Vulcan Buys South Lake Union Site for $35M

Seattle-based Vulcan Real Estate has purchased the site at 791 Ninth Avenue North in Seattle's South Lake Union market with plans for a seven-story office project. Vulcan Director of Real Estate Investment Strategy Lori Mason Curran said in an email that the company bought the property with the long term-plan of eventually expanding the Allen Institute, a brain and cellular research center that Vulcan Chairman and CEO Paul Allen launched. Vulcan paid $35 million for the property that sits catty-corner from the new $200 million, 270,000 square foot life sciences building, opened just last year, that serves as the Allen Institute headquarters. An entity related to Walton Street Capital was listed as the seller of 791 Ninth Avenue, which paid $10.5 million for the two-thirds of an acre last February.

Over the past decade, Vulcan Real Estate has played a key role in developing the South Lake Union neighborhood into a hub for creative class employees including renowned life sciences organizations like Seattle BioMed, PATH, the University of Washington School of Medicine and the Institute for Systems Biology. "South Lake Union has become the center of life sciences research for the state," said Ada Healey, vice president of real estate for Vulcan Inc.

"It has been a privilege to watch the Institute grow, and to witness the huge impact the Allen Institute for Brain Science's research and its public resources have had on the broader neuroscience community," said David Anderson, Ph.D., professor of biology and Howard Hughes Medical Institute Investigator at the California Institute of Technology, and Scientific Advisory Board member at the Allen Institute for Brain Science. "I look forward to the next phase of the Institute's growth and productivity [...], and with a deep appreciation for Mr. Allen's generous and farsighted investment in science."

A partnership between Talon Private Capital and Chicago-based Walton Street Capital worked with Lake Union Partners to develop an office project on the site after purchasing it last February. The plans for the development called for roughly 163,000 square feet of office space with 16,000 square feet of ground floor retail, as well as underground parking, with an estimated project cost of $70 million. Lori Mason Curran would not say what, if any, changes Vulcan might make to that project.

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Amazon's Global HQ for Sale

Microsoft co-founder Paul Allen's Vulcan Real Estate announced last Thursday that it would be putting Amazon.com Inc.'s 11-building Seattle headquarters on the market with plans to use the proceeds for other real estate projects in the area. "We have been deeply involved in the redevelopment and revitalization of South Lake Union for over a decade, and the sale of the Amazon campus will allow us to continue to invest in the neighborhood and the community," Ada M. Healey, vice president of Vulcan's real estate unit, said in the statement.

"Vulcan's portfolio is heavily weighted in office and we need to rebalance that distribution," Lori Mason Curran, Investment Strategy Director of Real Estate at Vulcan said in a statement. "With the current low interest rate environment and high values for core assets this feels like a good time to capitalize on market conditions."

Built in the former warehouse district north of downtown, the 1.8 million square foot campus is being listed for sale through CBRE Group Inc. While no asking price was listed, industry experts expect the property to sell for more than $1 billion. According to a Reuters report, Amazon, which only recently moved into its new headquarters, declined comment on whether it would be a bidder to buy the 11 buildings on 1.8 million square feet of land which make up its headquarters. Amazon already has plans to build new offices nearby to house its growing staff.

"If they're going to take the cash and use it to do more development in South Lake Union, I see it only as a good thing," commented Jerry Dinndorf, president of the South Lake Union Community Council.

"The Amazon corporate headquarters buildings represent exactly what core capital wants today: new product featuring durable, credit income streams in great CBD locations. Markets like South Lake Union in Seattle, South of Market in San Francisco and Silicon Beach in Santa Monica, command premium rents because of huge tenant demand," said Kevin Shannon of CBRE in a CoStar Group report. "Technology and corporate tenants love state of the art campuses in amenity rich, transit oriented environments like Amazon's because these locations allow them to attract and retain the best talent in the workforce."

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