtesy of Bridge Industrial

Industrial development and investment firm Dermody Properties has purchased Bridge Point Lacey, a three-building, 717,544-square-foot Class A industrial campus in Lacey, Wash., and rebranded it as I-5 Logistics Center. According to Thurston County records and CommercialEdge information, the firm picked up the asset for $132.1 million from Morgan Stanley.

The acquisition marks an addition to Dermody’s Pacific Northwest portfolio of more than 1.6 million square feet, concentrated around Seattle and Portland, Ore.

Bridge Point Lacey, up close

Bridge Industrial developed the campus between 2019 and 2020, on a 41-acre parcel situated in the Hawks Prairie master-planned industrial park. Innovo Architects and Poe Construction were also part of the project; the former provided design and engineering services and the latter served as general contractor.

Located at 3300-3316 Hogum Bay Road NE, the three industrial buildings measure 514,000 square feet, 110,00 square feet and 98,114 square feet, respectively. The facilities feature 36- and 32-foot clear heights, a total of 176 dock-high loading doors and eight grade-level doors, alongside 324 trailer stalls that include electric vehicle chargers.

READ ALSO: We Also Need to Amenitize Industrial. Start With the Break Room.

The campus was fully leased at the time of sale. Amazon is one of the tenants, having leased 510,040 square feet at Building A in 2021, CommercialEdge data shows. Target, The Home Depot, Walmart and Costco also operate facilities in the area.

Located less than 2 miles north of Interstate 5, the logistics center is 30 miles of the Port of Tacoma, as well as 45 miles from Seattle-Tacoma International Airport. Downtown Seattle is 55 miles northeast.

Seattle’s industrial strength

Outside of California, Seattle is the largest industrial market in the Western U.S. According to data from a recent CommercialEdge report, the metro boasted a year-to-date transaction volume of $180 million as of May, alongside a pipeline nearing 6.4 million square feet and a vacancy rate of 4.0 percent.

In May, electric vehicle giant Tesla signed a 245,000-square-foot lease for its first facility in the region, in the town of Marysville, Wash. The property will house a parts assembly and manufacturing plant.

One month prior, also on the leasing front, Harbor Freight Tolls inked a long-term lease for 782,875 square feet of space at the FRED310 industrial campus, an ongoing two-phase development that will measure out at 4 million square feet.

The post Dermody Properties Acquires Seattle-Area Industrial Park for $132M appeared first on Commercial Property Executive.

Image by Deejpilot/iStockphoto.com

Markets with a large tech presence, such as Seattle, have been increasingly impacted by the changing work scenarios of the past years. The tech industry’s confidence in office space has started to wane as hybrid work increasingly takes over.

As of April, Seattle’s office market had nearly 6.9 million square feet under construction, representing 5 percent of total stock. The pipeline has grown since April 2022, when the 5.8 million square feet underway made up for 4 percent of total office stock.

Adding planned projects to the pipeline, Seattle’s relative to total stock figure in April ballooned to 13 percent, on par with San Francisco and outperformed only by high-growth Sun Belt cities, such as Austin, Texas, (24.7 percent), Nashville, Tenn., (13.6 percent) and Charlotte, N.C., (13.2 percent). On a national level, the under-construction pipeline relative to total inventory reached 1.8 percent that month, while underway plus planned stock amounted to 5.6 percent of total stock.

Seattle’s tech hub shakes up office fundamentals

Microsoft Redmond Main Campus – Redevelopment. Rendering courtesy of Microsoft

Recent tech pullbacks have impacted the Emerald City’s office market. Back in March, Microsoft announced its withdrawal from the RedWest North campus expansion in Redmond, Wash. The tech giant filed a proposal in 2021 comprising the development of four new buildings totaling more than 1.1 million square feet, along with an underground parking structure. The company has also delayed parts of its $5 million redevelopment on the Redwest East campus. Furthermore, Microsoft will reportedly decline several office lease renewals in Bellevue and Issaquah, Wash., through 2025.

Phase 1 of Amazon’s Bellevue 600 project—the largest office building under construction in the metro—broke ground in 2021 and is expected to be completed in 2024. Set to rise 43 stories tall, the downtown Bellevue structure will be the tallest building in the city, alongside 555 Tower which Amazon leased back in 2020. Vulcan Real Estate broke ground on the 42-story 555 Tower that same year and is slated for completion in 2023.

Also in March, LPC West and investment partner Intercontinental Real Estate Corp. broke ground on a 266,000-square-foot office building within the U District submarket. The University of Washington will anchor the 12-story tower.

The life science sector is still highly sought-after, following its accelerated boom during the pandemic. In January, Downtown Design Review Board of Seattle approved the preliminary design of a two-tower, 616,000-square-foot lab and office development. BioMed Realty is behind the 1.6-acre project, with architectural design by Perkins & Will.

Rapidly rising office vacancy

Year-over-year through April, Seattle’s vacancy rose by 3.3 percent, to reach 19.0 percent—marking one of the largest spikes across all U.S. markets. Only Portland (3.5 percent) and Austin (5.9 percent) registered higher vacancy increases on a year-over-year basis. The national rate hit 16.7 percent in April, up 1 percent since the same period last year.

Across gateway cities, office vacancy was highest in San Francisco (19.4 percent), tailed by Seattle, and lowest in Boston (10.1 percent) and Miami (12.1 percent).

Boeing Longacres. Image courtesy of CommercialEdge

Alaska Airlines expanded and extended its office lease at Unico Properties LLC’s Longacres Campus in Renton, Wash. The airline company signed up for an additional 20 years at the property, expanding its footprint from 38,000 square feet to 107,000 square feet. Unico acquired the Boeing Commercial Airplane HQ facility at Longacres from The Boeing Co. in 2021 for $80 million.

Sales volume follows national trend

Year-to-date through April, office sales in the Emerald City amounted to $54.7 million, at an average price of $287.6 per square foot—higher than the national average of $196 per square foot. Among gateway cities, Seattle had the smallest sales volume in the first four months of the year, while prices were close to those in Miami ($261 per square foot) and Los Angeles ($251 per square foot). Manhattan ($699 per square foot) and Boston ($518 per square foot) were the priciest office markets.

At the same point in 2022, office deals in Seattle totaled $1.3 billion, while the average sale price reached $538 per square foot. Year-to-date through April, the largest office sale in the metro was the trade of Gateway One, a nearly 112,000-square-foot property in downtown Bellevue. Lionstone Investments and Talon Private Capital sold the asset for $34.5 million, pocketing $3 million less than what they paid back in 2007. Felton Properties Inc. was the buyer.

Coworking represents a significant portion of office space across all significant markets, especially in gateway cities, which led the list of markets with most coworking locations, according to CommercialEdge data. In April, Seattle had roughly 2.5 million square feet of shared space, representing 1.7 percent of total rentable office space. Regus and WeWork had considerable footprints within the metro.

The post How Is Seattle’s Office Market Faring Amid Tech Pullbacks? appeared first on Commercial Property Executive.

The Eight. Image by Dan Miller, courtesy of Skanska 

Skanska has topped out The Eight, a 25-story Class A office in Bellevue, Wash. The 541,000-square-foot speculative development is slated for completion in March 2024. CBRE will be overseeing office leasing at the property, while Newmark will be handling retail leasing.

Aiming for LEED Platinum certification, the property will provide underground parking across four floors, 10,000 square feet of retail space, including a standalone 1,000-square-foot mass timber retail pavilion. From October 2023 onwards, the building will be available for tenant fit-outs.

The Eight’s amenities will comprise electric vehicle charging stations, a fitness center, seven balconies for tenants, a private rooftop deck, outdoor seating areas, as well as collaborative workspaces and a lounge for tenants on the ground floor.

READ ALSO: Today’s Most-Desired Office Amenities

Rising along NE 8th Street, The Eight will offer connectivity to interstates 405 and 520. Situated in proximity of Bellevue Square, Bellevue Art Museum and Lake Washington, the site is within walking distance of the Downtown Bellevue Transit Center.

Skanska has been busy in 2023, with several of its buildings moving forward in their construction status. Back in February, the company celebrated the topping out of 1550 on the Green, a 28-story, 375,000-square-foot Class A office tower in Houston’s Discovery Green. Just last month, the company also topped off an 11-story mixed-use development in Washington, D.C. The 334,000-square-foot building was designed to achieve LEED Gold and Fitwel certifications.

The post Skanska Tops Out Seattle-Area Office Tower appeared first on Commercial Property Executive.

Image by Adriana Pop

Tesla has signed a lease for its first Pacific Northwest facility, according to the Puget Sound Business Journal. The electric car manufacturer will occupy a 245,000-square-foot building in Marysville, Wash., and use it for a parts manufacturing and assembly plant.

Situated at 16015 51st Ave. NE, the Tesla-leased building is the first to be completed in the 426-acre Cascade Business Park. According to CommercialEdge data, the facility came online earlier this year on a 20-acre site. It features 52-foot by 50-foot column spacing, 36-foot clear heights, ESFR sprinklers, a 135-foot truck court and 244 parking spaces.

READ ALSO: Electric Vehicles Put a Charge in Industrial Growth

Cascade Business Park is NorthPoint Development’s first project in the Pacific Northwest. Upon completion, the industrial campus will feature some 4 million square feet across nine buildings.

Sierra Construction Co. is the project’s general contractor while Studio North Architecture served as architect; LDC and AHBL provide engineering services. KBC Advisors’ Matt Wood and Hans Vieser, along with Kidder Mathews’ Matthew Henn and Matt Hagen, are the property’s leasing brokers.

The business park is taking shape within the 4,000-acre Cascade Industrial Center, an industrial hub under construction in Marysville and Arlington, Wash. Over the next decade, some 20,000 additional jobs are expected to be brought about by the hub’s development.

Tesla’s national movements

According to Drive Tesla Canada, the Marysville lease is not Tesla’s first time scouting out facility space in the state. In early 2021, the company was looking to expand to a 206,000-square-foot industrial building in Lakewood, Wash. However, it appears as though the transaction never finalized.

Early this year, Tesla signed a full-building lease in Brookshire, Texas. The industrial facility, encompassing more than 1 million square feet, is in the Empire West Business Park. While concrete plans for the facility were unknown at the time of its signing, it was anticipated that the company would use the space for fabricating and storing power sources for vehicles.

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FRED310. Image courtesy of Nelson Worldwide

Panattoni and a real estate fund advised by Crow Holdings Capital have found a tenant for an industrial facility in Frederickson, Wash., that’s currently under construction. The joint venture signed a long-term lease with Harbor Freight Tools , which will occupy a 782,875-square-foot building within the FRED310 industrial campus.

Panattoni and Crow Holdings received the approvals to start work on the multi-building FRED310 development in August 2022. The project is currently under construction and Harbor Freight’s occupancy will start once its building is complete in the summer of 2024. Cushman & Wakefield’s Scott Alan, Patrick Mullin and Connor Cree were in charge of marketing the project and represented the owners in the lease.

READ ALSO: Top 5 Markets for Industrial Transactions

The design of the facility caters to distribution and manufacturing needs, and Harbor Freight will use the space for distribution, according to Cushman & Wakefield. Harbor Freight’s building will be part of the first phase of FRED310, whose buildings will offer dock high and grade loading, 36- to 40-feet clear heights, car and trailer parking and large truck courts.

The building is located at the intersection of Canyon Road E. and E. 176th Street near Interstate 5, giving tenants a 30-minute drive to the Port of Tacoma, while being 45 miles away from the Port of Seattle. The area is already home to several corporate tenants, including Ikea, Ace Hardware, Amazon and Whirlpool.

FRED310 to bring 4 MSF of industrial space

Harbor Freight’s facility only represents a portion of Panattoni and Crow Holdings’ first phase of its FRED310 industrial project in Frederickson. When completed, the first phase will total 2.3 million square feet spread throughout four buildings. According to Panattoni, the joint venture currently has more than 1.3 million square feet of the first phase under construction and is expecting to deliver that much space by the first quarter of 2024.

The first phase is expected to be fully complete in the first half of 2024. The joint venture’s second phase of FRED310 will include three buildings ranging from approximately 450,000 to 750,000 square feet. Once fully built out, the overall project will total more than 4 million square feet.

Elsewhere in Washington, Panattoni is about to break ground on a 243,000-square-foot warehouse in Covington, Wash. Earlier this year, the company also announced plans to develop a 274,000-square-foot distribution facility in Surprise, Ariz., in the Phoenix metro.

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Microsoft Redmond Main Campus – Redevelopment. Rendering courtesy of Microsoft

In a move that’s consistent with other recent retrenchments by the tech industry, Microsoft Corp. has withdrawn plans to expand its RedWest North campus in Redmond, Wash., the Puget Sound Business Journal reported, based on public records.

In the fall of 2021, Microsoft had filed a proposal with the City of Redmond to develop four buildings totaling more than 1.1 million square feet, plus an underground parking structure with a central plaza above, all on 26 acres at 14848 NE 51st St., adjacent to Route 520. Three five-story buildings on this RedWest South campus were to be accompanied by a three-story “amenity building” with food venues and multi-purpose meeting rooms, with a direct connection to an outdoor terraced amphitheater.

The PSBJ reported that it’s not known whether Microsoft plans to continue development of this campus at a later time.

READ ALSO: Tech Layoffs’ Impact on Office Leasing

The RedWest South expansion was cancelled as Microsoft is slowing its separate $5 billion redevelopment of its east campus, according to the PSBJ. That project reportedly is to encompass demolishing various older buildings and delivering 17 new ones by the middle of 2025.

A Microsoft spokesperson informed the PSBJ that the company still intends to open the first of eight modernized buildings late this year.

Tech slows down

Many tech companies have not done well since the pandemic’s onset, with Amazon’s ongoing trimming of its logistics space growth being a prime example.

Microsoft is retrenching its office commitments, both across the Puget Sound region and much more widely, the PSBJ reported.

For example, it will be declining to renew several office leases in Bellevue and Issaquah, Wash., through 2025. Further, Microsoft reportedly has ceased development of a 90-acre campus in Atlanta.

Last summer, a Hines–Invesco Real Estate joint venture sold Atlantic Yards, a 523,511-square-foot campus in Midtown Atlanta, to Global Atlantic Financial Group, for an estimated $500 million. The property is fully leased to Microsoft.

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Boeing Longacres. Image courtesy of CommercialEdge

Unico Properties LLC has signed a 20-year lease renewal and expansion at the Longacres Campus in Renton, Wash., with Alaska Airlines. JLL’s Kris Richey Curtis brokered the agreement on behalf of the tenant.

The airline company expanded its lease at the North Building of Longacres from 38,000 square feet to 107,000 square feet. The company will use the additional space for its flight simulation equipment and to support its simulation trainings.

The Longacres campus comprises the North and South Buildings, two class A office properties totaling 962,800 square feet. Longacres features 2,700 parking stalls, a Bright Horizon facility, a central utility plant, two ponds, a park-like campus, a running trail, an apple orchard and approximately 50 acres of developable land.

Convenient location

Longacres is a transit-oriented property at 1901 Oakesdale Ave. The 158-acre site is close to Tukwila Transit Center, which provides direct access to downtown Seattle. There’s an abundance of retail centers and dining options in the proximity of the facility. Seattle-Tacoma International Airport is only 3 miles away.

According to CommercialEdge data, Unico Properties acquired the Boeing Commercial Airplane HQ facility at Longacres from The Boeing Company in 2021 for $80 million. The acquisition loan was originated by Benaroya, the same source shows. Before closing on the transaction, Unico negotiated and signed a lease with Seattle Sounder FC, a soccer team that intends to make the South Building at Longacres its new headquarters. Work is underway at The Sounders FC Center at Longacres project, which will feature four full-size training pitches and 50,000 square feet of office space when completed in 2024.

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Seattle skyline. Image by Deborah Jackson via pixabay.com

LPC West and investment partner Intercontinental Real Estate Corp. have commenced construction on the University District Station Building, an approximately 266,000-square-foot office destination in Seattle, according to the Puget Sound Business Journal. The University of Washington will be the lead tenant at the 12-story tower.

The start of construction of UDSB comes roughly 18 months after LPC West and Intercontinental inked a long-term ground lease for the transit-oriented development, which will sprout up at 4328 Brooklyn Ave. N.E., directly above a light rail station. The building will sit just two blocks from the university, in the heart of the city’s bustling U District submarket. “This project will support the transformation of the neighborhood and serve as an elevated gateway to the University of Washington,” according to a project presentation document by the City University Community Advisory Committee.

READ ALSO: Top 10 Markets for Office Deliveries in 2022

Perkins & Will is the architect behind UDSB and has created a design that will include nearly 260,000 square feet of premier office space, approximately 2,600 square feet of ground-level retail space and, remaining true to the project’s transit-centric theme, zero car parking accommodations and ample bike storage. UDSB will also feature shower rooms, an amenity space, a rooftop terrace and a green roof with a solar panel array. Additionally, the development will offer open space in the form of an 8,800-square-foot pocket park. The project is designed to meet LEED Gold certification.

