By Jon Peterson
New York City-based Clarion Partners has paid $203 million to acquire the 1.3 million square foot Segale Business Park in Tukwila, according to sources familiar with the transaction. This project has a mixture of uses and is aimed at industrial, office and data center users. The transaction will represent a rare sales transaction that involves industrial properties at over $200 million in the greater Seattle market.
Several offices of CBRE worked on the sale of the property on behalf of Tukwila-based Segale Properties. The offices of CBRE included Seattle, Dallas, Los Angeles, Ontario, Calif. and Oak Brook, Ill. CBRE declined to comment when contacted for this story.
Clarion also declined to comment when contacted for this story. There was at least one other major investor that competed with Clarion on the transaction. This was San Francisco-based Prologis.
The vast majority of the business park is warehouse/distribution industrial space. This part of the property totaled 983,536 square feet in eight buildings covering 57.73 acres. This real estate is currently 99 percent leased. This space was developed between 1974 and 2010 and has 21’ to 30’ clear heights.
Clarion has plans to add some value to the office part of the business park. This portion of the property totals 110,339 square feet spread across three buildings. This space is now 76 percent leased to Continental Mills through 2026, where the firm occupies two of the three buildings as its corporate headquarters and R&D center. Continental Mills has been in the property since 1990.
The Seattle office of Colliers International will be involved with the leasing of the business park going forward. The people overseeing this will be Matt McGregor and Bill Condon. Both of them are executive vice presidents. They declined to comment when contacted for this story.
Segale Business Park does have one data center facility. This is a 218,003 square foot building that is 100 percent leased to CenturyLink. This tenant has been at this location since 1998. The park also has around 4.4 acres of a paved development parcel. This land could be developed in the future for either industrial, office or R&D product.
The industrial market in the Puget Sound region is showing strong results. Total industrial vacancy has remained well below the 15-year historic average for the fourth quarter at 5.6 percent. Low vacancy rates and strong net absorption are contributing to higher rental rates and fewer tenant concessions.
Clarion has a variety of capital sources for which it buys assets. In some cases this would be separate account relationships like the one it has with the California States Teachers Retirement System, but it also can invest for its commingled funds. One of these is the Lion Properties Fund.