By Jack Stubbs
An up-and-coming area where developers and investors are looking to put down roots in the expanding area roughly seven miles north of the city’s downtown core, Seattle’s Northgate neighborhood has seen a fair amount of activity over the last several months.
Several in-the-works developments occurring there—such as Simon Property Group’s transformation of the 1950s-era Northgate Mall into a 1.3 million square foot mixed-use development—suggest that the northern submarket continues to attract interest from local and out-of-town investors alike, and another commercial office property recently traded hands.
On June 28th, the Northway Square East office building across from Northgate Mall sold for $30.5 million, or approximately $390 per square foot, King County records show. The buyer, HR Acquisition I Corp, shares the same address as Nashville, TN-based Healthcare Realty, a publicly-traded REIT that specializes in the development of medical office buildings throughout the U.S. The seller of the property was Alpine Ridge Group LLP, an entity affiliated with Russ Francisco of Pan Pacific Properties Inc., a property management company based in Seattle.
The seller did not respond to calls for comment about the transaction in time for the publishing of this story.
The five-story Northway Square East office building, located at 2150 N 107th St., was built in 1974 and totals 78,173 square feet, according to public documents. It is not entirely clear how much space is currently available within the property. According to a listing written by Colliers International, there are currently 704 square feet for lease on the second floor.
Sitting adjacent to Interstate-5, the building offers convenient access to Northgate Mall, downtown Seattle and the Eastside, and also offers on-site storage and employee parking. The property is roughly seven miles north of Seattle’s Central Business District and just under four miles from the University of Washington.
The neighborhood of Northgate continues to evolve, as a number of projects highlight the dynamism of the location at present. As perhaps the most notable example, Simon Property Group is looking to transform Northgate Mall—a 55-acre site located at 401 NE Northgate Way—into the new focal point for the surrounding area that will ultimately consist of 1,205 residential units, 596,600 square feet of retail, 768,800 square feet of office space and 372 hotel units across two hotels, along with 5,346 parking stalls and 342,000 square feet of public open space.
The master-planned project—the design team for which includes architecture firm GGLO, CallisonRTKL and Civil Engineer KPFF—was moved further along in the city’s Design Review process earlier last month. On June 3rd, the project team received positive feedback from the Northeast Design Review board about the design elements for the hotel and office components of the development.
Board deliberations about the retail buildings and other aspects of the applicant team’s proposal are scheduled to be discussed at subsequent meetings for the project, according to the project planner with Seattle Department of Construction and Inspections (SDCI).
Recently progress with the development represent the latest chapter in a multi-year process: Simon Property Group announced its preliminary plans to redevelop Northgate Mall in March of 2018, and these plans were approved at the initial Early Design Guidance (EDG) meeting held for the project in mid-August 2018. In November 2018, the project owners received approval at a second EDG meeting to bring hockey franchise NHL Seattle into the fold, with a new ice center ultimately set to add 262,000 square feet of space to the larger complex.
In mid-June, the 46,024 square foot Northgate Meridian Building located at 2111 N Northgate Way—directly adjacent to the Northway Square East building—sold for $19 million, or roughly $412 per square foot, with HR Acquisition Corporation acquiring the property from Stephen C Grey & Associates (SCGA), a property management company based in Seattle.
Since its formation over 25 years ago, Healthcare Realty has developed relationships with market-leading health systems throughout the country, with the majority of Healthcare Realty’s properties on the campus of or adjacent to these health systems, according to the company’s web site.
As of late March 2019, Healthcare Realty owned 201 properties—comprising 15 million square feet—across 26 states nationwide. Some of the company’s assets in the Puget Sound region, where the company’s portfolio totals just over 1 million square feet, according to the company’s web site, include the Overlake Medical Center in Bellevue; the 820,000 square foot University of Washington School of Medicine Valley Medical Center in Seattle; and the 60,000 square foot McMurray Medical Building in Seattle.
According to The Registry’s reporting, Healthcare Realty was last active in the Puget Sound region in early November 2017, when the company acquired a two-parcel property containing the Eastview Professional Building in Bellevue for $12.7 million.