Tenant prospects

The Seattle office market has yet to fully recover from the consequences of the pandemic. However, certain areas are faring better than others, and the U District/Ballard submarket is one of them. The neighborhood that is hosting UDSB recorded an office vacancy rate of just 4.7 percent at the end of 2022, compared to metropolitan Seattle’s overall office vacancy rate of 10.5 percent, according to research by Kidder Mathews.

“While rising economic headwinds threw cold water on leasing activity to close 2022, some companies remained active in the market, looking to take advantage of ample high-quality options and relocate or, in some cases, expand,” according to the Kidder Mathews report.

With GLY Construction Inc. serving as the general contractor for UDSB, the University of Washington expects to take occupancy of the building in early 2025. In the meantime, LPC West and Intercontinental remain busy with other projects, including a 195,000-square-foot life science building that is planned for a site just a stone’s throw from the Space Needle in Seattle’s South Lake Union neighborhood.

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Harvest. Rendering courtesy of Columbia Pacific Advisors

Columbia Pacific Advisors Bridge Lending has provided a $92 million loan for the construction of the retail phase of Harvest, a mixed-use project in the Hollywood District of Woodinville, Wash. This marks the company’s fourth loan for the development, resulting in the bridge lender’s cumulative investment approaching a total of $200 million.

Under Windward Real Estate Services’s ownership and developed by Greg Krabbe and Dan Wachtler, the project is slated for completion in the second part of 2024. Backen & Gillam Architects is also part of the project, while Jensen Design Architecture is handling interior design. Engineering firm CPH Consultants and landscape architecture company Brumbaugh & Associates are also part of the team.

The development will rise about 17 miles northeast of downtown Seattle and close to north Bellevue, Wash. Besides the on-site wine-tasting venues, retail offerings, restaurants and office spaces, Harvest will offer connectivity to outdoor activities, riverside bike paths and hiking trails.

Addressing suburban retail demand

At full build-out, Harvest is set to encompass more than 100,000 square feet of ground-up retail and 26,000 square feet of storage space, along with on-site parking, 70 townhomes and condominium flats, and 200 rental apartments. Additionally, the project will feature the 165-key Somm Hotel and Spa. Almost 60 percent of the project has already been preleased.

Upon completion, the development will also include a 650-stall, multi-level underground parking garage. Harvest is set to comprise a hybrid workspace along with various local wineries and two restaurant concepts. The addition of a marketplace, a florist, coffee shops and kitchen retailers is also in the books.

According to a recent Kidder Matthews Seattle retail report, suburban retail markets are experiencing more activity, due the ongoing shift toward remote and hybrid work. According to the same source, the direct retail vacancy rate stayed the same in the fourth quarter of 2022, remaining at 2.6 percent. However, the overall availability rate decreased by 10 basis points during the same time frame and by 50 basis points during 2022, ending the year also at 2.6 percent.

According to Kidder Matthews, there was a decrease in retail development after the pandemic, but it has remained consistent over the past two years, particularly with build-to-suit and pad developments.

The Hollywood District has received a second capital infusion and a total of four loans from Columbia Pacific Advisors to aid in its development. One of the loans, a $14 million acquisition loan, was granted in 2018 for the property. The most recent loan was given in 2021 to support the construction of 31 townhomes in the Woodinville Wine Village, which is the first residential project in the local market.

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905 80th St. SW. Image courtesy of Kidder Mathews

Formost Fuji, a Woodinville, Wash.-based manufacturer in the packaging industry, has acquired a 65,344-square-foot industrial building in Everett, Wash. The aerospace manufacturing company MTorres America sold the asset, that served as its North American headquarters and manufacturing facility, for $20.1 million. Kidder Mathews represented the buyer.

According to The Seattle Times, the sale was in direct connection with MTorres’ downsizing and relocating its North American headquarters to Lynnwood, Wash. The move was influenced by the pause in Boeing’s 777X program, for which MTorres provided equipment, the news outlet reported.

READ ALSO: Trends That Will Shape Industrial Real Estate in 2023

Completed in 2017, the property sits on 14.9 acres at 905 80th St. SW and has a capacity for warehouse expansion of up to 32,000 square feet. The asset is some 27 miles from downtown Seattle and has access to Interstate 5 through the 526 Freeway. Notable companies in the area include Boeing, its Everett factory being only 2 miles away, but also Jamco America, FedEx, Amazon, US Foods and Funko Distribution Center, among others.

Executive Vice President Zach Vall-Spinosa and First Vice President James Leptich of Kidder Mathews negotiated on behalf of Formost Fuji.

Seattle’s industrial market

CommercialEdge data shows that 61 industrial properties traded in metro Seattle in 2022, totaling approximately 1.7 million square feet. Just last month, LaSalle Investment Management paid $120 million for a 473,000-square-foot industrial facility in Renton, Wash.

According to the same data provider, the market had a supply pipeline of 14 industrial properties in various stages of development as of January, set to add 3.1 million square feet to the metro’s existing inventory.

In August, Panattoni and Crow Holdings broke ground on a 4 million-square-foot industrial project in Frederickson, Wash. And, earlier this month, Panattoni embarked on another project involving a 243,000-square-foot development in Covington, Wash.

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800 Fifth. Image by Aaron Leitz via EQ Office

EQ Office has finalized the redevelopment of 800 Fifth, a 934,806-square-foot, Class A office building located in Seattle’s Central Business District. Seattle-based architectural firm Olson Kundig was behind the building redesign.

The 42-story building was originally completed in 1981 and underwent cosmetic renovations in 2001 and 2016, as shown by CommercialEdge. EQ Office’s renewal comes with new amenities designed to meet the needs of today’s workforce, merging both indoor and outdoor wellness- and collaboration-centric spaces for tenants.

The same data provider reveals that the owner picked up the asset back in 2019 for $540.4 million. The office building’s tenant roster includes Sonos, Greystar, Bank of America, Starbucks and Merriman Wealth Management, among others.

A reimagined 16,200-square-foot entry and lobby, a new fitness center and a 15,800-square-foot public garden and plaza, comprising an outdoor fireplace and event space, are among the renovations at the LEED Platinum certified property.

800 Fifth. Image by Aaron Leitz via EQ Office

Interior renovations were aimed at creating a comfortable work environment and incorporated the addition of suspended lantern lighting, customized bookcases, integrated artwork and an enhanced terrace.

Seattle’s robust development pipeline

Located in downtown Seattle, the office tower is close to the waterfront, Pike Place Market and the central retail core. A variety of dining and entertainment offering are also nearby.

According to a recent CommercialEdge report, 132 million square feet of office space was being built nationwide as of November 2022. The same source stateed that as of the same month, 5.6 million square feet of office space was under construction in the Seattle area.

Last year, developer evolution Projects announced the development of the first phase of 35 Stone, a preleased office project in Seattle. The development is scheduled for completion by the third quarter of 2024.

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Seattle. Image by ID 12019 via pixabay.com

Panattoni Development Co. plans to break ground on a 243,000-square-foot warehouse in Covington, Wash., this April. The company purchased the 20.47-acre site on Dec. 30, for $12.2 million, according to the Puget Sound Business Journal.

The speculative project, Covington 18, is situated at 28009 Covington Way SE. Tenants will be in proximity to Route 18, with access to Interstate 90 and the East Side.

The site has a traffic count of some 52,090 cars per day, according to CommercialEdge data. The speculative building is in the Seattle market and Kent SeaTac submarket.

In prepared remarks Travis Hale, partner at Panattoni, said that the Covington asset is one of the limited parcels of land available for industrial development in the area. It will compete for Sumner tenants due to its location near Kent Valley.

An office, 36-foot clear heights, 40 dock-high doors, 255 car parking spaces and 200 trailer parking spots are to be included in the Covington 18 project.

Construction is anticipated to complete in late 2023.

KBC Advisors’ Matt Wood and Kidder Matthews’ Todd Clarke and Ty Clarke are Covington 18’s brokers. The project is for lease and for sale, with a build-to-suit possibility.

Seattle’s strong industrial market

Despite economic uncertainties and slowing capital investment, the Seattle-area industrial market fared well throughout last year. Quarter three of 2022 saw the 12th consecutive quarter of positive absorption, with 1.6 million square feet, according to a recent Newmark report. The vacancy rate was 3.5 percent as of the same quarter, making the area attractive to developers and investors.

Due to its positive fundamentals, the Seattle industrial market saw high levels of investment activity through the end of 2022. Recently, LaSalle Investment Management purchased a 473,000-square-foot distribution center in the area for $120 million. The asset almost doubled in sales price since it last traded in 2017.

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Denny Park South. Image courtesy of BioMed Realty

The Downtown Design Review Board of Seattle has approved the preliminary design of BioMed Realty’s Denny Park South development, according to the Philadelphia Real Estate. The two-tower project is slated to encompass 616,000 square feet of life science laboratory and office space. The Board also allowed the developer to submit its master-use permit for a full build-out.

The firm purchased the entire city block in April 2022 for $126.8 million, with the intent to demolish the existing structures and conduct excavation for new building foundations. BioMed tapped Perkins & Will for the project’s architectural design, while Turner Construction will provide contracting services. For engineering, urban planning and infrastructure considerations, the developer is consulting with KPFF, Site Workshop, MacDonald-Miller, Hargis/Cochran and Rushing and OAC.

READ ALSO: Life Science Outlook Remains Strong—Cushman & Wakefield

Rendering of the Denny Park South development. Image courtesy of BioMed Realty

Spanning 1.6 acres along Denny Way and Dexter Avenue, the project will be built over two parcels at 2300 Seventh Ave. and 2301 Eighth Ave. The first structure is set to be an 18-story tower and the second one an 11-story connection. The developer plans to include a lawn for public events, a small forest between the two towers and a 600-stall underground parking garage.

Mike Ruhl, vice president of leasing at BioMed, further detailed the project’s utility to Commercial Property Executive, within both the proposed buildings and the surrounding area. “Our proposed 690,000-square-foot Denny Park South development will provide additional optionality for tenants seeking purpose-built buildings to accommodate research. The 1.6-acre property is in close proximity to industry-leading life science and technology companies and research institutes,” Ruhl explained.

Situated within a mile of downtown Seattle, the facility will be within walking distance of many of the area’s top retail, dining and hospitality offerings, in addition to several of the developer’s ongoing and completed life science projects around the city, such as the T6 Innovation Center, a 540,000-square-foot research & development project.

BioMed’s life science build-up

Within Seattle, Denny Park South will add to the firm’s existing portfolio of 1.2 million square feet.

BioMed remains a prolific investor and developer in the life science sector, purchasing land and building up new projects within some of the nation’s most lucrative markets for the asset class. In Cambridge, Mass., the firm recently broke ground on 585 Kendall, a 600,000-square-foot life science facility that is entirely preleased to Takeda Pharmaceutical Co. In the Bay Area, the Blackstone subdivision opened a 245,000-square-foot portion of its Gateway of the Pacific campus, the new headquarters of Amgen.

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Valley Distribution Center

LaSalle Investment Management has acquired Valley Distribution Center, a 473,000-square-foot industrial facility in Renton, Wash., for $120 million, according to King County public records.

The seller, Clarion Partners, was represented in the transaction by CBRE, according to the Puget Sound Business Journal.

In 2017, Clarion Partners purchased the property for $67 million, CommercialEdge data shows.

Located at 300 S.W. 27th St., Valley Distribution Center is a one-story concrete cross-dock building equipped with ESFR sprinklers, climate control systems, 386 parking spots and an additional two-level office build-out space, CommercialEdge data shows. The property’s tenants include Graybar Northwest Service Center, packaging and distribution company Sealed Air and a Coca Cola bottler, the same data provider shows.

Situated on a 22-acre lot, the industrial asset is close to Interstates 5 and 405, within 3.8 miles from Seattle-Tacoma International Airport, 14 miles from downtown Seattle and 15 miles of downtown Bellevue. Wash. CBRE’s team led by Vice Chairman Brett Hartzell and Executive Vice President Paige Morgan worked on behalf of Clarion Partners.

In September, LaSalle Investment Management also purchased a Class A life science asset in San Diego, fully occupied by Vertex. Last year, the company sold one of its Seattle industrial assets, a 315,392-square-foot industrial park for $72.6 million.

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Rendering 1916 Boren in Seattle. Courtesy of Trammell Crow Co.

Trammell Crow Co. and Washington Capital Management, on behalf of their clients, broke ground on 1916 Boren, an 11-story, 282,700-square-foot life science development in Seattle’s Denny Triangle neighborhood.

The building is slated for completion by December 2024 with the first tenant move-in scheduled for the first quarter of 2025.

Seattle Children’s Research Institute has preleased 124,000 square feet, which will be used for pediatric research. Dr. Eric Tham, senior vice president and chief research operations officer at Seattle Children’s, said in a prepared statement the space will meet the growing needs of its downtown workforce as Seattle Children’s Research Institute continues its work to find cures for childhood diseases.

READ ALSO: Life Science Outlook Remains Strong

Alan Cantlin, senior vice president with TCC’s Seattle office, said in prepared remarks Seattle Children’s early commitment to the project reflects 1916 Boren’s market-leading life science infrastructure and design. He said the building will be well-suited to meet the specifications for the most demanding life science buildouts.

The building will feature 14-foot floor-to-floor height and 11-foot windows to provide ample natural light and space for a range of life science uses. Amenities will include two dedicated freight elevators, chemical storage, outdoor patios on each floor, a cycling studio with locker rooms, rooftop terrace and top-floor conference center with meeting rooms and collaboration spaces. The property is situated in Seattle’s largest concentration of residential communities, retail and culinary destinations. Located at the intersection of Boren Avenue and Stewart Street, it has a transit and Walkscore of 100 and is also just blocks from Interstate 5.

Shelley Gill and Adam Brenneman of Hazelbrook Advisors represented Seattle Children’s in the lease negotiations. Paul Carr of CBRE represented the landlord. Other project partners include CollinsWoerman acting as the project’s architect of record and Lease Crutcher Lewis acting as general contractor.

Second Life Science Project in Area

1916 Boren is TCC’s second life science development in the Denny Triangle neighborhood, a growing technology hub and sought-after location for businesses and residents. It is adjacent to Boren Lofts at 1930 Boren Ave., a 10-story life science development completed in February by TCC and Washington Capital Management. The partners began work on the 136,217-square-foot Class A project in August 2019 and sold the building to Oxford Properties Group in April for $119.1 million. Located within walking distance of Amazon’s corporate headquarters, the building also has about 4,400 square feet of retail. The development has more than 15,000 square feet of uninterrupted floorplates, 15-foot-high ceilings and a rooftop terrace.

The post Trammell Crow JV Breaks Ground on Seattle Life Science Building appeared first on Commercial Property Executive.

35 Stone. Rendering courtesy of JLL

Developer evolution Projects has secured $109 million in construction financing for the first phase of 35 Stone, a preleased office development in Seattle.

Plans call for a five-story building offering 112,700 square feet of office space and 7,500 square feet retail space. The project is scheduled for completion by the third quarter of 2024.

JLL Capital Markets‘ Director Kaden Eichmeier and Senior Managing Director Bruce Ganong represented the borrower in obtaining the loans. The construction financing encompassed a mezzanine loan provided by Canyon Partners Real Estate and a senior construction loan issued by The Union Labor Life Insurance Co.

Designed to feature mass-timber construction with exposed wood beams and dowel laminated timber ceilings, 35 Stone will meet Living Building Pilot Program’s green building standards, aiming to be one of the most energy efficient and sustainable office buildings in Seattle. The property is anticipated to reduce energy usage by at least 25 percent compared to other office buildings in the metro.

Surrounded by an array of retail, dining, outdoor and entertainment offerings, the development will feature a variety of on-site complementary amenities, including a roof deck, a central lobby with shopping amenities, as well as locker and shower suites, bike parking and 135 parking spots.

A Millennial-compliant office space

Set to rise at 3524 Stone Way N., in the city’s Fremont submarket, 35 Stone will be part of Campus Seattle, evolution Project’s mixed-use development. In a prepared statement, Eichmeier said that Fremont is a top destination for Seattle’s Millennial population.

Dubbed Center of Universe, the master-planned community will feature more than 230,000 square feet of office, retail and recreation space at full build-out. Located at Stone Way, between 36th and 35th, Campus Seattle is about 5 miles from Seattle’s CBD, within a block of King County Metro bus station and two blocks from the Burke-Gilman Trail.

Anchored by The Fremont Collective and Bouldering Project, the campus aims to merge the outdoor lifestyle with the office environment.

Represented by Savills’s Executive Managing Directors Brian Kelly and Eric Lonergan, Brooks Running signed a prelease agreement to join 35 Stone’s tenant roster. Joule, The Whale Wins and All Together Skatepark are among the property’s tenants.

