By Meghan Hall
The explosion of the region’s industrial market and increased investor appetite for close-in warehouse space has some property owners taking a close look at their assets, with some even contemplating a sale after decades of ownership. Such is the case with Buffalo Investment LLC, who has several assets in Seattle’s South of Downtown neighborhood that are not only up for lease, but potentially for sale.
“We’re open to both lease and sale opportunities,” explained Buffalo Investment’s President Mark Benezra. “We are not bailing out by any stretch, but, if the appropriate sale rears its head, we’re definitely going to look at it for [these] buildings.”
Buffalo Investments owns three buildings at 3420 and 3430 East Marginal Way and on 3401 Colorado Avenue. Together, they total about 100,000 square feet of space. The Colorado Ave. building totals about 33,400 square feet, while the assets on Marginal Way total 48,600 square feet and 16,500 square feet, respectively. The Marginal Way buildings share a common wall, and therefore a new owner or tenant could make the property into one, large open space if needed.
“You get some good flexibility for the tenant or owner-user who takes that space,” said Benezra.
The buildings were constructed in the 1940s and 1950s, and are tilt-up construction and high-stacking facilities with loading dock access. The properties have been in Buffalo Investments’ portfolio since the 1980s. Initially, the industrial textile company had occupied the assets itself but decided to relocate in 2000 after its business needs changed. Since then, the assets have been leased to a wide variety of tenants, including a cabinet supply company and a nail supply company, among others. The spaces are well-equipped for both distribution and light and medium manufacturing.
If a company is interested in leasing, Buffalo Investment typically aims for leases between three to five years in length, but are open to longer contracts. However, ownership has received a number of investment inquires as well.
“We’ve had a bit of a run recently; we’ve got a lot of activity,” said Benezra. “Most of it has been on the sale side. I think…acquiring a piece of property, particularly with when interest rates are really favorable, it’s a pretty good, pretty good time to buy.”
Benezra estimates that the properties could sell for around $185 per square foot.
Recently, Buffalo Investments, along with a dozen other parties, sold off a nearly 70 year-old warehouse, also in SoDo, to Charlie’s Produce for $17 million, or about $135 per square foot. The transaction closed mid-October.
The region’s industrial market continues to hold stable, despite much of the uncertainty caused by COVID-19. According to Kidder Mathews, leasing activity during the third quarter was “very active,” with 1.46 million square feet absorbed. Sales volume has also been relatively steady, with $423 million worth of assets sold. E-commerce users such as Amazon are also still very active in the market, with Kidder Mathews speculating that despite nearly 7 million square feet of space leased or committed, the company could be on the hunt for additional room to grow.
Benezra believes the Buffalo Investment’s assets could be appealing to those who want to be close to Seattle’s urban core, or to their employees, and that SoDo will only continue to grow.
“I think it’s still a very, very strong area,” said Benezra. “…I think there’s going to be a lot more activity down here.”