By Jon Peterson
GLL Real Estate Partners and Vestas Investment Management have placed on the market for sale the 810,493 square foot Safeco Plaza office tower in downtown Seattle located at 1001 Fourth Avenue. The pricing guidance on the planned sale is $460 million, or $567 per square foot, according to sources that track the sale of major office assets in Seattle.
The sellers have chosen CBRE to be the listing agent on the transaction. Those involved with the property sale include Tom Pehl, senior vice president, who works out of the firm’s Seattle office and Christopher Ludeman, global president of the capital markets group of the firm’s New York office. CBRE declined to comment when contacted about the property.
GLL and Vestas have held ownership of the property since July 2016. They acquired the property for $387 million then, according to public records.
The sale will offer the new ownership a leasing and releasing investment opportunity. The office asset is now 91 percent leased with 19 tenants. This level of occupancy is no surprise, since the asset has averaged over 90 percent occupancy in the last 20 years. There will be a marked-to-market move that could be made given that the existing leases in the property are estimated to be over 30 percent below market.
The anchor tenant in the office building is Liberty Mutual Insurance Company. It has a triple-net lease in the asset that covers 66 percent, or 503,871 square feet, of the building. The lease expires in October 2028. The other significant tenants are Fox Rothschild, which occupies 50,030 square feet, Interior Architects, which is in for 19,854 square feet, and Helsell Fetterman, which takes up 18,482 square feet.
Over the past 15 years Safeco Plaza has gone through over $100 million in building upgrades. This has included a full lobby renovation, building amenity upgrades, elevator modernization, HVAC and mechanical improvements, sprinkler upgrades and asbestos abatement. The office building was first developed in 1969. It has a parking operation that has a total of 593 stalls over five subterranean parking levels.
The office property is located in the downtown Seattle sub-market. Current vacancy for class A space sits at 6.3 percent, according to information from CBRE. Rent growth year-over-year for Class A buildings in downtown Seattle has averaged 7.3 percent between 2015 and 2020. Absorption in the region has totaled 13.8 million square feet over the same time period making it the fourth highest in the country.