As of October, 135.5 million square feet of office space was under construction at a national level, according to a recent Yardi Matrix report. According to the same source, the Seattle area had 6.17 million square feet of office space underway as of the same month.

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Orchard Workspace by JLL. Image courtesy of JLL

Flex by JLL has opened its second Orchard Workspace by JLL location, this time in Seattle. The 35,000-square-foot coworking space occupies two floors at Westlake Tower, a nearly 370,000-square-foot office building in the city’s CBD. JLL Property Management will fully operate and manage the flex offices.

Unico Properties is the owner of the property since 2019, when the company paid $235.8 million for the asset, CommercialEdge data shows.

Orchard Workspace by JLL encompasses dedicated desks in shared workspaces, team suites, private offices for teams larger than 50 members, meeting rooms, as well as virtual address services with daily and monthly memberships. The space has ergonomic furniture, access to a dedicated VLAN, A/V and mobile equipment.

READ ALSO: Boston Properties Buys $730M Seattle Tower

Located at 1601 Fifth Ave., the transit-oriented site is less than a mile from Interstate 5 and next to several subway lines. Numerous dining and retail options are within walking distance of the property. U.S. General Services Administration, Global Washington, BHC Consultants and KPFF are some of the building’s tenants.

JLL’s first Orchard Workspace coworking location opened last year in Brooklyn. Currently, Flex by JLL owns and manages ten flex office properties across the U.S. Just last month, the division teamed up with Manulife US Real Estate Investment Trust for the development of a ground-up 15,407-square-foot flex office space in Secaucus, N.J., slated to open in the second quarter of 2023.

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Image by Pexels via Pixabay.com

LPC West and Intercontinental Real Estate Corp. are adding another life science building to their Seattle office portfolio. The partnership has closed on a property that will be developed into a nine-story office building with spaces primarily aimed at life science tenants.

The Class A building is still in the early design stages but is expected to offer approximately 195,000 square feet. The project is located near the intersection of Fifth Avenue and John Street, putting it within walking distance to the Space Needle, Climate Pledge Arena and the Seattle Children’s Museum. The life science property will also have nearby access to the Seattle Center Monorail, Metro Transit lines and Highway 99.

READ ALSO: Top Markets for Office Transactions in H1 2022

The project’s location in the mixed-use South Lake Union neighborhood puts it near other major corporate offices like the Bill & Melinda Gates Foundation and Amazon. The area has also attracted tenants from the health, tech and research sectors, including Seattle Children’s Hospital and the Fred Hutchinson Cancer Research Center.

Jessica Levin, senior director of acquisitions for Intercontinental, said in prepared remarks that this development will be a long-term investment for the company’s portfolio. She added in her prepared statement that Seattle has strong life science fundamentals, and the area is seeing a combination of funding, growth and talent.

LPC West’s growing life science portfolio

Prior to this upcoming project at Fifth Avenue and John Street, the two companies previously broke ground on an adjacent life science building. LPC West and Intercontinental started construction at 222 Fifth Ave. in June and are expecting to complete the life science development in early 2024.

To date, LPC West has been a part of more than 4.5 million square feet of transactions across all major life science markets in western U.S. Last year, the company acquired a 240,904-square-foot office campus in Pasadena, Calif., in a partnership with Angelo Gordon. The partners are renovating the Pasadena property to accommodate life science tenants.

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In the first half of 2022, national office sales reached $37.46 billion, marking a $3.13 billion expansion on a year-over-year basis, according to CommercialEdge data. While overall, investment activity picked up pace nationwide, the largest increase in deals signed was across Class B properties, which recorded a 29.7 percent increase since mid-2021. The sale of Class C assets was up 20.5 percent, while Class A deal volume registered the lowest increase: 4.7 percent.

Some markets drove activity, such as Boston, the Bay Area and Seattle, where the life sciences sector saw increased demand. The office market has also recovered rapidly in high-growth Sun Belt cities like Austin and Phoenix. Gateway cities that hold a large existing office supply occupy leading positions on our list for top office markets for transaction activity in the first half of the year, based on data from CommercialEdge. Here’s our list of the top markets for office transaction activity during the first half of 2022:

5. Seattle

Seattle. Image by Lars Kristiansen from Pixabay

Seattle’s tech sector has kept the city’s office investment market active. In the first six months of the year, office deals in Seattle amounted to $1.8 billion, up nearly 9 percent compared to the same period last year. The average sale price per square foot was the second largest across top ten markets for investment activity after Manhattan, reaching $633.7.

While the Seattle market’s overall dollar volume transacted in the first six months grew on a year-over-year basis, the actual square footage sold in the first half of 2022 reached 3.6 million square feet, down 780,000 square feet since the same period in 2021. Sale volume was up across all asset classes since mid-2021 levels, but Class C assets registered the largest, 366 percent increase in sale volume for the first half of the year. Prices were up compared to mid-2021, when they averaged at $460.0 per square foot.

In February, Deka Immobilien paid $802 million—or more than $1,260 per square foot—for a Google-anchored office property in the metro’s South Lake Union submarket. The 635,000-square-foot asset was finalized in 2019. The two residential towers that sit atop the office component were not part of the deal.

4. Washington, D.C.

Washington, D.C. Image by David Mark via PIxabay.com

Washington., D.C. is the first market on our list to exceed the $2 billion-mark in office sales in the first six months of 2022. Sales added up to 7.9 million square feet that changed hands. The metro’s overall office transaction total nearly doubled since 2021, expanding by $1.1 billion compared to the first half of the previous year. Significant growth has been recorded across all asset classes.

The metro is one of the least expensive on our top 10 list, along with Chicago ($196.2 per square foot), New Jersey ($272.3 per square foot) and Phoenix ($282.5 percent). The average price for office assets in Washington, D.C. reached $292.7 per square foot, up $46.3 since mid-2021.

In June, Post Brothers bought into the Washington, D.C. office market with the acquisition of two Class B buildings. As part of the company’s transition to a focus on multifamily and its signature National Landing project, JBG SMITH sold off the asset for $228 million. Spanning a full city block, Universal North and South comprise a total of nearly 660,000 square feet.

3. Boston

Boston. Image by Andreas Hundt via Pixabay

One of the biggest life sciences hubs, Boston’s office market has seen an impressive recovery during the past year. With high-quality space hitting the market, the average listing rate in June was up by 12.0 percent on a year-over-year basis. The same month, Boston was the only market to have an office vacancy rate below 10 percent.

The metro’s office transaction volume for the first half of 2022 hit $2.4 billion, up roughly $51.3 million since the same period in 2021. Pointing toward a more stable market, the gain in deal volume was less spectacular than in the markets mentioned above. The average sale price hit $408.6 per square foot, down $28.8 since the first half of last year.

In the beginning of the year, Alexandria Real Estate Equities Inc. picked up a 1.3 million-square-foot office campus in Andover, Mass. Atlantic Management and Spear Street Capital were the sellers of the eight-building office, R&D and laboratory ensemble in Minuteman Park, which traded for a total of $341 million.

2. Bay Area

Bay Area. Image courtesy of Pixabay.com

The San Francisco Bay Area’s unmatched tech hub and life science sector has, to some degree, provided a protective shield against pandemic-induced woes faced by traditional office space. The metro is one of the top markets for office construction, with vacancy improving at a steadier pace than in the Peninsula.

The East and South Bay’s sales volume in the first half of the year reached $2.4 billion, down roughly $1 billion since the same period last year. This drop in investment volume year-over-year was atypical, as most U.S. markets registered increases over the last 12 months, the only other exception being Manhattan (-$289.13 million). The average price for office product in the Bay Area was stable since mid-2021 and reached $497 per square foot in June.

Transaction volume decreased across all asset classes compared to the first six months of 2021. Prices decreased for B Class assets from $369 per square foot in the first half of 2021 to $282.9 in the same period in 2022. The average price for Class A properties inflated the most, from $684.2 per square foot in 2021 to $1,038.5 in the first six months of 2022.

1. Los Angeles

Los Angeles. Photo by Cameron Venti via Unsplash.com

In mid-2022, the Los Angeles metro’s office pipeline relative to existing office stock was one of the lowest in the country, but the City of Angels was the nation’s busiest market for office transactions. The sales volume for the first six month of the year reached $2.5 billion and nearly doubled compared to the same period in 2021. The actual square footage that changed hands in the first half of the year—5.22 million square feet—was also significantly higher than last year, when it added up to 3.48 million square feet.

Prices in L.A. have also increased, from an average of $355.6 per square foot recorded in the first six months of 2021 to $485.5 per square foot year-to-date through June 2022. Average transaction prices were up across Class A and Class B assets since mid-June last year, but for Class C properties, prices decreased year-over-year from $512.9 in 2021 to $271.4 in the first six month of the year.

In June, a subsidiary of FS Credit Real Estate Income Trust Inc. picked up 555 Aviation, a nearly 300,000-square-foot creative office property in El Segundo, Calif. Tishman Speyer sold the single-story, LEED-certified asset for $205.5 million. Built in the 1960s, the property went through a compete overhaul in 2018. At the time of the sale, the building was fully leased to three tenants.

CommercialEdge covers 8M+ property records in the United States.

The post Top Markets for Office Transactions in H1 2022 appeared first on Commercial Property Executive.

FRED310. Image courtesy of Crow Holdings

Crow Holdings and Panattoni have received the environmental green light to move forward with FRED310, a 4 million-square-foot industrial development in Frederickson, Wash. The partners secured the requisite State Environmental Policy Act approval for the Greater Seattle area project and will commence construction on the 2.3 million-square-foot initial phase.

Located roughly 40 miles south of Seattle’s central business district and approximately 15 miles from downtown Tacoma, Wash., FRED310 is taking shape in industrial-hungry Pierce County. “The FRED310 project is targeting large local, regional and national companies that have limited options for existing product in Pierce County for larger warehouse space,” Patrick Mullin, executive director with Cushman & Wakefield, told Commercial Property Executive.  Mullin and Cushman & Wakefield colleagues Scott Alan and Connor Cree are overseeing marketing responsibilities for the project and have already landed a major prelease agreement with Floor & Décor, which signed for 1.1 million square feet in Building C in the first quarter of 2022.

READ ALSO: The Benefits of Multi-Tenant Industrial Real Estate

FRED310 will occupy a rare, 310-acre development site that consists of two parcels at the intersection of Canyon Road East and East 176th Street. Wetlands surround and peeper the site; however, the wetlands enveloping the property will go untouched and a plan is in place for onsite wetlands that may be disturbed during development.

“Mitigation for the direct impacts to the onsite wetlands will be provided through onsite, in-kind compensatory actions,” according to the FRED310 Conceptual Mitigation Plan produced by Soundview Consultants LLC. “The proposed project will result in a net gain in ecological functions when compared to the existing degraded conditions of the existing wetlands and associated buffers proposed to be impacted.”

The size of things

The first phase of FRED310 will yield four premier facilities, including the approximately 753,200-square-foot Building D, the 437,400-square-foot Building E, the 549,300-square-foot Building F, and Building G, which will encompass 614,000 square feet. The facilities will offer features including clear heights ranging from 36 to 40 feet, large truck courts and ample parking for trailers and automobiles. The site’s location will provide tenants with easy access to the Port of Tacoma, which is within 30 miles’ reach, in addition to rail, and a bevy of highways.

READ ALSO: CRE Investment Volume Climbs 10% in Q2

FRED310 is being marketed for lease with spaces as small as 100,000 square feet, as well as for build-to-suit opportunities. “The advantages for new construction in a core market like Tacoma is clear and obvious, including its major port, access to labor and limited land for development,” Scott Alan, executive director with Cushman & Wakefield, told CPE. “On both a regional and national level, FRED310 is an important core-plus project that will deliver exactly the type of industrial needs we see needing fulfilled today: clear height, great access, near labor and ports, accessibility, size, trailer parking and more. The decision to build speculative big box warehouses in a core-plus market with today’s conditions and demand makes perfect sense.”

The industrial market in Pierce County

The industrial market is faring quite well in Frederickson and in Pierce County in general. In the second quarter of 2022, Pierce County recorded strong fundamentals, including robust leasing activity and high tenant demand, according to a report by Newmark. Of Puget Sound’s total 2.2 million square feet of positive net absorption in the second quarter, Pierce County was responsible for 1.7 million square feet, or approximately 80 percent.

FRED310, however, isn’t the only project that is expanding the Pierce County industrial market with the addition of substantial square footage. In one of the larger completions of the second quarter, the approximately 860,000-square-foot LPC Frederickson One Building 5 delivered, but the project had already been preleased by Amazon Fresh.

“We do not have enough product to meet the demand,” Connor Cree, senior director with Cushman & Wakefield, told CPE. “Companies are needing buildings, and the market is not able to deliver big box fast enough to meet the immediate requirement demands. Those who are constructing and completing projects are reaping the rewards.”

Some industrial markets across the U.S. may be riding a boom and could ultimately become the victim of overdevelopment in the rush to accommodate ongoing demand. However, such will unlikely be the case in Pierce County, according to Cushman & Wakefield. The brokers believe that the strength of the Pierce County industrial market is a long-term condition.

“Big box distribution and manufacturing space, specifically state-of-the-art new construction, will continue to have great success over the coming years,” Mullin notes. “Class B and C warehousing will start to feel pressure due to some of the market headwinds that are taking hold of our economy. However, new modern warehousing, especially that can deliver size and location, will continue to see the greatest demand.”

The post Crow Holdings, Panattoni to Build 4 MSF Seattle-Area Project appeared first on Commercial Property Executive.

KANON. Image courtesy of Newmark

Dallas-based Beam Reach Partners is planning to build a two-tower, 740,000-square-foot office development in downtown Bellevue, Wash., which will be aimed at tech office occupiers.

KANON is expected to break ground in late 2023 with completion slated for mid-2026. Beam Reach Partners ground leased the site from Wallace Properties, a Bellevue-based investment and development company that has owned the property at the southeast corner of 112^th Avenue NE and NE Fourth Street for nearly 30 years.

The new development team has filed an application with the City of Bellevue in lieu of Wallace Properties’ previous plan for 222 112^th Ave. NE., a plan that had been submitted in early 2021. Sam Rabb, co-founder of Beam Reach Partners with John Lewis, said in a prepared statement a long-term ground lease was a good solution to maintain the Wallace family’s presence in Bellevue while leveraging their expertise in commercial real estate.

READ ALSO: Top 5 California Markets for Office Construction

Designed by Gensler to include two 16-story buildings, KANON is set to feature extensive decks and terraces with outdoor green space on every tenant floor, as well as several “superfloors” featuring oversized outdoor space and programming. The project will also have a bike/pedestrian connection to the nearby light rail station, rooftop decks, access to the multi-modal trails along 114^th Avenue, abundant parking, bike rooms and lockers.

The property will also feature a nearly 1-acre central park, which will be the largest outdoor green space amenity of any office development in downtown Bellevue. The park’s amenities will include Wi-Fi and an amphitheater, as well as outdoor work, social and eating areas.

In addition to the site’s proximity to the Downtown Bellevue light rail station, future tenants will also be to take advantage of the numerous cultural, entertainment, shopping and dining offerings in the area. Bellevue Downtown Park, Bellevue Botanical Garden, Bellevue Arts Museum, Seattle Marriott Bellevue, Hilton Bellevue, Surrey Downs Park and Bellevue Club are some of the assets near the planned development.

Brian Di Maggio, senior associate and studio director at Gensler Seattle, said in prepared remarks KANON should create a prominent gateway on Fourth Avenue. He added that, according to Gensler research, abundant outdoor access and green space, that provide places where tenants can socialize or have focused time with a sense of safety and wellbeing, are among the most important amenities sought by employees.

Newmark Executive Managing Director Jesse Ottele and Associate Director Brendan Soelling are leasing KANON on behalf of Beam Reach Partners.

Bellevue office market

Newmark Research stated the Seattle Eastside office submarket has held steady over the second quarter of 2022 with four quarters of positive absorption. The overall vacancy rate was 4.8 percent, down 20 basis points over the quarter and 170 basis points over the past year. Construction activity continues to thrive on the Eastside with 6.5 million square feet of office space underway.

In May, Schnitzer West announced plans for a 19-story, 458,000-square-foot Class A office tower in downtown Bellevue. Groundbreaking is set for this quarter, with completion expected in late 2025. The Arcadian will rise at 120 106^th Ave. NE, two blocks from the city’s Main Street and its restaurant retail and residential core.

In January, Fana Group sold an office development site at the corner of NE Fourth Street and 106^th Avenue NE, with the assistance of Newmark. Patrinely Group and Dune Real Estate Partners acquired the nearly 1-acre parcel for $95 million, planning to build an approximately 481,300-square-foot tower.

The post Beam Reach Partners to Build Seattle-Area Office Campus appeared first on Commercial Property Executive.

