Commercial Lease Rates Hitting New Heights In Seattle

seattle sunsetThe Highway 99 Blues Club, established in 2004 and located in the basement of a hundred-year-old brick building, is possibly one of the best blues clubs in Seattle. As reported by The Seattle Times, in June, the business was notified that their rent would be increasing. Somewhat normal and understandable considering the immense growth Seattle overall is experiencing, especially downtown. However, their rent isn’t going up just $500, or even $1,000. Starting in January 2016, the blues club, if they intended on staying, would be responsible for paying $14, 959 a month. That’s an increase of 225 percent (or $10,359 more a month) and how the business sees it, an eviction notice.

The commercial real estate market in Seattle is reaching new heights, quite literally and figuratively speaking, so much so that downtown tenants, like the Highway 99 Blues club, are being squeezed out due to astronomical rent increases. This gentrification of downtown Seattle is well supported, as companies haven’t a problem finding tenants to fill local office space in exchange for a pretty penny. In fact, not only are rents 7.5 percent higher (an average of $36.76 a square foot) than last year, but in June of this year “the vacancy rate was 11.4 percent, down nearly by half from its high of 21 percent five years ago,” according to the Seattle Times.

This rise in lease rates in Seattle, Bellevue, and surrounding areas has been greater than any other metro area in the US, and that includes tech hotspots like San Francisco, San Jose, Boston, and New York, according to the New York based market research firm Reis. Still, Seattle is cheaper than Manhattan, San Francisco, and London, and currently offers a thriving and exponentially growing technology and health industry. In fact, many San Francisco-based businesses are on the hunt for Seattle offices, including cloud-computing giant, Salesforce.com.

It’s been reported that three-quarters of newly occupied office space in King, Snohomish and Pierce counties is located in downtown Seattle. Last year a top floor office space went for $30 a square foot, this year a lower floor office space in the same building is asking $36 a square foot. That’s a 20 percent rent increase. Demand for land is what is moving these prices, as business owners are paying huge premiums and signing large lease transactions in order secure a spot to set up shop.

Adding to the difficultly in securing an already existing office in downtown Seattle or nearby areas, many companies are signing pre-leases on buildings that are still under construction. Some of these companies being:

–          Amazon just leased 817,000-square-feet of Troy Block, which is part of two-building project in South Lake Union.

–          Holland America Line just leased Martin Selig’s new 185,000 square foot building in Lower Queen Anne, set to open next year.

–          Tableau Software is set to lease a new 2016 210,000-square-foot building north of Gas Works Park.

–          And Juno Therapeutics leased 287,000 square foot building which is under construction at 400 Dexter Ave. N in South Lake Union.

It certainly seems “Seattle is a landlords market,” Stuart Williams, managing director of commercial real-estate brokerage JLL told The Seattle Times. This isn’t a playground for the mom and pop smaller tenant. This game is only available for big time tenants ready to pay up, commit to long term leases and wait patiently for their space in the ever changing Seattle metropolis.

Real Estate Steps into the 21st Century with Cloud Based Apps

Seattle, known as a progressive leader in information and technology, houses established companies and growing start-ups alike. As Amazon expands, Facebook moves in, and numerous start-ups take up stake in Seattle’s burgeoning technology hub, it is evident the commercial real estate industry, a sector some would say is lagging on the technological front,  is a major player in assisting these innovative companies set up shop.

According to the Puget Sound Business Journal, in 2014, high-tech tenants accounted for 45 percent of leasing activity in Seattle. That’s a good chuck of business coming from a client base who appreciates system innovation – it would be wise if the real estate sector jumped aboard the techie train and geared their marketing strategy towards their forward thinking client base.

That is exactly what co-founder of Hightower, Brandon Weber and Floored CEO, Dave Eisenberg are monopolizing on. Seattle based, Hightower, takes commercial leasing to that magical place everyone seems to love – the cloud. Allowing for full business execution in the palm of your hand, Hightower allows commercial owners and brokers to manage their entire portfolio, leasing documents, and collaborate with their leasing team all in real time. Joining forces with New York City based company, Floored, a fully interactive 3D visual tool for the real estate industry, Weber and Eisenberg have created a full-bodied leasing platform like no other.

