Belmont, Calif. -based Embarcadero Capital Partners sold last week one of its Puget Sound assets, this one located 3400 & 3500 188th Street SW in Lynwood for $42,050,000. The 199,000 square foot complex sold to the Alaska Electrical Pension Fund for just over $211 per square foot. Embarcadero had owned the asset since December of 2007 when it paid for $45,549,328 to purchase it from RREEF. The complex was developed in 1985.
The 10-acre campus includes the two six-story buildings at 3400 and 3500 188th St. SW, which are 99,248 square feet and 99,260 square feet, respectively. The property is located just across the street from the Alderwood Mall in Lynwood, which features more than 200 shops, restaurants and entertainment options. The property has direct access to downtown Seattle and downtown Bellevue via the I-5 and I-405 freeways, and also offers good proximity to a range of quality suburban housing options. Since purchasing the buildings, Embarcadero remodeled both lobbies, added a new state-of-the-art conference room and created a tenant lounge featuring an Avanti Market.
Some of the tenants in the complex include Guild Mortgage Company, WideOrbit and Timeshare Exit Team. According to Loopnet’s Web site, approximately 22,000 square feet is available for rent in seven suites between 1,300 and 5,200 square feet. That would bring the vacancy to approximately 11 percent. The asking NNN rate is roughly $21.50 per square foot per year, according to Loopnet.
Managing Directors Stuart Williams and Lori Hill led the JLL team on the sale.
“As the Seattle-Bellevue CBD experiences upward rent growth, investors continue to find tremendous value in high-quality assets in surrounding areas,” said Williams. “The Alderwood Business Center exemplifies this and also provides tenants with superior accessibility thanks to its location.”
Embarcadero owns one remaining asset in the greater Puget Sound region. This is the 276,000 square foot Blackriver Corporate Park in Renton.
According to a recent, third quarter Seattle Office Real Estate Market Review from brokerage firm Kidder Mathews, the vacancy rate in the Northend office market where Lynwood is located continues to move downward, ending the third quarter down 30 more bps to 7.02 percent on the strength of 107,146 square feet of net absorption. The Lynnwood/Edmonds submarket led the improvement with vacancy falling to 7.1 percent on 2016 YTD net absorption of 112,223 square feet, most of that by a variety of smaller tenants. The Northend submarkets continue to attract tenants looking for a combination of higher value, lower cost office space and more affordable housing for workforces. Asking rental rates moved up 2 percent in the third quarter; still very affordable at $23.43 per square foot per year, full service. The slow decrease of the vacancy rate and increase in rent are expected to continue for the near future, stated the report.