Lakefront Blocks. Image courtesy of Benjamin Benschneider

Vulcan Real Estate has finalized the disposition of Lakefront Blocks, a 635,000-square-foot office development in Seattle’s South Lake Union area. German real estate investor Deka Immobilien paid $802 million—or more than $1,260 per square foot—for the Google-anchored asset.

The high-priced deal didn’t include the two residential towers situated atop of the office buildings.

The property came online in 2019 and has been on the market since September 2021, with each block marketed separately. Newmark represented the seller, while Cushman & Wakefield advised the buyer in the transaction which achieved more than double the market’s average price per square foot last year. In 2021, office sale prices within the Seattle metro averaged $572 per square foot, according to a recent CommercialEdge report.

READ ALSO: Net Lease Remains a Viable Play in the Current Environment

This project was the best core office offering on the West Coast in 2021, Kevin Shannon, co-Head of U.S. Capital Markets at Newmark, said in prepared remarks.

Lakefront Blocks. Image courtesy of Benjamin Benschneider

The LEED Gold-certified Lakefront Blocks development comprises two city blocks, situated just south of Lake Union Park. Both Block 31 and Block 25 are composed of two six-story office buildings, designed by Graphite Design Group.

In 2019, Vulcan achieved another record-breaking price with the sale of Arbor Blocks, a 388,900-square-foot, Class A property also in Seattle. Ponte Gadea acquired the pair of Facebook-leased buildings for $415 million.

In late 2020, the German REIT made another significant U.S. office investment, with the purchase of 915 Wilshire, a 388,126-square-foot Class A tower in downtown Los Angeles. A joint venture between Rockwood Capital and Lincoln Property Co. sold the tower in a $196 million deal.

An energy-efficient campus

Block 31 is positioned at 625 Boren Ave. N., on a 1.7-acre plot, according to CommercialEdge. The 433,625-square-foot, 14-story mid-rise offers 313,500 square feet of office space, 9,225 square feet of retail and 79 residential units, situated on the top eight floors. The retail roster includes Tapster and a 203 Degrees Fahrenheit coffeehouse.

The east block (Block 25) buildings rise on a 1.6-acre lot at 630 Boren Ave. N. and are separated by a public alley. The 14-story property offers 148,115 square feet of office space, first-floor retail and 70 residential units on seven stories.

The Newmark team involved in the transaction included Shannon, Vice Chairman Nick Kucha, Executive Managing Directors Ken White and Rob Hannan and Senior Managing Director Michael Moll. Kevin Smith, Gerry Casimir, Bill Burke, Nikki Lam and Tom Weber of Cushman & Wakefield represented the buyer and will assist with the ongoing management of the campus.

The post Deka Immobilien Pays $802M for Google Campus appeared first on Commercial Property Executive.

The Jack. Image courtesy of Urban Visions

Urban Visions has secured $90 million in construction financing for The Jack, a 146,000-square-foot office project taking shape in Seattle’s historic Pioneer Square neighborhood. JLL Capital Markets negotiated the note on behalf of the borrower. An affiliate of Mack Real Estate Credit Strategies LP provided the loan.  

The Jack is currently underway on nearly 0.5 acres at 74 S. Jackson St. The project broke ground in 2020 and was initially slated for completion this summer. After several months of delay, the property is scheduled for completion at the beginning of next year. Urban Visons tapped architect Tom Kunding of the Olson Kunding studio and general contractor JTM Construction to deliver the project.  

The Jack was designed to achieve LEED Gold, WELL Building and WiredScore certifications. Plans for the eight-story building call for a brick and glass facade, floorplates averaging 20,000 square feet, as well as a 17,000-square-foot outdoor terrace. Located adjacent to Seattle’s waterfront, the project site opens to some 20 acres of pedestrian space and is within walking distance of multiple dining and retail options in the city’s downtown.

The JLL Capital Markets team representing Urban Visions included Senior Managing Director Bruce Ganong, Director Kaden Eichmeier and Associate Christopher DuCharme. JLL will also handle leasing activities at the upcoming location.

Updating the office landscape

At the end of last year, Seattle had nearly 6.9 million square feet of office space underway, despite 16.1 percent of inventory being available as of December—60 basis points above the national vacancy rate, the latest CommercialEdge report shows.

The metro’s construction pipeline is driven by some 2.5 million square feet of active tenant requirements, JLL’s Ganong said in prepared remarks, adding that well-located, highly amenitized buildings like The Jack are most likely to benefit from that demand.

The Seattle office sector is supported by tech businesses, which accounted for more than half of the total leasing activity in the last quarter of 2021, a recent JLL report indicates. Companies were particularly keen on expanding or relocating to high-quality office space.

Catering to the strong demand for next-generation workspace, Urban Visions is currently developing another building that is set to reshape Seattle’s office landscape. Last year, the company partnered with Mitsui Fudosan America to start construction on The Net, an 807,000-square-foot office building taking shape within half a mile of The Jack. The 36-story tower will be the first Gold pre-certified WELL development in the Pacific Northwest.

The post Urban Visions Lands $90M for Seattle Project appeared first on Commercial Property Executive.

N.E. 4th St. and 106th Ave. N.E. Image via Google Earth

With the assistance of Newmark, Fana Group has sold Four 106, an office development site in Bellevue, Wash., to Patrinely Group and Dune Real Estate Partners in a transaction valued at $95 million. The new owners will pick up where Fana left off, with a vision for an approximately 481,300-square-foot tower on the nearly 1-acre parcel at the corner of N.E. 4th St. and 106th Ave. N.E.

READ ALSO: What’s Driving the CRE Recovery?

Newmark’s Kevin Shannon, Ken White and Tim O’Keefe represented Fana in the transaction and appeared to have found an eager audience of potential buyers. Shannon, co-head of U.S. Capital Markets with Newmark, noted in a prepared statement that Bellevue’s Eastside submarket continues to experience robust job growth in the office using sector, and “new office product is justified and warranted, which is why capital is attracted to ground-up office development in Bellevue.”

Fana, which owns the Key Bank Building neighboring Four 106, had been planning to develop the newly sold site for years. The company secured the appropriate permits to replace an existing 40,300-square-foot office structure with a 21-story tower featuring eight levels of below-grade parking. Now, Patrinely and Dune will follow suit. In addition to the high-rise, the new owners will build a 6,500-square-foot Pavilion Blvd. of retail offerings along what is currently a surface parking lot. Four 106 will also offer an unidentified list of COVID-friendly amenities.

Winning the tech popularity contest

Four 106 will sprout up in the right place at the right time, as while the metropolitan Seattle market may have its pockets of problem areas, overall, the city’s office market remains strong, and Bellevue is faring particularly well. As noted in a Kidder Mathews report, at year-end 2021, the Bellevue central business district had the highest quoted average rent of any submarket in metro Seattle at an annual $55.68 per square foot. Newmark remarks in a fourth quarter 2021 report that Amazon’s prolific expansion in the Bellevue CBD is driving rents upward. However, Amazon is not the only tech giant that is seeking elbowroom on the Eastside.

“Google, Facebook and Microsoft are also growing, though in the Eastside’s suburban submarkets, a fact that is not lost on investors,” according to the Newmark report. As noted on Patrinely’s website, the new owners of Four 106 will break ground on the office tower in spring 2022.

The post Seattle-Area Office Site Fetches $95M appeared first on Commercial Property Executive.

16650-16750 Woodinville Redmond Road. Image via Google Earth

Feeling no end-of-year malaise, Terreno Realty Corp. continues its buying binge with the acquisition of 16650-16750 Woodinville Redmond Road, a two-building industrial asset encompassing 118,000 square feet in Woodinville, Wash. Terreno purchased the Seattle-area property, which is 100 percent leased, from Woodinville CD LLC in a transaction valued at $33.5 million. The purchase marks the company’s fifth acquisition this month.

Also known as Buildings C and D, 16650-16750 Woodinville opened in 1999 on a 9.6-acre site near the intersection of Interstate 405 and State Route 522 within close proximity of the Sammamish River. The buildings are also immediately adjacent to two facilities, 16224-16240 Woodinville Redmond Road, which Terreno had acquired in October 2021 for $23.6 million.

READ ALSO: What to Expect From the Industrial Sector in 2022

16650-16750 Woodinville offer 27 dock-high and eight grade-level loading positions, as well as parking accommodations for 291 vehicles. Four businesses call the distribution facilities home today, including energy drink company Zipfizz and Superior Cleaning & Coit Cleaning and Restoration.

Packing a portfolio

Terreno, which focuses on acquiring and operating industrial assets exclusively in six major coastal U.S. markets, has been quite acquisitive throughout 2021, purchasing a mix of core and value-add assets at every turn in today’s highly competitive industrial investment sales climate. The company seems on track with the vision it had at the beginning of the year.

“We see attractive acquisition opportunities and expect our 2021 acquisition volume to exceed that of 2020, perhaps significantly so,” Blake Baird and Michael Coke, co-founders of Terreno Realty Corp., wrote in the annual letter to shareholders dated March 2, 2021.

In the fourth quarter alone, Terreno has averaged more than one acquisition per week. Notable transactions include the $74.1 million purchase of 4181-4241 West 108th St. in Hialeah, Fla., a two-building, 402,000-square-foot asset in metropolitan Miami, and the $60.8 million acquisition of 5150-5236 Eisenhower Ave., a 199,000-square-foot, suburban Washington, D.C., complex in Alexandria, Va.

“Within our six markets, we have increasingly focused on urban infill locations. While our net growth will remain limited to a size where we can make directly informed operational decisions, we feel more strongly today than we did 11 years ago about the long-term investment merits of our strategy and the growth opportunities ahead,” Baird and Coke added in the shareholder letter.

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5th & Bell. Image courtesy of Hudson Pacific Properties Inc.

Hudson Pacific Properties Inc. caps a busy year of activity in the studio sector with the acquisition of a leasehold interest in a premier office asset in Seattle. The REIT purchased 5th & Bell, a 197,000-square-foot property leased in its entirety to Amazon, from Alexandria Real Estate Equities in a transaction valued at $119 million.

5th & Bell first opened its doors in 2002 as a development project of Touchstone. Carrying the address of 2301 Fifth Ave., the property sits within the city’s Belltown neighborhood in the Denny Triangle submarket. The building has spent time in the portfolios of some of the leading real estate companies in the U.S., including Hines, which acquired the six-story tower from Touchstone for $69.9 million in 2007. In 2016, a Blackstone affiliate purchased 5th & Bell for $93 million and held it until 2018, when the company sold the LEED Gold-certified property to Alexandria in an approximately $95 million transaction.

A Class A asset designed by architecture firm CollinsWoerman, 5th & Bell features a host of bells and whistles, including a rooftop deck, retail space and a well-equipped end-of-trip facility. Amazon first became a tenant in the building in 2014, occupying only a portion of the square footage at the time. The e-commerce giant became the sole tenant of the property after Alexandria took ownership.

READ ALSO: Top 5 Office Deliveries Nationwide

Hudson Pacific relied on a $75 million draw on its revolving credit facility and proceeds from its recently completed preferred stock offering to finance the acquisition of 5th & Bell. The purchase of the office building increases Hudson Pacific’s footprint in the Denny Triangle to nearly 2 million square feet and expands its presence in metropolitan Seattle to a total of approximately 3 million square feet.

A sector balancing act

Hudson Pacific has been busy bolstering its studio platform in 2021, while simultaneously maintaining an active role in the office sector. In the third quarter alone, the REIT partnered with Blackstone on the approximately $160 million acquisition of a 91-acre site near London for the development of Sunset Waltham Cross Studios. The company also revealed plans to develop Sunset Glenoaks Studios, a 241,000-square-foot, purpose-built studio facility in Sun Valley, Calif., via another joint venture partnership with Blackstone.

On the office side, Hudson Pacific submitted plans in Vancouver for Burrard Exchange, a 450,000-square-foot hybrid mass timber office and retail development at Bentall Centre. If given the green light, the property will be one of the tallest exposed mass timber office buildings in North America.

The post Hudson Pacific Buys Amazon Building for $119M appeared first on Commercial Property Executive.

Image by Fabian Holtappels via Pixabay.com

How is Starbucks, one of the most recognized global brands, reengineering its workplace for post-pandemic life? Two senior executives involved in the company’s Seattle retrofit, Scott Davis, president of Splice Project Management, and Marc Weigum Sr., manager, Workplace Delivery – Corporate Real Estate, Starbucks Coffee Co., gave an insider’s look at the recent CoreNet Global Summit in Seattle.

Weigum said that the company had been thinking about how to create a modern workspace before the pandemic began. There are more than 4,000 employees in 1 million square feet at the company’s headquarters in Seattle.

“The big thing was that it can’t just be facilities, it requires HR and tech. That was instituted. It’s become its own entity within Starbucks. And that was one of the most instrumental things getting us to this point.”

READ ALSO: Why Slow Return-to-Office Doesn’t Threaten Office REITs Now

Another aspect of rethinking the office layout and design was more tied to the overall brand. While millions of people around the world associate Starbucks with a place to sit down, check email and get a coffee, the offices themselves were more standard and generic.

The pandemic brought the opportunity to recreate the workspaces in ways that mirrored the stores themselves.

Every department will have an area to sit, work, and—have coffee.

“This is one of those things that when partners do come back is going to be a game changer,” Weigum said.

Also, the layouts for the departments will reflect a neighborhood and community concept.

Every neighborhood will have a central area, a “front porch,” varying colors for different teams and the ability to create larger or smaller areas for enterprise and collaboration space.

“We took all the workstations away from the windows and just by doing that, the whole office seems much lighter and brighter,” Weigum said.

With 1 million square feet of space, way-finding can be difficult; and the company needed to create an atmosphere in which employees knew how to get around, because they would no longer have their own workstations. The company increased signage and the use of colors and different lettering, with Braille, not unlike signage one sees in an airport.

Square footage per worker is now increasing at Starbucks from 100 square feet to about 200 square feet. Prior to the pandemic, every employee had a dedicated space, now the offices are almost 100 percent flex. Corridors are three times the size.

The larger individual spaces can be accomplished, because each employee is likely to spend less time in the building.

Offices are dual purpose; they will support managers when they are working in person, but they can be used by others as a focus room when they are not. Some offices will be permanently designated, such as those for legal or HR, which have different requirements.

Tactical challenges

That change to flex space brought about one of the biggest tactical challenges that had to be planned and executed: scheduling employees to come back during the pandemic and removing their personal effects—photos, fridges, even dinosaur collections. More than the logistics involved, employees needed to be reassured they were not being laid off.

They called it “Pack to the Future.”

Davis said that “Starbucks was less knee jerk than other companies and has projected farther into the future, and because of that the company could use COVID-19 as an advantage, as bizarrely as that sounds. There was an upside; the building was mostly empty. There’s a lesson to use the challenge in front of you as an opportunity.”

“For me the takeaway is that change isn’t done. We just spent two years blowing up how people work together. We don’t know the sociological impact of that. The hope is that we can learn from all that fast figuring out stuff on the fly, and we’re going to have to do it again, but to what end, I don’t know.”

“If this (pandemic) only lasted for 3 months, we would have just gone back and nothing would have changed,” Weigum said. “But today, new hires don’t even know what it was like prior—that it was difficult to take a day off, or to be home. Now it’s the complete opposite.”

He said it will be another 12 to 18 months before they are going to have a good sense of how it is working, and in the meantime, there could be additional COVID-19 spikes.

“We can’t think it’s behind us and start doing sprints. Flexibility is the key.”

“This is going to jump you guys more in front,” Weigum added. ”You are going to be more up front visually; now comes the hard work and ensuring that we stay true to our objectives and goals and don’t just back off.”

The post Starbucks Revamps Corporate HQ: It’s a Latte appeared first on Commercial Property Executive.

2865 Duke Parkway, Aurora, Ill. Image courtesy of Duke Realty Corp.

A new joint venture between Duke Realty Corp. and CBRE Global Investors has closed on the first of three tranches of logistics assets totaling 1.3 million square feet for $157 million.

In all, Duke Realty will contribute seven facilities totaling 4.8 million square feet and two trailer storage lots totaling 25 acres to the joint venture that will be 80 percent owned by CBRE Global Investors and 20 percent by Duke.

READ ALSO: Office Asset Near O’Hare Lands $148M Refi

The joint venture plans to place secured debt financing on the assets that will be about 50 to 60 percent loan-to-value.

The properties in the first tranche are located in the Atlanta and Chicago logistics markets at: 4200 N. Commerce Drive, East Point, Ga.; 6115 and 6125 Mimms Court (Site S), East Point; and 2865 Duke Parkway, Aurora, Ill. They consist of two facilities totaling 1.3 million square feet and one trailer lot totaling 17.2 acres.

4200 N. Commerce Drive, East Point, Ga. Image courtesy of Duke Realty Corp.

Duke Realty declined to release the addresses of the remaining properties until those transactions close but both firms released general locations. The second tranche consists of two facilities and one trailer lot in Baltimore that is expected to close later in the third quarter. The third tranche consists of three facilities located in Pennsylvania, Seattle and South Florida that are expected to close in early 2022.

