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.

For more news and information visit Blumberg Partners.

Union Investment Buys Amazon Phase VI for $299M

Union Investment, one of Germany's largest real-estate fund managers and the investment arm of the DZ Bank Group, announced that it has purchased the Amazon's Phase VI office complex in Seattle's South Lake Union market for $299 million, or approximately $757 per square foot. Seattle-based Vulcan Real Estate sold the two-building property in a deal brokered by CBRE Group Inc.’s Kevin A. Shannon. Union Investment was advised on the deal by Metzler Real Estate and represented by Mayer Brown, while Vulcan Real Estate was represented by Foster Pepper PLLC.

"Seattle is one of the fastest-growing U.S. cities, and highly attractive to young, well-educated employees, so it provides ideal conditions for our increased international focus," said Martin Brühl, an executive at Union Investment, in a statement. The complex at 515 Westlake Avenue North and 500 Ninth Avenue North was bought by Union for its open-ended, Unilmmo: Europa fund. Amazon Phase VI is part of a 1 million-square-foot expansion of Amazon' South Lake Union campus that Vulcan developed. Two other buildings — Phases VII and VIII — were finished this summer as part of the expansion and are not for sale.

In concert with the announcement, Vulcan said several signature eateries would be moving into the complex’s 15,000 square feet of retail space. Early next year, Ethan Stowell plans to open a Ballard Pizza Co. location in the 500 Ninth Avenue North building. In June, Seattle restaurateur Josh Henderson will open Poulet Galore, Vestal and Cantine Bottle Shop and Bar in the same building. And Seattle dnut company Frost will open a store next summer in 515 Westlake Avenue North.

For more news and information visit Blumberg Partners.

Vulcan Sells Westlake Office Building for $251M

American Realty Advisors announced this week that it had acquired 2201 Westlake, a 12-story office building in the heart of South Lake Union in Seattle, from Vulcan Real Estate. The building, which is home to Amazon and international health nonprofit PATH, traded hands for about $251 million, according to a Seattle Times article. At just over $791 a square foot, the sale sets a record for the highest price paid for a Seattle-area office building, brokers said, topping the $745-a-square-foot paid in 2013 by Munich-based GLL Real Estate Partners for 202 Westlake. CBRE handled the transaction with a team led by Kevin Shannon and supported by the local CBRE office. Vulcan said in a press release that it intends to invest the funds from the property sale toward its continued development efforts, as well as new land and value-add investment opportunities throughout the region.

"We were very pleased by the broad interest we received from institutional investors," said Ada M. Healey, Vice President of Real Estate for Vulcan Inc. "The pricing reflects both the exceptional quality of the asset and the highly-desirable characteristics of the Seattle office market."

"Opportunities to acquire a newly-constructed building with high-quality tenants at a 'Main and Main' location are rare," added Drew Hess, Senior Director, Investment Group for American Realty Advisors. "This purchase secures a fully-leased Class A asset at an ideal location and still offers strong rental growth opportunities beyond an attractive risk-adjusted return."

Developed by Vulcan in 2009, 2201 Westlake is an all-concrete 12-story structure with large office floorplates ranging from 22,000 to 39,000 square feet, expansive window lines, 14 foot floor-to-floor heights throughout the building, 336 parking stalls in a five-level subterranean garage, raised- floor HVAC distribution, and 23,400 square feet of high-quality retail space directly across the street from Whole Foods. In addition to office space, the ground floor of the building takes advantage of the location with high-value retail space, currently occupied by Bang & Olufsen, West Elm, Einstein Bagels, and Ann Sacks Tile & Stone. American is acquiring all of the office and retail components of the mixed-use building that also includes 135 residential units known as the Enso condominiums.

For more news and information visit Blumberg Partners.

Amazon Grabs More Seattle Space

The online retail giant Amazon.com continues to grow in Seattle as it takes another 150,000 square feet of space at 1800 Ninth Avenue, an office building owned by Talon Private Capital, according to a Kidder Mathews report. Amazon has been a titan in the Seattle real estate market in recent years, buying three city blocks from Seattle's Clise family in January of last year to build a 3.3 million square foot office complex, then following that acquisition nine months later by purchasing the South Lake Union headquarters campus it had been leasing from developer Vulcan Real Estate. It's also rumored that Amazon will be leasing 136,000 square feet of space in Metropolitan Park North at 1220 Howell Street.

"Amazon is the undisputed heavyweight champion of downtown Seattle," said Kip Spencer, president of The Spencer Companies, a Seattle real-estate consulting firm.

"In the 25 or 30 years I've been around downtown Seattle, I've never seen anything remotely like what Amazon has done to the market," says Dale Sperling, former president and CEO of Seattle's Unico Properties.

A joint venture of Talon and Prudential Real Estate Investors bought 1800 Ninth in December 2011 from Regence Blue Shield, which leased back about 30% of the space. The 1800 Ninth building is about three blocks from the nearest building Amazon already occupies.

For more news and information visit Blumberg Capital Partners.

City Center Plaza in Bellevue Sold for $375M

CommonWealth Partners, a fully integrated private real estate investment, development, management and operating company based in Los Angeles, California, has purchased City Center Plaza in Bellevue, WA for $374.7 million, or roughly $655 per square foot. According to a Seattle Times article, the purchase price is the highest ever on the Eastside and similar to what Amazon.com is paying Vulcan Real Estate for its 11-building South Lake Union office complex. Cole Real Estate Investments sold the 583,000 square foot office tower on behalf of Cole Credit Property Trust III, Inc. The trust had purchased the property in July 2010 for $310 million from Beacon Capital Partners of Boston.

"When our experienced real estate team brought this opportunity to us in the summer of 2010, despite industry naysayers, we felt this acquisition would be an excellent fit for our growing portfolio of mission-critical corporate properties," said Marc Nemer, Cole's president and chief executive officer. "Today, not only have we seen a 21% increase in the property's value, but we were able to deliver a return of 38% on the equity invested, creating significant value in the portfolio for the benefit of our shareholders."

Located at 555 110th Avenue NE, City Center Plaza was completed in 2008 and designed by Zimmer Gunsul Frasca Partnership. The 26-story Class A office tower serves as the headquarters for Microsoft Bing, which occupies 96.3% of the building.

For more news and information visit Blumberg Capital Partners.

Amazon Paying $1.16B for Global HQ

Last month Vulcan Real Estate announced that it would be putting Amazon.com's 11-building Seattle headquarters on the market; this week, Amazon announced that it would purchase the campus. In what will be the United States' biggest commercial real estate deal so far this year for a single property, Amazon is expected to close on the 1.8 million square foot complex by the end of the year.

"When we originally commenced the disposition process, we did not think Amazon would necessarily be the buyer," said Ada Healey, vice president for real estate at Seattle-based Vulcan. The 11 buildings were built in six phases. "We were fully prepared to have the six phases go to six different buyers."

In addition to the sale, Vulcan also said last month that it would construct two new buildings for Amazon, a $160 million project two blocks west of the existing headquarters that will add 380,000 square feet for Amazon. According to a Seattle Times article, construction of the five- and six-story buildings should start in January, and Amazon should move in by early 2015.

For more news and information visit Blumberg Capital Partners.

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."

For more news and information visit Blumberg Capital Partners.