By Jon Peterson
New York City-based Blackstone Real Estate Partners has placed on the market for sale the 421,000 square foot office and flex project in Redmond called Willows Commerce Park. This property could end up being sold somewhere in the range of $80 million, or around $190 per square foot, according to sources familiar with the transaction.
Blackstone has put this property on the market through its listing agent, the Seattle office of CBRE. Both of these companies declined to comment when contacted for this story.
The transaction could end up producing a seven percent cap rate, as stated by sources that track the office building sales market in the Seattle region. This return would be based on the property’s current net operating income.
The complex as it stands now is considered a core plus investment opportunity. The property is now 97 percent leased. It does have some credit tenants like Microsoft, LabCorp and DigiPen Institute of Technology. The complex is a mixture of straight office building space and some flex space, and more than 90 percent of the existing leases in the property have five years left to run.
There will be a change to add some value to the property going forward. The leases in the property are a little bit below market, and there is one vacancy in the property that needs to be filled. The complex has a total of four buildings that are located at 9825, 9845, 9111 and 9931 Willows Road Northeast in Redmond.
The office market in Redmond is producing very strong results. The current vacancy in the market is seven percent. It has achieved strong absorption and rental rate growth over the past couple of years. One of the reasons for that is that no new development is occurring in the marketplace. This situation exists as net rents on a per square foot basis are at $26. To justify new construction, net rents need to be at $30 per square foot, according to sources that the office market in Redmond.