According to a prepared statement by Jim Connor, Duke Realty’s chairman & CEO, officials with the largest domestic-only logistics REIT have said in recent earnings calls that they planned to monetize a portion of assets leased to one of the company’s largest customers to manage portfolio risk. Connor also said Duke Realty has had several successful transactions with CBRE Global Investors, a leading global real assets investment management firm, in the past.

Morgan Stanley & Co. LLC acted as exclusive financial advisor and Hogan Lovells US LLP acted as legal advisor to Duke Realty.

Recent Logistics Deals

Gary Jaye, CBRE Global Investors Head of Americas Logistics Operator Division, said in a prepared statement the firm has deep knowledge and scale in the logistics sector and believes the joint venture with Duke Realty will continue to create future opportunities. He said teaming with a best-in-class partner like Duke Realty supports the firm’s strategic ambitions for overweighting the sector to deliver real assets solutions that capitalize on market opportunities and drive outperformance.

Several recent transactions have been in the logistics sector. Earlier this month, CBRE Global Investors acquired Irvine Crossing, a 393,673-square-foot mixed-use facility in Irvine, Calif., through one of its sponsored funds, from an affiliate of Menlo Equities, for $180.8 million. In December, a fund sponsored by CBRE Global Investors acquired Memphis Global Crossing, a newly built, Class A logistics facility in Memphis, Tenn., from DHL Supply Chain, which will remain the main tenant. The 421,470-square-foot asset changed hands for an undisclosed amount.

The post Duke Realty, CBRE Global Investors Form Logistics JV appeared first on Commercial Property Executive.

Tacoma Supply Chain Center. Image courtesy of Dalfen Industrial

Dalfen Industrial, of Dallas, has acquired a brand new three-building, 711,855-square-foot Class A industrial park in Frederickson, Wash., a suburb of Tacoma. The acquisition price in the off-market transaction was about $115 million, according to Colliers, which represented Dalfen in the deal.

READ ALSO: Dream Industrial to Sell US Portfolio for $167M

The sellers were Panattoni Development Co. and Crow Holdings, according to a local media report.

The Tacoma Supply Chain Center is off of 176th Street and close to the major trucking routes of I-5 and SR-512, as well as the Port of Tacoma.

The project, known informally as Big Freddie, was completed in June and features a mix of dock-height and grade-level loading and can accommodate parking for more than 300 trailers.

Colliers’ industrial team of Bill Condon and Matt McGregor represented Dalfen.

Dalfen Industrial noted in a prepared statement that “Tenants are migrating south of Seattle’s Kent Valley submarkets in search of better value, newer/more functional product, and a stronger labor market.”

Dalfen President & Chief Investment Officer Sean Dalfen added that the park’s location provides outstanding last-mile fundamentals.

Humming along

The Pierce County industrial space market leads the Seattle-Tacoma region in projects under construction and is seeing declining vacancy (to 7.6 percent), as 981,696 square feet of net absorption surpassed completions of 639,761 square feet, according to a second-quarter report from Kidder Mathews.

One of the submarket’s largest projects now underway is in Frederickson, an 862,1667-square-foot building by Logistics Property Co.

In February, Dalfen sold the 14-building Capital Center Industrial Park in metro Cincinnati for $51.3 million. The purchaser of the 896-523-square-foot asset was TradeLane Properties.

And last November, Dalfen was honored by Commercial Property Executive with the Gold award for Best Investment Transaction: Single Property for the purchase of the I-4 Logistics Center, in Seffner, Fla., in metro Tampa, Fla.

The post Dalfen Industrial Pays $115M for Tacoma-Area Logistics Park appeared first on Commercial Property Executive.

NorthBay Medical Office Building, 2470 Hilborn Road, Fairfield, Calif. Image courtesy of courtesy of Anchor Health Properties

Anchor Health Properties continues its expansion program with the addition of four Class A medical office buildings to its holdings, courtesy of separate transactions valued at a total of more than $100 million.

With the new purchases, the national health-care real estate company has grown its portfolio by an aggregate 210,000 square feet in high barrier to entry markets on the West Coast and in North Carolina.

READ ALSO: Top Gateway Markets for Office Vacancy

Anchor’s new additions include California’s NorthBay Medical Office Building and Vista Medical Plaza, located in Fairfield and Vista, respectively, as well as IDC Medical Plaza in Renton, Wash., and University City Medical Office Building in Charlotte, N.C.

Vista Medical Plaza, 2067 W. Vista Way, Vista, Calif. Image courtesy of courtesy of Anchor Health Properties

The company acquired all four properties through joint ventures with existing institutional equity partners in off-market transactions. With the closing of the purchases, Anchor has completed $330 million in MOB investments via 12 transactions year-to-date. It’s a pattern; the company has been highly acquisitive throughout the global health crisis.

“The COVID 19 pandemic put many marketed investment sales processes across U.S. commercial real estate asset classes on hold—including medical office—and rewarded those investment firms who were able to create their own opportunities,” James Schmid, chief investment officer & managing partner with Anchor Health Properties, told Commercial Property Executive.

“It helped Anchor to have complementary development and management / leasing platforms, which also helped generate investment leads. At a macro level, U.S. consumers started spending on health care as a basic need function almost immediately after lockdowns ended last spring, which reinforced the tenancy within medical office buildings and helped ensure operating performance over the past 12+ months.”

Property particulars

IDC Medical Plaza, 1412 S.W. 43rd St. Renton, Wash. Image courtesy of courtesy of Anchor Health Properties

NorthBay MOB in Fairfield, Calif., carries the address of 2470 Hilborn Road and is part of the San Francisco MSA. The approximately 29,600-square-foot, two-story structure first opened its doors in 2015 and counts NorthBay Healthcare and Retinal Consultants Medical Group as tenants. At the other end of the state, the two-story Vista Medical Plaza at 2067 W. Vista Way sits in the San Diego-area market, offering roughly 54,700 square feet. The MOB is leased to such names as United HealthCare, Rady Children’s, LabCorp, Greider Eye Associates and Blue Coast Cardiology.

IDC Medical Plaza’s Renton address at 1412 S.W. 43rd St., places it firmly in the suburban Seattle market. The approximately 59,200-square-foot property opened in 2005 and holds the distinction of being one of only two MOBs to be erected in the Renton submarket within the last 15 years. A host of tenants call the building home, including anchor tenants Providence Health and a Sight Partners-operated ambulatory surgery center.

University Place Medical Office Building, 8401 Medical Plaza Drive, Charlotte, N.C. Image courtesy of courtesy of Anchor Health Properties

University City MOB at 8401 Medical Plaza Drive in Charlotte completes the group of new purchases and at 66,500 square feet, is the largest of the collection. Novant serves as anchor tenant at the three-story property, which occupies a site that provides more than 2 acres of excess developable land for future expansion. Anchor will bring all four assets under its corporate umbrella, providing asset and property management services at the properties, in addition to spearheading leasing activities.

The road ahead

The MOB sector is a competitive business. New construction notwithstanding, the MOB market in the U.S. has a relatively limited supply of investable inventory, according to a 2021 report by Colliers International. Furthermore, the majority of that inventory, approximately two-thirds, can be found under the ownership of health-care systems and providers. Anchor, however, is undaunted by the investment community’s increasing fondness for the resilient sector. The company still has big plans for the rest of 2021.

“We have $300 million of new investments under our control and see the potential to close on significantly more than that if things break our way,” Schmid said. “Our growth trajectory continues to open new doors for the firm, and we look forward to sustaining and diversifying the growth in the coming months.”

The post Anchor Health Adds $100M in MOBs to Portfolio appeared first on Commercial Property Executive.

Image by Gerd Altmann via Pixabay

Boston Properties Inc., Canada Pension Plan Investment Board and GIC, Singapore’s sovereign wealth fund, have established a co-investment program to acquire office properties in the U.S.

Through the program, the partners reportedly intend to “selectively acquire and operate office properties in BXP’s (Boston Properties’) core markets—Boston, Los Angeles, New York, San Francisco and Washington, DC, as well as Seattle.”

READ ALSO: Global Investors Are Still Betting on the US, AFIRE Finds

The partners have targeted a total of $1 billion of equity to the platform, with BXP and CPPIB each allocating $250 million and GIC allocating $500 million. With appropriate leverage, this should allow for an initial investment capacity of about $2 billion, according to the partners.

“This new co-investment program underscores the attractiveness of Class A office investment opportunities in our markets,” BXP CEO Owen Thomas said in a prepared statement. BXP is the nation’s largest publicly traded developer, owner and manager of Class A office properties.

Adam Gallistel, managing director of Americas Real Estate, GIC, added that the program is intended to “capitalize on an uptick in demand stemming from a return to the office and the reopening of America’s great cities.”

Under the agreement, BXP will over the next two years provide CPPIB and GIC with exclusive first offers to form joint ventures with BXP to invest in acquisition opportunities that meet the program’s target investment criteria, subject to certain exclusions (including ground-up development). BXP will act as general partner and provide customary property management, leasing and other services.

Hodes Weill & Associates was exclusive advisor to Boston Properties on the co-investment program.

Caution warranted

Early last year, BXP made a rather different play, by teaming with Alexandria Partners to create a life sciences campus in South San Francisco, Calif., that will combine both existing buildings and developable land the two REITs had owned separately.

Around the same time, BXP broke ground on 325 Main St., a 420,000-square-foot office building in Cambridge, Mass. Google had already signed on to be the anchor tenant.

READ ALSO: How the Economic Recovery Is Shaping CRE’s Future

The overall U.S. office vacancy rate rose by 100 basis points in the first quarter to 14.2 percent, partly because of net negative absorption topping 45 million square feet, according to a market outlook released by Colliers in May. In addition, the nationwide sublease market hit 200 million square feet for the first time.

All this was despite progress with vaccinations, federal stimulus payments and broad improvements in the economy and employment. However, asking rents have remained steady for the most part, according to the report.

The post Boston Properties, CPP Investments, GIC Form Co-Investment Program appeared first on Commercial Property Executive.

255 S. King St. Image courtesy of Cushman & Wakefield

American Life Inc. has refinanced the three-year-old office and hotel property at 255 S. King St. in Seattle to the tune of $122.7 million. Relying on Cushman & Wakefield as adviser, ALI secured a loan for the approximately 717,700-square-foot mixed-use asset through PCCP.

READ ALSO: Hines Breaks Ground on Toronto Creative Office Project

ALI, developer of 255 S. King, saw that the timing was just right to refinance. “The financing capital markets have rebounded from early-COVID-19 times in a serious way. Lender appetite for well-located, quality product is near all-time highs,” a member of the Cushman & Wakefield Equity, Debt & Structured Finance team told Commercial Property Executive.

Dave Karson, Chris Moyer, Stephen Michels, Zachary Kraft and Lauren Greenberg comprise the Cushman & Wakefield team that represented ALI in the transaction with PCCP.

Located in the city’s bustling Pioneer Square submarket, 255 S. King consists of two interconnected towers, the tallest of which is the 23-story Embassy Suites by Hilton Seattle Downtown Pioneer Square, a 282-key hotel featuring 10,000 square feet of meeting and event space and approximately 17,300 square feet of retail space.

The hotel braved the pandemic and kept its doors open with limited staff. Completing the LEED Silver-certified property is the 11-story, roughly 209,500-square-foot office building, which sits above a seven-story retail and parking podium. The office building, also known as Avalara Hawk Tower, is leased in its entirety, with software firm Avalara Inc. serving as anchor tenant in an approximately 133,500-square-foot space under a lease that expires in 2028.

Turning the corner

A premier hotel on its own may not have been enough to bring lenders running today—lodging-backed loans continue to record the greatest stress among the various real estate sectors—but a premier hotel coupled with a fully stabilized office property in a premier metro proved to be the right balance to attract lenders’ attention.

“Great response from the lending community, due in part to the desirable location just south of downtown Seattle near major transit hubs, and the fully leased office tower, which had a strong weighted average lease term,” according to the Cushman & Wakefield team. “There haven’t been many hotel financings within the industry in recent time due to the impact of COVID-19, and so this notable transaction was a good sign of the rebound in this segment looking forward.”

The post American Life’s Seattle Mixed-Use Property Lands $123M Refi appeared first on Commercial Property Executive.

Block 24 within the Spring District. Image via Google Street View.

Brookfield Asset Management has purchased a second building in The Spring District development, in Bellevue, Wash., through one of its real estate funds. Advised by J.P. Morgan Global Alternatives, a joint venture of Wright Runstad & Co. and Shorenstein Properties, the developers of Spring District, sold the Facebook-leased Block 24 property for $200 million.

READ ALSO: Post-Pandemic Comeback Predicted for CRE

Block 24 broke ground in 2019 and was recently completed. According to CommercialEdge data, the building received a $95 million construction loan, provided in 2019 by Wells Fargo Bank.

The nine-story, 197,959-square-foot property is located at 12355 N.E. District Way, within the 36-acre district. Floorplates average around 18,800 square feet, and the building also includes 1,190 square feet of ground-floor retail. Block 24 is currently pursuing LEED certification.

In October last year, Brookfield also acquired the 11-story Block 16 for $365 million, which is also leased to Facebook. The tech giant owns one of the buildings within the development, which it acquired last year for $367 million from REI.

The Spring District is a transit-oriented development comprising retail, hotel, office, and apartment buildings in various stages of development. The project already comprises more than 1 million square feet of office and retail space, as well as around 800 units. More than 350,000 square feet of office and retail space are under construction within the project, and more than 1 million square feet are in the planning phases.

The development is in the Bel-Red area, about 2 miles northeast of Bellevue’s CBD, near Interstate 405. The East Link Extension is an upcoming 40-mile light rail line that will include a station within Spring District and is expected to come online in 2023.

According to a recent Cushman & Wakefield report, the Puget Sound-Eastside market had around 3.3 million square feet of office space under development as of the first quarter of 2021, approximately 93 percent of which were within the Bellevue CBD area.

The post Brookfield Buys Seattle Campus for $200M appeared first on Commercial Property Executive.

Boren Lofts. Image courtesy of Trammell Crow Co.

Trammell Crow, together with Washington Capital Management on behalf of its clients, has sold Boren Lofts in downtown Seattle for $119.1 million, public records show. Oxford Properties Group acquired the 136,217-square-foot life science development just a few months after the building opened.

Located at 1930 Boren Ave. in the Denny Triangle neighborhood, the 10-story building is within walking distance of Amazon’s corporate headquarters and a couple of blocks from Interstate 5. The development side-mounted core comprises more than 15,000 square feet of uninterrupted floorplates, 15-foot-high ceilings, a rooftop terrace and some 4,400 square feet of retail. According to CommercialEdge data, Trammell Crow and Washington Capital Management received a $59.9 million construction loan from Wells Fargo Bank to develop the project, which is seeking LEED Silver certification.

The life science sector has experienced a boom in the past year, as the race for both a COVID-19 vaccine and treatment translated into accelerated demand for modern lab space. A recent JLL report names the Seattle-Tacoma-Bellevue metro area as the U.S. leader in terms life science employment acceleration.

The post Trammell Crow Sells Seattle Life Science Property for $119M appeared first on Commercial Property Executive.

300 Pine St. Image courtesy of KKR

KKR, in a joint venture with Seattle-based Urban Renaissance Group LLC, has purchased a 770,000-square-foot landmark office building in Seattle’s retail core. According to the Puget Sound Business Journal, the deal closed at roughly $580 million.

A former Macy’s flagship store, the eight-story asset at 300 Pine St. takes up a full block between Third and Fourth avenues. Amazon is the sole occupant of the office portion, according to CommercialEdge data. Seller Starwood Capital Group acquired the property gradually between 2015 and 2020, converting the 1920s historic building into a predominantly office asset.  

Investing in Puget Sound

The latest deal marks KKR’s fourth investment in the Puget Sound Region. The company’s portfolio includes F5 Tower, a 43-story Class A high-rise in downtown Seattle, as well as a three-building, 915,000-square-foot office complex and a 20-story tower, both in Bellevue, Wash.’s central business district.

Global investment firm KKR made its Puget Sound debut in late 2019, when it spent a cumulated $1.2 billion on the purchase of a collection of Class A office properties in central Seattle and Bellevue, Wash.

In a record-breaking deal roughly two years ago, Touchstone—a local developer that is now a subsidiary of Urban Renaissance Group—sold two Amazon-occupied Class A+ office towers to Ponte Gadea for $740 million. At the time, the transaction marked the largest single-asset deal by volume in Seattle.

Planned upgrades

Originally built in 1929 as a Bon Marché department store, 300 Pine St. was vertically expanded in 1955 with four additional stories. More recently, then-owner Macy’s sold the upper six floors between 2015 and 2017, followed by the store’s final closing in 2020.