“Tenants struggle to visualize how space might look, landlords spend billions of dollars on speculative space construction,” Brandon Weber, explained to Commercial Observer. “Floored greatly reduces this need by delivering a virtual tour experience showing the tenant exactly how their space will look once built out. We believe this can save Landlords billions in spec build out costs.”

Between Hightower’s mobile app technology and Floored’s 3D visual sophistication, brokers and building owners have the ability to virtually walk clients through available properties that provide such robust example of what the space could look like, that the platform is unmatched with anything else out there. What a refreshing game changer – but it is changing the game?

According to the Puget Sound Business Journal, Weber says Hightower is tracking more than 10,000 vacant office spaces, and that figure is growing 20 percent a month. Hoping to streamline his business for bi-coastal clients, Weber is excited at the prospect of assisting a Los Angeles tenant find property in New York via the Hightower application.

Thanks to new kids on the block, infusing life into the real estate industry, like Hightower and Floored, maybe some of the biggest names in the business will step into the 21st century.

Two Seattle High Rise Buildings Under Design Review

 

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Photo Courtesy of the Daily Journal of Commerce

Two new proposals for towers under review in Seattle’s downtown core. According to the Daily Journal of Commerce, design review meetings have been set for the towers, the first a 39 story residential tower located at 1613 2nd Avenue, and the second a 40 story mixed-use building at 970 Denny Way. The Wood Partners are interested in building the 39 story tower on 2nd Ave, and have listed 1,000 planned sq ft of street level retail space, as well as parking designated for 140 stalls, four levels below ground, and 6 levels above ground. An early review meeting is scheduled for this project on January 20th at 7pm, in Seattle City Hall.

Holland Partner Group is also planning a 400 ft building at the intersection of Denny Way and Terry Avenue North. The design plans include 500 residential units, 17,000 sf of retail space and 450 parking stalls. For more information on Seattle Real Estate, contact your local real estate agent today.

Nine Office Buildings For Sale Around the Sound

This just in: Chicago based private equity real estate firm Walton Street Capital has listed 9 office buildings in the Puget Sound area, according to the Daily Journal of Commerce.Two of the buildings that hit the market are located in downtown Seattle, one at 1111 3rd Ave, and the other (just kitty corner to it), at 2nd & Spring. Six of the other apartmentsbuildings listed are located in Bellevue, and the other is the Island Corporate Center on Mercer Island. The portfolio for sale totals over 2 million sf of office space, a large slice of inventory for the firm to place on the market at one time. Walton Street Capital bought 11 offices in the surrounding Seattle area after a previous owner defaulted on a $900 million dollar loan. Seeing a win-win opportunity, Walton, along with several bankers bought some of that heavily discounted debt, and set themselves up for success to take control of the buildings once the owner defaulted. If you’re in the market to purchase or sell commercial real estate in Seattle, contact your local real estate agent today.

Pacific Place Sold For $271 Million

pac place1998 was a big year for downtown Seattle. Nordstrom completed its move across Pine Street to its shiny new flagship, and just down the street the Pacific Place shopping center opened, finally giving shoppers an alternative to the then-dingy Westlake Center. Can anyone even remember what occupied that block before Pacific Place rose five stories above Pine and Olive?

It appears that the shopping center still has plenty of earning potential, as it was just sold to D.C.-based real estate management company Madison Marquette (along with other unnamed investors) for $271 million, which is believed to be a record for this type of property in Seattle. Additionally, investors are donating $14 million from the sale to the United Way of King County.

According to an article in the Puget Sound Business Journal, Pacific Place sees 6 million visitors annually and it is 90 percent leased. Many tenants have come and gone over the years, and it now houses such upscale retailers as Barney’s New York, Michael Kors, and Tiffany & Co, along with original tenants Williams Sonoma, Helly Hansen, Il Fornaio and what is now the AMC movie theater.

For more information on Seattle Real Estate, contact your local real estate agent today.

