Alexandria arranged the off-market, joint venture transaction with Clarion Partners for a 70 percent portion of the life science portfolio in Seattle’s South Lake Union for $315 million (total valuation of the portfolio came in $450 million). The transaction is the largest sale completed in the state of Washington year-to-date. (ed. note: According to sources with knowledge of the transaction details, the transaction closed at $315 million. The cap rate on the sale was in the low 4 percent range, and the capital source that Clarion used on this transaction was the Clarion Lion Properties Fund, which is Clarion’s flagship core open-ended commingled fund.)
Newmark’s Co-Head of U.S. Capital Markets Kevin Shannon and Executive Managing Directors Ken White and Rob Hannan cooperated with Vice Chairman, Nick Kucha, Executive Managing Directors Tim O’Keefe and Jesse Ottele and Senior Managing Director Cavan O’Keefe to represent the seller, an affiliate of Alexandria Real Estate Equities, Inc, a preeminent national developer, owner, and operator log life science real estate. The buyer, Clarion Partners, has acquired a 70 percent interest in the properties.
“This transaction marks the first core life science offering in the Seattle market in several years,” said Shannon. “Life science fundamentals are faring better than the overall office fundamentals with rents that are now ranging from $65 to $70 NNN annually, which allowed us to achieve record setting pricing for the Puget Sound marketplace.”
Ottele added, “The Puget Sound ranks third nationally for life science growth over the past five years with venture capital having increased 120 percent during that time frame.”
The portfolio, located at 1201 Eastlake Avenue E, 1208 Eastlake Avenue E, and 199 East Blaine Street, encompasses 322,858 square feet of first-class office and laboratory space and is 100 percent leased to strong life science tenants.
The portfolio features premier facilities designed and constructed to represent the highest technical specifications and capable of accommodating a broad range of occupancy requirements. Many of the tenants recently completed significant improvements consisting of lab/office renovations, upgraded lab compressed air systems and expanded collaboration spaces.
One driving force behind Seattle’s recent success has been its emergence as a national life science hub, which can be attributed to the combination of research, NIH funding, strong employment growth, educational opportunities and depth of skilled labor pool.
The life science market in Seattle, which is concentrated in the Lake Union submarket and measures roughly six million square feet of inventory, has exceeded the performance of the overall market by a wide margin. Overall vacancy among Seattle life science buildings was less than 4 percent in the third quarter, and new inventory is virtually impossible to find, putting strong upward pressure on asking rents, according to Newmark Research. Seattle has ranked among the strongest real estate markets in the country in recent years and is on track to become the top office market in the nation for sales velocity in the fourth-quarter 2020.
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