The new ownership is planning to renovate the art-deco structure that is poised to encompass 85,000 square feet of upgraded ground-floor retail space designated for flagship stores, along with 682,000 square feet of office space. The office segment will have 80,000-square-foot floorplates and seismic retrofitting. The top two floors will receive additional natural lighting through more than 20 skylights.

The upgraded property will feature a 20,000-square-foot rooftop deck and will offer 15-foot ceiling heights. The retail space, situated above the underground Westlake Light Rail Station, will be known as The Bon Marché Collective. The retail suits will range from 3,000 to 16,600 square feet. Current tenant Victrola Coffee will continue to operate at the building’s southwest corner.

The post Amazon-Leased Seattle Landmark Trades for $580M appeared first on Commercial Property Executive.

Advanta Edge Campus

The Shidler Group has sold the leasehold interest in Advanta Edge Campus in Bellevue, Wash., for $169 million, according to public records.

The 601,081-square-foot campus is fully leased to Microsoft. The new owner, a partnership between Talon Private Capital and PGIM Real Estate, received $200 million in financing from a consortium of 13 lenders including Greystone Insurance Co. and Hilltop Securities, as well as an entity connected to Kennedy Wilson and companies connected to Fairfax Financial.      

READ ALSO:  Microsoft Signs 150 KSF Metro DC Lease

Located at 3005, 3007 and 3009 160th Ave. SE, the campus is roughly 6 miles from Microsoft’s headquarters in Redmond, Wash. The property was designed by architect CollinsWoerman and was completed in 2008 by Schnitzer West.

Microsoft funded more than $120 million out of the $174.5 million worth of capital improvements to enhance the electrical and mechanical infrastructure, telecommunications backbone, interior finishes and build-outs.   

Newmark Co-Head of Capital Markets Kevin Shannon, Vice Chairman Nick Kucha, Executive Managing Directors Rob Hannan, Ken White, Senior Managing Director Michael Moll and Director Rachel Jones, as well as Executive Managing Directors Tim O’Keefe and Joe Lynch, worked on behalf of the seller. According to Shannon, Seattle’s Eastside is currently one of the strongest office submarkets in the country. The area is attracting significant attention from tech companies, with Facebook paying $390 million last September to buy REI Co-op’s corporate campus located just less than 6 miles northwest from Advanta Edge Campus.

The post PGIM JV Buys Microsoft-Leased Campus for $169M appeared first on Commercial Property Executive.

The Net. Image courtesy of Urban Visions

Urban Visions is literally making way for the development of The Net with the recent commencement of demolition of the old structure at the site of the upcoming 807,000-square-foot office project.

The company plans to kick off construction of the new tower after securing a prelease agreement with an anchor tenant for the sustainability- and health-centric development.

READ ALSO: Resilience: A Blueprint for Cities’ Future

“Urban Visions believes the definition of ‘demand’ is evolving dramatically as we slowly come out of the pandemic. Tenants are going to be demanding office space with the health and wellness features The Net is providing and we are positioned ahead of that curve,” Greg Smith, founder & CEO of Urban Visions told Commercial Property Executive.

Urban Visions is developing The Net with Mitsui Fudosan America, which joined the project in September 2020, when Urban Visions formed a joint venture with the company and sold the development site into the new partnership in a transaction valued at $127.7 million, according to King County records. The three-story, 64,000-square-foot office structure that currently occupies the property at 801 3rd Ave. is now being removed and ultimately, The Net will sprout up in its place with the new address of 875 Third Ave.

The Net. Image courtesy of Urban Visions

The plan for The Net, designed by architecture firm NBBJ, is for the project to not only change downtown Seattle’s skyline, but also alter the city’s concept of the office workplace. A next-generation office building melding climate-friendly elements with wellness-focused design, The Net will offer a state-of-the-art ventilation system; smart technology allowing for touchless movement from street to suite; rooftop green space in the form of a three-tier skypark; dedicated bike parking; and multimodal transportation options. The 36-story tower will also feature an all-electric mechanical system that will eradicate the need for fossil fuels, a resource system that reduces water and energy use, as well as an open floor plan and circulation staircase that maximize natural light and collaboration space. Smith added, “The Net’s side-core design makes for extremely adaptable floorplates, matched with a technology backbone to meet post-pandemic office needs.”

The Net will hold the distinction of being the first Gold pre-certified WELL project in the Pacific Northwest. The building will also pursue LEED Gold certification, as well as Salmon-Safe certification and Wired Certified Gold designation.

“Because of the wildfires that have unfortunately become commonplace throughout the West Coast over the last several years, Urban Visions has been focused on creating spaces that support air quality and health, as well as our climate—and we have gotten even more focused on those features as a result of the pandemic,” said Smith.

Seattle office scene

In providing the optimal climate-friendly and healthy workplace, The Net will incorporate the kind of cutting-edge technology that will likely prove enticing to tech tenants. “Urban Visions definitely expects interests to come from the tech sector, as well as the traditional downtown financial services, insurance, real estate type tenant,” Smith noted. “The technology backbone of The Net will be state-of-the-art from a connectivity and cybersecurity perspective, which will certainly attract tech companies, but has also become critical infrastructure for most other downtown office users.”

The Net. Image courtesy of Urban Visions

Seattle’s otherwise strong office market suffered the same pandemic-induced hindrances as that of other major metropolitan cities, recording reduced absorption and higher vacancies in 2020. However, the outlook appears bright across the Puget Sound region. According to a report by JLL, which is spearheading leasing activity for The Net, COVID-19 vaccines have instilled optimism in the market, and widespread immunization is anticipated to lead firms back into the office environment in earnest. JLL projects that leasing activity will pick up in the latter half of 2021.

Urban Visions is keen on the future of the Seattle office market as well, but the company does foresee change. “A year from now, Urban Visions expects demand for Class A office space in the Seattle regional market to remain strong. But the usage of office space may be different and evolve over time,” Smith said. “Urban Visions is expecting more demand for collaborative working spaces and offices that seamlessly support a combination of in-office and remote work through technology.” Pending an anchor-tenant commitment, The Net could make its debut as soon as late 2024.

The post Urban Visions’ Health-Centric Office Project Advances in Seattle appeared first on Commercial Property Executive.

Boren Lofts. Image courtesy of Trammell Crow Co.

Trammell Crow Co., alongside its partner Washington Capital Management, announced the opening of Boren Lofts, a core-free life science development in downtown Seattle.

READ ALSO: Top 10 Office Deliveries of 2020

The partnership began work on the project in August 2019, tapping Howard S. Wright as general contractor, while LMN Architects designed the property specifically for life science tenants. CBRE’s Scotta Ashcraft and Nick Carkonen are handling leasing activities for Boren Lofts.

Located at 1930 Boren Ave., the 10-story life science development offers 136,217 square feet of Class A space in Seattle’s Denny Triangle neighborhood. Boren Lofts’ design utilizes a side-mounted building core, which allows for unobstructed floorplates, whereas others typically have elevator cores in the building’s center. The property offers floorplates that average 15,000 square feet and can accommodate up to three tenants per floor. The development was also built with 12-foot windows and 15-foot floor-to-floor heights with outdoor patios on all floors, a rooftop terrace, UV air filtration system and thermal temperature security check-in.

Alan Cantlin, Trammell Crow’s senior vice president, said in prepared remarks that the open-plan spaces at Boren Lofts is ideal for life science companies that need flexibility to plan office and lab spaces.

Demand in Denny Triangle

Trammell Crow is in talks with several life science companies that could potentially lease approximately 30 percent of the building. Cantlin told CPE that demand for life science space in downtown Seattle has been strong and has increased since the onset of the COVID-19 pandemic. Cantlin also told CPE that the surge in demand is likely caused by more capital coming into the sector from private and public sources.

The Denny Triangle neighborhood where Boren Lofts is located in is also seeing sustained activity in its office sector. The submarket has 2.4 million square feet of projects under construction as of June 2020, including Amazon’s 888,049-square-foot office project and Onni Group’s 896,890-square-foot mixed-use project. Denny Triangle has also recently saw one of its trophy office towers at 1918 8th Ave. change hands for $625 million.

The post Trammell Crow Completes Seattle Life Science Project appeared first on Commercial Property Executive.

1408 Third St. S.E., Puyallup, Wash. Image courtesy of Anchor Health Properties

Chestnut Funds and Anchor Health Properties have launched Chestnut Healthcare Fund II, a new investment vehicle centered on the acquisition of medical office buildings and other related health-care real estate assets across the U.S. The $100 million real estate private equity investment fund will seek core and core-plus assets over the next 48 months.

“Chestnut Funds and Anchor anticipate many attractive investment opportunities in 2021 and beyond, with the fund focused on approximately 30 key markets across the U.S., where very specific potential investment targets are being identified,” James Schmid, chief investment officer & managing partner with Anchor Health Properties, told Commercial Property Executive.

The launch of Fund II comes five years after the initiation of Chestnut Healthcare Fund I, which, having raised roughly $50 million, will have completed its four-year investment period early this year with the acquisition of 52 assets via direct or joint venture transactions. Due to the U.S.’s aging population, expanded health insurance coverage and a shift in patient services away from hospitals, the medical office building sector has only grown more popular among investors since the 2016 introduction of Fund I. However, Anchor, which will co-manage Fund II with Chestnut Funds, is undaunted by the increased competition.

“There’s no question that institutional investors continue to recognize the performance of the sector across economic cycles and accordingly commit more dollars to sector investments. On behalf of Chestnut Healthcare Fund II, the Anchor team does an excellent job of sourcing off-market opportunities,” Ben Ochs, CEO & managing partner with Anchor Health Properties, told CPE.

Good Samaritan Hospital, Puyallup, Wash. Image courtesy of Anchor Health Properties

Ochs’ assertion is not hyperbole; historically, more than 50 percent of Anchor’s closed transactions are sourced on an off-market basis. “This allows the fund the opportunity to avoid broadly marketed processes and/or having to pay large portfolio premiums for aggregated asset pools while continually sourcing over $400 million of sector transactions per year,” Ochs continued. “Other investors new to the sector have found it more challenging to source transactions without deeply established relationships and a national infrastructure–elements notable within Anchor’s integrated operating platform of management/leasing, development and investment services.”

Pandemic-resistant

While no sector of commercial real estate has gone completely unscathed by the COVID-19 pandemic, medical office buildings have survived the lockdowns and temporary halts in elective medical procedures. “The strong performance of medical office and health-care real estate during the pandemic has really accelerated demand for these investments as a consistent source of stable cash yield and total return,” Schmid said. “While the period between March and June 2020 saw a modest pause in capital markets activity, new investment closings returned in a meaningful way in the second half of the year, and the pipeline of new attractive investment opportunities remains robust.”

Along with announcing the launch of Fund II, Chestnut Funds and Anchor disclosed that they have completed the inaugural seed investment with the purchase of 1408 3rd St. S.E., a 10,000-square-foot medical office building on the campus of Good Samaritan Hospital in the medical corridor in Puyallup, Wash. The high-quality, two-story, metropolitan Seattle property opened in 1997 and is presently occupied by MultiCare Health.

The post JV Kicks Off $100M MOB Fund appeared first on Commercial Property Executive.

Kirkland Urban

Google CEO Sundar Pichai has announced that the company will open its office spaces to serve as vaccination sites. The tech giant will partner with health-care provider One Medical and public health authorities to convert buildings, parking lots and open spaces to vaccination clinics available to anyone eligible for the shot. The initiative will start in Los Angeles, the San Francisco Bay Area, New York, and Kirkland, Wash., with plans to expand the program nationally.

According to CommercialEdge data, Google’s real estate footprint includes the 1.4 million-square-foot San Bruno, Calif., location in San Francisco and the roughly 530,000 square-foot Kirkland Urban, which the company acquired in 2019 and is situated 14 miles from Seattle’s dowtown. Additionally, Google owns some 4.4 million square feet across three properties in Manhattan. Recently, the company unveiled plans for a massive, 80-acre mixed-use development in downtown San Jose, Calif.

Putting space to good use

Almost a year into the pandemic and physical office occupancy hasn’t cracked 30 percent for the country’s top 10 largest markets, even though some metros, specifically Texas cities, have fared a bit better, Kastle Systems data shows. With employees working remove and so much unused space available, office occupiers are rethinking their space to accommodate the needs of workers in a post-pandemic world.

Google is joining other companies offering their unused space for the fight against COVID-19. Last week, Amazon announced it will work with Virginia Mason Franciscan Health to organize pop-up clinics to administrate vaccines at their facilities. In a recent CNBC interview, Rudin Management CEO William Rudin said his company may turn some of its empty retail space into testing sites.

The post Google Opens Up Offices for Vaccine Campaigns appeared first on Commercial Property Executive.

Cascadian. Image courtesy of Tim Rice Photography

Partners Group and Unico Properties have celebrated the placing of the final beam on Cascadian, downtown Seattle’s latest sustainable office building. Sellen is the general contractor of the nine-story project, which features an in-built solar energy system.

READ ALSO: Vaccine to Trigger Q3 CRE Recovery: Report

After breaking ground in September 2019, the Class A office development is expected to deliver in the summer of 2021. Upon completion, Cascadian will offer 211,066 square feet of creative office or life science space, with average floorplate sizes between 25,000 and 30,000 square feet. The project also calls for a 7,300-square-foot rooftop terrace and outdoor spaces for tenants.

Located at 330 Yale Ave. N. in South Lake Union’s Cascade neighborhood, the office will have nearby access to Interstate 5 and Metro and Sound Transit Express stops. Cascadian is also situated near Seattle’s central business district that is home to Amazon’s corporate headquarters and Facebook’s Dexter office.

Aerial view of the Cascadia neighborhood of South Lake Union, a growing tech hub in Seattle. Image courtesy of Tim Rice Photography

Salmon-safe sustainability

Ron Lamontagne, Partners Group’s managing director & co-head of private real estate Americas, said in prepared remarks that the Cascadian project aligns with the company’s focus on sustainability. The office will be equipped with an in-built 92 kW solar energy system that will offset 8 percent of the building’s total energy use, according to Unico. The building’s design has earned a LEED Platinum pre-certification, as well as a Salmon-Safe certification, a regional designation that aims to protect salmon habitats through minimizing the impact of developments.

Shortly after the groundbreaking of Cascadian in 2019, Unico teamed up once again with Partners Group to acquire a 227,811-square-foot mixed-use building in Bellevue, Wash., in an off-market transaction. Unico also bolstered its Seattle office portfolio with a $236 million acquisition of a 365,674-square-foot Class A property in October 2019.

The post Unico Properties JV Tops Out Seattle Project appeared first on Commercial Property Executive.

South Seattle Distribution Center. Image via Google Maps

LaSalle Investment Management has finalized the $72.6 million sale of South Seattle Distribution Center, a three-building industrial park totaling 315,392 square feet in Seattle. Charlie’s Produce acquired the warehouses, according to King County records. The complex previously traded in December 2013, when Metzler Real Estate sold it for $38.7 million, CommercialEdge data shows.

The new owner financed the purchase with a $71.7 million loan provided by KeyBank. The mortgage also encumbers a 104,099-square-foot warehouse just south of the current assets. Charlie’s Produce acquired that building for $17 million from a group of private investors in October, public records show.

Located on 10 acres at 3844 and 3800 First Ave. S. and 3601 Second Ave. S., the three facilities were built in 1949, 1968 and 1980, respectively. The properties have a total of nine grade-level and 17 dock-high doors. The Second Avenue property has a two-level office component.

Situated in Seattle’s Industrial District, the complex is a short distance from Interstate 5 and 3 miles north of King County International Airport, home to several Boeing facilities. Approximately 5.5 million square feet of industrial space is within a mile of the properties, according to CommercialEdge, with major tenants including UPS, DHL and Food Service International.

In December a partnership between LaSalle Investment Management and Stream Realty sold Park Row Logistics Center, a 155,425-square-foot warehouse in Arlington, Texas. Clarion Partners acquired the fully leased facility.

The post LaSalle Investment Sells Seattle Logistics Asset for $73M appeared first on Commercial Property Executive.

Image by Gerd Altmann via Pixabay

Skanska has divested its 95 percent interest in 2+U, a 38-story office tower in Seattle, Wash., selling it to South Korean financial group, Hana Alternative Asset Management, alongside Hana Financial Group, for SEK 5.5 billion, or around $669 million. Hana will immediately start operations of the 2+U building.

READ ALSO: Taking Stock of Office’s Future

Located in Seattle’s central business district at 1201 2^nd Ave., 2+U encompasses a total of 703,000 square feet of office space, with floorplates ranging between 14,390 and 30,659 square feet. The building also features 17,000 square feet of retail space across six floors and has an open-air community hub on the ground floor. Thanks to its green features, such as EV charging stations, the tower is proposed for LEED Platinum certification.

Due to its central location, the office is easily accessible via public transportation and is also close to interstates 5 and 90. The building is situated about 6 miles from the King County International Airport.

