By Jack Stubbs
On Monday, July 23rd, the Pacific Commercial Building in Seattle’s historic Pioneer Square neighborhood sold for $20.5 million, or approximately $455 per square foot, according to public records filed with King County.
Pasadena, California-based Alexandria Real Estate Equities acquired the asset from HAL Real Estate Inc., a Seattle-based real estate investor that targets direct and joint-venture investment opportunities across the Puget Sound region. The acquisition means that Alexandria has spent $149 million on three commercial office properties in Seattle since early June.
Senior vice president and regional market director John Cox with Alexandria Real Estate Equities did not respond to inquiries for comment in time for the publishing of this story.
In terms of the company’s broader strategy in the region, the sale of the Pacific Commercial Building came at the right time, according to HAL Real Estate’s President Jonathan Manheim. “We continue to believe in Pioneer Square, we love the building and the submarket, but the asset is a relatively small property in our portfolio and it’s the only asset that HAL owned directly,” he said. “Today we are focused on being a local, nimble, well-capitalized joint venture partner for the Puget Sound Area’s best operators and developers. Selling the Pacific Commercial Building allows us to further concentrate on what we strive to do best.”
Part of a historic neighborhood, the 5-story Pacific Commercial Building located at 240 2nd Ave. has a long-standing history. Originally built in 1899, the current reincarnation of the asset involved the rebuilding of the top two stories after the Seattle earthquake in 1949 through a combination of historic and new market tax credits, according to Interurban Development’s web site. The historic brick and stone structure was restored and seismically upgraded with the addition of two new floors between 2008 and 2010, according to HAL Real Estate’s web site.
The property first served as a city power station until becoming home to one of the earliest and largest Japanese-owned businesses in the U.S., the M. Furuya Company. According to Google Maps, the property is currently occupied by Pioneer Square Labs, software company FiftyThree Inc., and Milepost Consulting, as well as a number of restaurants.
Founded in 1994, Alexandria Real Estate owns, operates and develops life science and technology campuses across the country, according to the company’s web site. The company has has an active presence in Seattle and currently operates nearly 1 million square feet of office/laboratory space in South Lake Union.
The company’s acquisition of the Pacific Commercial Building marks the latest statement made by Alexandria in recent months. On June 1st, the company acquired the 197,000 square foot Amazon-occupied 5th and Bell building in downtown Seattle for $95 million from New York-based investment company Blackstone Group. Also on July 23rd, the company acquired 701 Dexter, a 58,681 square foot office building in South Lake Union, from Unico Properties for $33.5 million, or approximately $571 per square foot.
Founded in 1993, HAL Real Estate specializes in the acquisition, development and recapitalization of apartment, condo, office and mixed-use properties, and also invests in raw land, industrial and retail properties. Some of the company’s past projects in the Puget Sound region include Plaza at Yarrow Bay, a four-building, 280,000 square foot office property in Kirkland and the Braeburn, a 153-unit residential condo project in Seattle’s Capitol Hill neighborhood.
The company is also involved in the evolution of the Spring District, a large-scale 36-acre mixed-use, transit-oriented project underway on the Eastside. The company is working on the under-construction 279-unit Spring District Apartments in Bellevue—slated for completion in late 2018—which HAL is co-developing with Security Properties. When fully developed, the Spring District will comprise over 5.3 million square feet of buildings.