 

 

New Amazon Building Sale Breaks Seattle Price Record

Amazon is expanding – and they’re paying top dollar to do it! According to the Puget Sound Business Journal, on Tuesday the new 202 Westlake office building sold for a record breaking $749 per square foot, shelling out a total of $97.4 million. GLL Westlake 202 LLC bought the building which is leased by Amazon. Seattle based companies First Western Development Services and Stephen C. Grey & Associates and San Francisco’s Spear Street Capital developed the building. john st westlake

The previous record was the sale of the City Center Plaza in downtown Bellevue, which sold for $642 per square foot in 2011. For more information on commercial real estate sales, visit the Puget Sound Business Journal.

Queen Anne Market Place Sold for $31.7 Million

QueenAnnemarket place

Photo Courtesy of Benaroya

According to the Puget Sound Business Journal, Benaroya Capital Co. sold the Queen Anne Marketplace, a full block retail center for $31.7 Million. Public Records have indicated that the buyer  is WRI Western Queen Anne Limited Liability Co.

The Marketplace currently includes a Metropolitan Market grocery, Bartell Drug store, and a Fedex among others along Roy and Mercer Streets. The Marketplace is at the base of Queen Anne Hill, bordered by First and Warren Avenues N. For more information on Commercial Sales & leasing, visit the Puget Sound Business Journal.

Will SCCC Gain Support to Move Into the Old PacMed Center?

According to the Seattle Times, Seattle Central Community College is interested in moving into a portion of the vacant space in the old Historic PacMed Center in Beacon Hill; and they’re running out of time to do so. The college must gain support from the state in a deal to occupy nearly half of the landmark, but since Amazon moved out, the building hasn’t been successful in finding tenants large enough to fill the 205,000 sf space. Seattle Central is interested in moving its health training program into the building, if the Pacific Tower receives $27 million in renovations from the state, but the Senate and House must reach a deal for this to happen, but the legislative session will end on Sunday. pacmed

A budget approved by a state house committee earlier this month would give $20 million for preparing the Pacific Tower for “community college health career training programs, offices for the department of commerce or other appropriate state agencies, and other nonprofit community uses.” However, there is no set measure in place with the Senate. Nothing is set in stone for the building, but we might have a better idea after Sunday’s session. For more information PacMed, visit the landmark’s website.

Seattle Commercial Agents win Power Broker Award

trophyCostar, the largest research organization serving commercial real estate, has released the list of recipients for their annual Power Broker Awards. The winners for the top retail leasing brokers in the Puget Sound market include Tom Graff, and Cameron Kent of Ewing & Clark, who together have established a strong presence in the core Seattle neighborhoods. What are the awards based on you might ask? The Power Broker Awards are given to those in the community who  have an outstanding performance in what is now an increasingly competitive commercial real estate market. Performance is based on their overall leasing transaction volume for the previous year, as reported by Costar, and measured against all of the active commercial real estate brokers in their market.

Congratulations to Mr. Kent and Mr. Graff for their achievements in the industry! As Costar is the largest commercial real estate research organizations, being recognized as one of the top real estate dealmakers around should be considered a great achievement. For more information on the 2012 Power Broker Awards visit Costar.

Ace Hardware to Move into the Securities Building Downtown

If you live in and around downtown, you’ll be thankful to hear that the city is finally getting a downtown hardware store. The Myers Group announced that they will be opening an Ace Hardware in the Securities building on 4th and Stewart in the first quarter of 2013. The store will be spread across 7,500 sf of retail space, catering to the ever growing population of city dwellers as well as businesses, creating a convenient place to grab your essentials such as hammers, fasteners and tools on the fly.

The Myers Group has said they’ve been looking for the right location for years, and they’re pleased a hardware store will now be able to assist the downtown population.  “The location adjacent to Bed, Bath & Beyond is a very complimentary fit for a hardware store and the Myers Group and Clise Properties were equally eager to make the terms of the lease work,” said Tom Graff, president of commercial at Ewing & Clark, who leased the space to the Myers Group. “When Richard Stevenson came to me to seek a quality retailer of the space, Tyler Myers was one of my first calls. His store will be a tremendous asset to the area and satisfy a steady request from downtown residential focus groups.” For more information and updates about the space, visit the Puget Sound Business Journal.