Skanska started the construction of 2+U in the second quarter of 2017. Both the exterior and interior elements were completed by the third quarter of 2019. The office portion of the building was already 60 percent leased about four months before its completion, when Dropbox signed a 120,886-square-foot lease in April 2019. Other tenants include Qualtrics, Indeed.com and Spaces.

The post Skanska Sells Stake in Seattle Tower for $669M appeared first on Commercial Property Executive.

Image via Pixabay.com

West Coast Self-Storage has opened Summit Heated Self Storage, an 843-unit facility in Tacoma, Wash. The development team included architecture firm Site + Plan + Mix and JPR Construction.

Summit Heated Self Storage totals 105,349 square feet of rentable storage space. The facility includes indoor units and outdoor access units. The indoor units range from 5 x 5 to 10 x 30, while the outdoor ones range from 10 x 10 to 12 x 30. The new facility also has 79 RV storage spaces ranging from 12 x 24 to 12 x 50.

The post West Coast Self-Storage Opens New Tacoma Facility appeared first on Commercial Property Executive.

Waterfront Place at Yarrow Bay

American Realty Advisors has sold Waterfront Place at Yarrow Bay, a 54,747-square-foot office property in the Seattle suburb of Kirkland, Wash., for $45 million. Documents filed with King County indicate the buyer is Progeny 3. The asset last changed hands in August 2014 for $31.4 million, according to CommercialEdge data. 

Located at 5209 Lake Washington Blvd. NE, the three-story Class A building opened in 2008 and is home to a mix of tenants including Bluetooth SIG, MacroHealth and TriStar Finance. Waterfront Place has 25,000-square-foot floorplates, an on-site conference center and access to Lake Washington’s waterfront. Parking is available outside and underneath the building at a ratio of 3.4 spaces per 1,000 square feet.

The property, just south of the mixed-use Carillon Point development, is less than 10 miles northeast of downtown Seattle. The asset is 3 miles north of Vulcan Real Estate’s 555 Tower and West Main, two Amazon-leased projects totaling 2 million square feet in nearby Bellevue.

The post American Realty Advisors Sells Suburban Seattle Office Asset appeared first on Commercial Property Executive.

6750 S. 228th St.

REI has completed the $24.6 million disposition of its 169,081-square-foot headquarters in Kent, Wash. Bridge Development Partners acquired the property, according to King County records.

Located on 16 acres at 6750 S. 228th St., the complex encompasses four buildings completed in 1988 and 2000. The property has served as the seller’s corporate offices for the past 27 years, CommercialEdge data shows. The office park has an on-site café and a parking ratio of 4 spaces per 1,000 square feet. 

The new owner intends to raze the existing buildings and develop two warehouses on the site. Building A will span 50,529 square feet and include two drive-in doors, 11 dock-high doors and 32-foot clear heights. The 258,499-square-foot Building B will feature two grade-level doors, 32 loading docks and a 36-foot clear height. The development is slated for completion in the first quarter of 2022. JLL Managing Director Chris Spofford, Vice President David Cahill and Associate Connor Raffety will oversee leasing for the industrial property.

In September, REI sold its recently developed corporate campus in Bellevue, Wash., for $390 million to Facebook. The 400,000-square-foot property is designed to LEED standards and has approximately 15,000 square feet of retail.

The post REI Sells Suburban Seattle HQ for $25M appeared first on Commercial Property Executive.

1918 8th Ave. building in Seattle. Image via Google Street View

Hudson Pacific Properties Inc. and Canada Pension Plan Investment Board will soon add the trophy office tower at 1918 8th Ave. in Seattle to their jointly owned portfolio of assets. The partners will acquire the approximately 668,000-square-foot building from institutional investors advised by J.P. Morgan Asset Management, for $625 million.

Hudson Pacific and CPP Investments are expected to close on the acquisition of 1918 8th Ave. by year’s end. 

Standing 36 stories above the Denny Triangle neighborhood in downtown Seattle, 1918 8th Ave. made its debut in 2010 as a development project of Schnitzer West. In 2011, J. P. Morgan purchased the asset from the developer for $350.5 million, according to King County records. Today, the LEED Platinum-certified property is 98 percent leased, with Amazon serving as anchor tenant in a 460,000-square-foot space that the e-commerce giant committed to in 2011, before the ownership change. RBC Wealth Management and KPMG are also among the names on the tenant roster at the building, where the average remaining lease term is 10 years.

READ ALSO: Top 10 LEED-Certified Buildings in Seattle

Office users have been drawn to more than the asset’s premier office space—1918 8th also features a host of amenities, including ground-level retail space, a central conferencing facility, a fitness center and a location within two blocks of light rail, streetcar service and dozens of bus lines.

Hudson Pacific will possess a 55 percent stake in the joint venture that will own 1918 8th, leaving CPP Investments with the remaining 45 percent interest, per terms of the sales agreement. Additionally, Hudson Pacific will take on property leasing and construction management responsibilities. The joint venture partners plan to place a secured, non-recourse loan for roughly 50 percent loan-to-cost from an unidentified institutional lender.

Buying and Selling in Puget Sound

Seattle’s office market is suffering the same pandemic-related uncertainties as most other major metros across the country; however, the investment community remains keen on the city and buyers and sellers are beginning to get off the sidelines. “In a solid sign of future growth, sales activity has rebounded slightly, and pricing is up year over year,” according to a third quarter 2020 report by Colliers International. While sales volume is down 78.3 percent year-over-year in Seattle, the average price per square foot increased 66.2 percent over the same period.

Recent office transactions in Seattle include Wright Runstad & Co., Shorenstein Properties and J.P. Morgan Asset Management-advised investors’ sale of the 345,500-square-foot Block 16 office building in The Spring District to a Brookfield Asset Management Real Estate Fund for $365 million.

The post Seattle Trophy Office Tower to Change Ownership in $625M Deal appeared first on Commercial Property Executive.

2340 Cousteau Court in Vista, Calif. Image via Google Street View

Elion Partners, of Miami, has acquired four last-mile industrial distribution assets on the West Coast, aggregating 425,000 square feet, for a total of $83 million. Elion reportedly intends to continue an investment strategy focused on first-, middle- and last-mile logistics properties, targeting core urban logistics hubs near large population centers in infill coastal markets.

READ ALSO: Supply Chain Resiliency to Boost Logistics Demand

The individual properties are:

• 2340 Cousteau Court, Vista, Calif., in the San Diego metro; 134,299 square feet
• 6955 Consolidated Way in San Diego; 82,781 square feet
• 33401 Central Ave., Union City, Calif., in the Bay Area/Alameda County; 94,976 square feet
• 6700 Hardeson Road, Everett, Wash., in the Seattle metro; 112,924 square feet

The sellers were not disclosed, but it appears that there were multiple companies, possibly separate sellers for each asset.

The addition of these assets provides the company with immediate operational cost-saving efficiencies, Shlomo Khoudari, managing partner at Elion Partners, said in prepared remarks.  

Elion expanded to the West Coast in April with the addition of James Lambert, who joined the firm from Amazon Logistics, as senior managing director of industrial investments.  

Accelerated e-commerce adaptation combined with the need for supply chain resiliency and diversification have been the primary demand drivers for the asset class, according to Lambert. As retailers and manufacturers increase their level of safety inventory and look to diversify their supply chains, strategically located distribution centers will be vital to their success, Lambert added in prepared remarks.

Just a bit of recovery

Separately, Elion announced the purchase of a 93,636-square-foot last-mile logistics asset in Florida, a former Bennett Auto Supply distribution center, at 3141 S.W. 10th St. in Pompano Beach, for $12 million.

The San Diego industrial real estate market bounced back in the third quarter with positive absorption of 876,800 square feet, versus negative absorption of 901,000 square feet in the second quarter, according to a recent report from Cushman & Wakefield.

Nonetheless, rents remain down compared with 2019. Countywide, the average asking rent for industrial space was $1.13 per month per square foot, triple-net, versus $1.18 per month 12 months earlier, also according to Cushman & Wakefield.

The post Elion Partners Expands West Coast Last-Mile Portfolio appeared first on Commercial Property Executive.

Block 16 of The Spring District. Image courtesy of McClure Images

Canada’s Brookfield Asset Management has acquired a new office building fully leased to Facebook within The Spring District, a mixed-use neighborhood being developed by Wright Runstad & Co. and Shorenstein Properties in Bellevue, Wash., for $365 million. The developers, together with institutional investors advised by J.P. Morgan Asset Management, sold the Block 16 building within the 36-acre business district.

READ ALSO: Top 10 Office Projects Under Construction in Seattle

The 11-story, 343,528-square-foot building at 1227 124^th Ave. NE is the first large-scale building to begin development in The Spring District, having started work in the first half of 2018, with $107.5 million in construction financing. Facebook signed a 13-year lease for the building in 2019, as part of the company’s expansion in the Seattle area.

The Menlo Park, Calif.-based tech giant has also inked leases for 325,000 square feet at Block 6 and 200,000 square feet at Block 24 within the same development. The Spring District is also home to Recreational Equipment Inc.’s recently completed headquarters complex, which Facebook acquired in September, paying $390 million for the 400,000-square-foot asset next door to Block 16.

Emerging projects

Out of a planned 24 buildings in The Spring District, 16 have been built so far. Located across Lake Washington from Seattle, the district houses the University of Washington’s Global Innovation Exchange, which opened in 2017, along with more than 800 residential units and a variety of public spaces.

Situated east of Interstate 405, the transit-oriented development is slated to add two more large-scale projects totaling 530,000 square feet of office space by 2023, with more development in the pipeline. The East Link extension of the Sound Transit system, which will connect the district with 40 miles of light rail in the Puget Sound region, is scheduled to begin service in the same year.

The post Brookfield Buys Facebook-Leased Building for $365M appeared first on Commercial Property Executive.

Columbia West Building. Image via Google Street View

Columbia West Properties has sold the Columbia West Building, a 137,349-square-foot office asset in Bellevue, Wash., to Swift Real Estate Partners for $72 million, according to Yardi Matrix. Walton Street Capital provided the buyer with $58 million in acquisition financing.

The property previously traded for $47 million in December 2008, when Columbia West acquired it from Pistol Creek Co.

Located at 155 108th Ave. NE, the property was completed in 1986 and is home to a diverse mix of tenants, including Thomson Reuters, several law firms and the building’s namesake. The eight-story asset has a fitness center and a parking structure with 310 spaces. The structure also has 8,000 square feet of ground-level retail space, occupied by a credit union and a bistro.

The Columbia West Building is in the heart of downtown Bellevue. In September, less than half a mile from the site, Amazon inked two leases for a planned, 2 million-square-foot expansion. Developer Vulcan Real Estate broke ground on the projects in February, with the towers expected to deliver in 2023.

The post Swift Real Estate Pays $72M for Seattle Office Asset appeared first on Commercial Property Executive.

9860 40th Ave. S. Image via Google Maps

Blackstone Group has finalized the $11.4 million acquisition of a 48,000-square-foot warehouse and distribution center in Seattle. A private investor sold the property, according to King County records. The asset last changed hands in 2005 for $3.5 million in a 1031 exchange.

Located on 2 acres at 9860 40th Ave. S., the building was completed in 1967. For the past 15 years, the property has served as a manufacturing facility and distribution center for Noble Wines, which was acquired by The Winebow Group in 2015. The single-story facility has a 7,505-square-foot office component along with one grade-level and nine extra-large dock-high loading doors.

The property is a short distance from Interstate 5 and 3 miles from King County International Airport. Other companies with facilities in the immediate vicinity include Steeler, Harrington Industrial Plastics and Pacific Grip & Lighting. Downtown Seattle is 9 miles northwest of the site.

In August, Blackstone completed the disposition of a fully leased, eight property-portfolio totaling 1.2 million square feet in Greenville, S.C. Sealy & Co. purchased the assets, marking its first acquisition in the state and the second largest in the company’s history.

The post Blackstone Acquires Suburban Seattle Warehouse appeared first on Commercial Property Executive.

A total of 36 projects received LEED certifications in the mentioned time frame, with developments ranging from residential and office use to hospitality and public properties. Most office projects on the list were completed in 2019 or 2020, further underpinning office developers’ growing interest in environmentally friendly projects.

1. 800 Fifth

800 Fifth

USGBC started the year with its first Platinum recertification granted to the 800 Fifth property in January. The project earned 81 points on the scorecard. EQ Office acquired the property in 2019 for $540.4 million. The tower received the highest certification in 2015, and at the time it marked the 12th building developed or managed by Hines to receive this designation.

In addition to earning LEED, the property has earned the Energy Star label every year since 2005. Since 2000, the building has completed more than 27 green activities that achieved outcomes of water use reduction, sustainable site selection and development, responsible materials selection and waste management, enhanced indoor environmental quality, energy-efficient operations and design. The tower has maintained a minimum of 98 percent occupancy since it opened.

READ ALSO: Top 10 Office Projects Under Construction in Seattle

2. 818 Stewart St.

818 Stewart Street

Totaling more than 232,000 square feet of office space, 818 Stewart St. has achieved LEED v4.1 O+M: Existing Buildings Gold certification in March 2020 with a scorecard of 73 points. Additionally, since 2019, the property has been Energy Star Certified with 78 points. J.P. Morgan Asset Management acquired the 14-story office building in a $129.3 million portfolio transaction in 2011. The building is home to tenants such as Seattle Children’s Research Institute, Rakuten USA Inc., Hagens Berman and DCI Engineers.

3. Block 25 V3

Block 25 V3

Block 25 is a 14-story, mixed-use building totaling more than 244,000 square feet. Located at 630 N. Boren Ave., the property includes ground-floor retail space, office space from the second floor to the sixth floor, and residential space from the seventh floor to the 13th floor, while the top floor features residential amenities. USGBC awarded the property LEED 2009 Core and Shell Gold certification in May 2020, with a scorecard of 71 points. 

4. Block 31 V3

Block 31 V3

Dubbed the Lakefront Blocks, Block 31 and Block 25 serve as Google’s office campus. The two-building Block 31 consists of more than 433,000 square feet of office space, ground-floor retail space and 79 residential units. Located at 625 N. Boren Ave., the 14-story buildings achieved Gold certification with a 67-point scorecard. Owned by Vulcan Real estate, the 2019-built assets are both Salmon-Safe certified and include stormwater systems to minimize runoff that can carry pollutants into nearby waterways and Puget Sound.

5. 333 Dexter

The two-tower, 635,000-square-foot office property in the Lake Union submarket achieved LEED 2009 Core and Shell Gold certification earlier this year in April. The 12-story buildings attained 63 points on the scorecard. Kilroy Realty’s asset was also Energy Star certified in 2013 with 92 points. Apple has fully leased 333 Dexter.

Bounded by Dexter Avenue and Highway 99/Aurora Avenue, the property is close to the Space Needle and has direct access to key regional transportation routes, including the SR-99. Located at 333 N. Dexter Ave., on Seattle’s primary north-south bike highway, the property’s design embraces bike culture and will include a two-floor bike facility with 128 lockers, 12 showers and 340 bike racks directly accessible from the street level.

6. Viewpoint

Located at 2401 Elliot Ave., Unico Properties’ 133,000-square-foot office building achieved LEED v4 O+M: Existing Buildings Gold certification earlier this year. The five-story property obtained a 62-point scorecard. The company has owned the building since 2017, when it acquired it for $65 million from Nuveen Real Estate. This building owes its green status to seven sustainable activities that achieved outcomes of energy-efficient operations, water use reduction, responsible materials selection and waste management, and enhanced indoor environmental quality. Built in 2000, Viewpoint is home to tenants such as WeWork and Pacific Market International LLC.

7. Met Park North

Met Park North

Owned and managed by Hudson Pacific Properties, Met Park North at 1220 Howell St. consists of more than 190,000 square feet of office space and received LEED v4 O+M: Existing Buildings Gold certification with a scorecard of 62 points. The company acquired the 11-story property in 2013 for $106.4 million, as part of a portfolio transaction.

Completed in 2000, Met Park North is part of the Met Park campus, which features roughly 700,000 square feet of office and retail space. Met Park East & West also reached a 61-point scorecard, achieving LEED 2009 Existing Buildings Operations and Maintenance Gold certification in 2014. The LEED scorecard provided by USGBC shows that Met Park North received a total of 14 out of 18 points for location and transportation, two out of 10 for sustainable sites, six out of 12 for water efficiency, 27 out of 38 for energy and atmosphere, two out of eight for material and resources, six out of 17 for indoor environmental quality, three out of four for regional priority credits and two out of six points for innovation.

8. 505 First

505 First

Located at 505 First Avenue S., the 288,300-square-foot office building is owned and managed by Hudson Pacific Properties, which acquired the asset for $155.9 million in the same portfolio deal as Met Park North. The seven-story asset received LEED v4 O+M: Existing Buildings Gold certification with a scorecard of 61 points and was also awarded Energy Star certification in 2020 with 79 points for its seven green activities.

