By Jon Peterson
Hartford, Conn.-based Cornerstone Real Estate Advisers has made its equity investment into the Madison Centre project in downtown Seattle its first office development in the area. The real estate manager had previously acquired existing office, industrial and apartments and placed equity into apartment development projects in the greater Seattle Area.
“Seattle is one of America’s true Gateway Cities. Office job growth has been, and is projected to be, significantly above the national average. This growth is coming from homegrown companies such as Microsoft, Nordstrom and most notably Amazon, and from San Francisco Bay Area companies desiring to tap into the talent pool in a lower cost market, “says Jim Gallagher, senior vice president of acquisitions for Cornerstone. He works out of the company’s regional office in Los Angeles.
Seattle is one of America’s true Gateway Cities
Seattle has had employment growth exceeding the national average over the past 12 months. During this time period the job growth in Seattle was 3.4 percent. This compares to the national average of 2.1 percent.
Gallagher feels that the downtown office market hasn’t seen much new development in recent times, making the market very attractive for investors. “Despite this significant employment growth, there has been very little office development in the CBD over the last 15 years, and in fact there are only two buildings under construction there now, including Madison Centre,” he said.
The total cost of the Madison Centre is $375 million. The equity amount is $150 million. Cornerstone would not comment on how much of the equity amount it put into the project. The development is being done in a joint venture with the project’s developer, Seattle-based Schnitzer West. This transaction is the first deal between the two companies.
The construction financing on the project totals $225 million. The loan was secured through New York City-based Blackstone Real Estate Debt Strategies. This real estate manager declined to comment when contacted for this story. The debt was arranged by HFF. This transaction was led by HFF’s team of Michael Tepedino, an executive managing director in the New York office, Geoff Goldstein, a director in New York, Tom Wilson, a senior managing director in Portland, and Jennifer Keller, a director in Boston.
Madison Centre is located at 505 Madison Street. The development is now under construction and is projected to be completed in the third quarter of next year. The office part of the project will include 754,000 square feet. The other parts of the project are 7,800 square feet of ground-floor retail atop a seven-story subterranean parking garage.