The property has received a total of 15 out of 18 points for location and transportation, three out of 10 for sustainable sites, eight out of 12 for water efficiency, 14 out of 38 for energy and atmosphere, four out of eight for material and resources, eight out of 17 for indoor environmental quality, four out of four for regional priority credits and five out of six points for innovation.

READ ALSO: Top 10 LEED-Certified Buildings in Illinois in 2019

9. 5th & Columbia Tower

5th & Columbia Tower

F5 Tower, also known as The Mark or the 5th & Columbia Tower, is a 48-story building featuring 25 levels of office space totaling 516,000 square feet leased entirely by F5 Networks, and two floors of penthouse mechanical space. Ten floors serve as luxury hotel space, four floors are dedicated to conference facilities and seven levels provide below-grade parking. The tower also features a restaurant.

In June, the asset received LEED-CS 2.0 Silver certification with 29 points on the scorecard. The nearly 700,000-square-foot tower is owned by KKR and managed by Daniels Real Estate. KKR acquired the asset in December 2019 for $458 million. To achieve Silver certification, the ownership implemented a rainwater reuse system, a 35-foot living wall and rooftop solar energy equipment. The glass walls of the building were designed to regulate temperature and energy use by selectively letting in sunlight.

10. 192724 Seattle Restack Floors 40 & 42

Located at 999 Third Ave., the 47-story building consists of nearly 1 million square feet of office space. Owned and managed by EQ Office, the property received LEED v4 ID+C: Commercial Interiors Certified certification with 45 points on the scorecard. The property has also been Energy Star certified since 2013, with 92 points. EQ Office acquired the asset for $588.3 million in 2019.

The property has received a total of 17 out of 18 points for location and transportation, four out of 12 for water efficiency, 13 out of 38 for energy and atmosphere, three out of 13 for material and resources, one out of 17 for indoor environmental quality, two out of four for regional priority credits and five out of six points for innovation.

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10801 and 10809 120th Ave. NE. Image via Google Maps

Alco Investment Co. has finalized the $28.5 million acquisition of two flex industrial buildings totaling 113,022 square feet in Kirkland, Wash. Systima Technologies sold both properties, according to King County records. The assets previously changed hands in 2013 and 2016, when a private investor sold them for a total of $12 million.

Located on 11 acres at 10801 and 10809 120th Ave. NE, the two buildings were completed in 1966 and 1983. The properties have an even 50-50 split of office and industrial space, as well as 2,080 square feet of laboratory space. At the time of the deal, one of the facilities was occupied by the seller, Systima Technologies, while the other was home to Pivotal Commware, a company working to improve the efficiency of 4G and 5G wireless data transmission.

The properties are a short distance from Interstate 405 and 14 miles northeast of downtown Seattle. Other companies with a presence in the I-405 industrial corridor include Amazon, SERVPRO and Gensco.

Earlier in September, Iron Mountain closed the $44.5 million sale of a 276,330-square-foot industrial building in Kent, Wash. CenterPoint Properties acquired the single-story warehouse.

The post Seattle Flex Portfolio Trades for $29M appeared first on Commercial Property Executive.

First & Eagle

A partnership between California State Teachers’ Retirement System and Beacon Capital Partners has completed the $50.7 million acquisition of First & Eagle, a 70,647-square-foot office building in Seattle’s Belltown neighborhood. CalSTRS holds a 95 percent stake in the BCal joint venture, which invests in U.S. office assets. Beacon owns the remaining 5 percent interest. 

A private investor was the seller, according to King County records. The asset last changed hands in 2018, when Econet sold it for $21.5 million, Yardi Matrix shows.

Located at 3005 First Ave., the four-story building was completed in 1980. In 2012, Econet executed a multi-million dollar capital improvement plan on the asset, according to Yardi Matrix. Later, the building’s four-story atrium was converted into additional office space, according to Puget Sound Business Journal. The tenant roster includes Universal Cells and Econet subsidiary Univera. The property has two passenger elevators, a fitness center, showers and locker rooms. The site is 1.5 miles from downtown Seattle.

In March, CalSTRS received a $991.8 million loan from New York Life Insurance Co. The note encumbers a 7 million-square-foot, multi-state portfolio which included five office properties, nine industrial assets and three residential communities. JLL arranged the financing for the borrower.

The post CalSTRS JV Pays $51M for Seattle Office Asset appeared first on Commercial Property Executive.

19826 Russell Road S.

Iron Mountain has completed the $44.5 million sale of a 276,330-square-foot industrial property in Kent, Wash. CenterPoint Properties acquired the facility, according to King County records. The asset last changed hands in 2001, when Equity Industrial Partners sold it for $11 million, Yardi Matrix data shows.

Located on 12 acres at 19826 Russell Road S., the single-story warehouse was built in 1981 and expanded in 1990. The facility has an 8,940-square-foot office component, one drive-in door and 78 loading docks. The seller has used the property for document and data storage and the secure shredding and disposition of IT assets.

The site is a short distance from Boeing Industrial Park and two Amazon fulfillment centers. The property is 2 miles from Interstate 5 and roughly 5 miles from Seattle-Tacoma International Airport. Downtown Seattle is 15 miles away.

In May, Iron Mountain finalized the $9 million disposition of a 145,000-square-foot industrial facility in Oklahoma City. Kessinger Hunter Capital acquired the asset, backed by a seven-year, $3.5 million acquisition loan from BOK Financial.

The post Iron Mountain Sells Seattle Warehouse for $45M appeared first on Commercial Property Executive.

REI Co-op Bellevue Campus. Image courtesy of Wright Runstad & Co.

Facebook has acquired REI Co-op’s recently completed corporate campus in Bellevue, Wash., for $390 million. The tech giant also purchased roughly 6 acres of land. Additionally, Wright Runstad & Co., the site developer, teamed up with Shorenstein Properties to buy an undeveloped 2-acre portion of the property.

READ ALSO: Amazon’s Bellevue Expansion Continues With 2 MSF Lease

The 400,000-square-foot asset at 1209 124th Avenue NE was designed to meet LEED standards and includes almost 15,000 square feet of retail and more than 200 parking spaces. The property is situated in the city’s Spring District neighborhood, next to Block 16, Wright Runstad & Co.’s 11-story, 338,000-square-foot office building where Facebook had signed a 13-year lease back in 2019.

The acquisition comes after Facebook significantly grew its metro Seattle presence, with more than 1.5 million square feet leased over the last two years, according to Yardi Matrix. The expansion includes some 200,000 square feet at Arbor Blocks, which changed hands last November. Additionally, the social media giant teamed up with Gehry Partners to design its Building X project, which is set to house the Oculus virtual reality unit. In 2017, Facebook acquired a 15-acre property from Crane Electronics in Redmond, Wash., for $20 million, with plans to develop a five-story building totaling 350,000 square feet of office space. The project at 10201 Willows Road NE is designed to meet LEED Silver standards.

Following the deal, Facebook and REI will each donate $1 million to the Eastrail, a 42-mile trail built on a historic railroad line on the east side of Lake Washington, from Renton to Snohomish County.

The post Facebook Pays $390M for REI Co-op Bellevue Campus appeared first on Commercial Property Executive.

Vulcan Real Estate broke ground on both Amazon-leased projects earlier this year, with expected completion in 2023. The 42-story 555 Tower will rise on 2 acres at 555 108th Ave. NE. Designed by NBBJ to achieve LEED Silver certification, the property is set to feature multiple outdoor terraces at various heights, a courtyard plaza and 28,400 square feet of retail space which will include a two-story, 22,000-square-foot pavilion fronting the pedestrian corridor.

Developed on 4 acres at 117 106th Ave. NE on the former site of the Bellevue Plaza shopping center, the 1 million-square-foot West Main is slated to consist of three buildings interconnected by a 20,000-square-foot landscaped plaza. Amenities will include two-story lobbies with small-scale retail kiosks totaling 33,000 square feet, bicycle accommodations and below-grade parking. With Graphite Design Group and Compton Design Office serving as project architects, West Main aims for LEED Gold certification.

West Main and 555 Tower will be less than 1 mile apart, some 10 miles east of downtown Seattle, west of Interstate 405. Both development sites are within walking distance of the future Bellevue Downtown Link, the light rail station slated for a 2023 opening as part of Sound Transit’s East Link extension.

Bellevue 600 approaches Phase II

Amazon also intends to start construction on the second phase of Bellevue 600, its 1.2 million-square-foot, two-building development adjacent to Bellevue Transit Center. The company acquired the 3.5-acre site for $194.9 million from Equity Commonwealth in April 2019 and intends to kick off construction once more within weeks.

Located at 600 108th Ave. NE, Bellevue 600 is Amazon’s first construction project in the city where the company started 26 years ago. Its first phase includes a 43-story office tower, expected to become Bellevue’s tallest.

Phase II will consist of a 27-story building which will replace an existing 10-story office structure. The 300,000-square-foot development will also include retail space. Designed by NBBJ to achieve at least LEED Gold certification, the project’s second phase is slated for completion by 2025, one year after the first.

The post Amazon’s Bellevue Expansion Continues With 2 MSF Lease appeared first on Commercial Property Executive.

2124 Fourth Ave.

St. John’s College has completed its $15.5 million disposition of a 25,487-square-foot office building in Seattle’s Bellevue neighborhood. King County acquired the property, which serves as the Downtown Public Health Center, according to public records. The asset last changed hands in 2014, when Nicola Wealth sold it for $10.1 million, Yardi Matrix shows. 

The tenant has been at the location since 1990, when it signed a triple-net lease with an expiration date in May 2021. The health authority provides several medical services at the site, including family medicine, maternity screening, dentistry services and COVID-19 testing.

Located at 2124 Fourth Ave., the four-story building was completed in 1952. The property is within 2 miles of the Swedish Hospital, a 1,571-bed medical center, and the 336-bed Virginia Mason Medical Center in downtown Seattle.

The asset is also a short distance from 400 University at Rainier Square, a 122,000-square-foot office project which broke ground in June. The development team is a partnership between Intercontinental Real Estate Corp. and Wright Runstad & Co.

The post Seattle Public Health Center Trades for $16M appeared first on Commercial Property Executive.

Murphy McCullough, Executive Vice President, Skanska. Image courtesy of Skanska

Boasting more than 24 years of commercial real estate experience, industry veteran Murphy McCullough has been with Skanska for nearly 10 years, and for the last four years he’s led the company’s commercial development operations team in Seattle. Following their latest skyscraper, 2+U—a 38-story, 665,000-square-foot office tower in downtown Seattle— McCullough and his team will oversee plans for two projects in the metro: The Eight, a 540,000-square foot office building, and The Kaye, a 320-unit community, both currently in the design and entitlement stages.

“We see Seattle coming out of this crisis stronger than ever and are focused on our longer-term strategy to develop office and multifamily buildings,” he told Commercial Property Executive. McCullough also shares his thoughts about Bellevue, Seattle’s overall market and the impact the pandemic has had on the metro’s commercial real estate industry. Additionally, he talks about how the coronavirus has impacted the company’s development projects.

READ ALSO: 5 Things to Do Now to Prepare for CRE Restructuring

You are a native of the Greater Seattle area and you’ve been in the real estate business for almost three decades. Tell us about Seattle’s CRE market before the pandemic.

McCullough: Over the past three decades, Seattle’s economy has grown dramatically into an impressively diverse and powerful regional economy. Some of the largest tech companies in the world were either founded here our have a major presence here, such as Amazon, Microsoft, Google, Facebook, and now Apple. 

Other major industries have fueled the growth as well, from aerospace to educational, retail, biomedical and major foundations. We have added nearly 500,000 jobs since 2011. All of this has fueled a real estate boom. Seattle and Bellevue went from developing very few office and multifamily high-rise buildings early in my career to so many buildings you can’t count them. It’s been an incredible experience to be a part of.

What impact has the coronavirus outbreak had on demand for office space in the Seattle area?

McCullough: Seattle and Bellevue remain one of the healthier office markets in the country. Most of the square footage under construction in this region is leased to high credit tenants and overall vacancy is relatively low. However, subleasing is increasing and there is some uncertainty in the marketplace.

Companies that still have the majority of their employees working remotely anticipate needing more space per person in order to keep their employees safe. But at this point, tenants are in a wait-and-see mode. I expect that, similar to the last cycle, Seattle will be one of the first to emerge out of this human health-induced recession.

How are Seattle developers navigating the COVID-19 crisis?

McCullough: Most developers continue to move their projects forward and stay positive. There have been office projects in Bellevue that have actually broken ground during this crisis, given the intensely tight market and strong demand from large tech users. Since most buildings have already been developed and leased to high credit tenants—like our newest project 2+U—I’ve seen many developers focused on retail operators who may need some support during this difficult time.

How has the health crisis affected the projects you are currently working on in Seattle and your business overall?

McCullough: Having the ability to self-finance our own projects gives us the freedom to test-and-learn with a number of different safety and wellness features that will be must-haves for tenants moving forward. Our two upcoming projects, The Eight, a 540,000-square foot office building, and The Kaye, a 320-unit community, are currently in the design and entitlement stage.

We’re working closely with our architects to bring post-COVID-19 floorplans and scenarios to the forefront. We’ve seen greater interest in touchless features, connection infrastructure, tenant-controlled HVAC systems, maximum air filtration and UV lighting. These features that we have offered for years, have become almost a requirement for going back to work in a safe environment. 

What is your strategy to overcome these challenging times?

McCullough: Skanska funds its projects 100 percent from its balance sheet and uses no outside equity or debt. We are fortunate in Seattle and frankly all our U.S. and international markets, to be in a very good position for this crisis and for the future. This allows us to be more selective of the projects and land acquisitions that we purchase, as well as the amenities and features that we place in our buildings.

Fully leasing 2+U, our latest project in downtown Seattle, to multiple high credit office tenants was a major success for our team. With two more developments in the works, our strategy is to stay the course while figuring out ways to do the same thing in a different way. Take communication with current and potential customers, for instance. Prior to COVID-19, in-person site tours were a part of the daily regime, now we encourage more virtual meetings and walk-throughs to stay engaged with prospective tenants and partners.

READ ALSO: Scouting Post-Pandemic Potential

With the coronavirus still seen as a threat to the economy, how do you think the office industry will perform going forward if social distancing protocols and work-from-home policies continue to be the norm?

McCullough: Change is inevitable. This crisis accelerated trends that were already in place and growing—almost creating the future faster. Flexibility will be key, so office development will need to adapt faster than ever. We do not expect to see a major reduction in office space—it’s likely that more people will travel less, but will need more office space per person and will work from home a day or two a week—in the long run. 

At Skanska, we have always focused on human health and sustainability and this crisis has helped push this even further to serve our customers. On the multifamily side, we are looking at ways to better accommodate a longer-term trend for working from home one or two days a week, by designing our units differently, creating flex office spaces and ensuring our multifamily and office buildings are equipped with state-of-the-art digital infrastructure.

What are Skanska’s most ambitious plans for the Seattle market?

McCullough: It’s hard to see through this crisis into the future, but like any crisis it will end, and the world will always be different. The initial slowdown in the market gave our team time to take a step back, listen and reconnect with customers to hear what they felt their office spaces would need in the future. Luckily, many of the health-first technology and sustainability amenities that Skanska offers have shifted from the wish list to the customer’s must-have list.

This includes cutting edge, independent HVAC systems, 100 percent outside air filtration, mobile access control, near touchless building access and digital infrastructure to power a touchless experience. We are excited to explore more mobility solutions and capacity management or people-counting technologies for our newer developments. We see Seattle coming out of this crisis stronger than ever and are focused on our longer-term strategy to develop office and multifamily buildings. 

The post Tech Keeps Emerald City Shining, Says Skanska’s Murphy McCullough appeared first on Commercial Property Executive.

West Coast Self-Storage Fircrest. Image courtesy of West Coast Self-Storage

Northwest Building LLC has opened West Coast Self-Storage Fircrest, a facility with 68,450 square feet of rentable space in Tacoma, Wash. The company has chosen West Coast Self-Storage to oversee management operations for the property.

The developer acquired the 4-acre site at 3001 S. Mullen St. for $1 million from Touchstone in 2018, public records show. Deacon Construction served as the general contractor for the Jackson|Main-designed project.

The three-story building provides 738 units, divided between climate-controlled, indoor and drive-up access units. The indoor units range between 25 and 200 square feet, while the drive-up access units are 300 square feet and fitted with individual alarms. All units have high ceilings to make space for larger items. The facility has security cameras, a retail store with moving supplies and a covered loading area.

The property is close to a Home Depot store and 36 miles south of downtown Seattle. Additionally, there are at least 18 other self storage facilities within a 3-mile radius, according to Yardi Matrix data. 

In February, Talonvest secured a $13.8 million CMBS loan for a 64,689-square-foot self storage property managed by West Coast Self-Storage. Wilmington Trust provided a 10-year mortgage with full-term interest-only payments.

The post West Coast Self-Storage Expands Seattle Portfolio appeared first on Commercial Property Executive.