By Meghan Hall
Eastside suburban markets are continuing to attract investors, especially as employees begin returning to the office in the coming months. In a transaction that recorded on Friday, Kent, Wash.-based Alco Investment Company purchased the Willows Commerce Park for $140 million. The seller of the Redmond office asset was Kennedy Wilson.
Located at 9931, 9845, 9825 and 911 Willows Road NE, Alco purchased four buildings. In all, they total 421,415 square feet of space. Kennedy Wilson originally bought the asset in the spring of 2017 for $65 million and received a $48.9 million loan to finance the deal. Currently, Microsoft and Facebook are tenants in the buildings; both firms have based their respective virtual reality HoloLens and Oculus branches in the offices.
Alco Investment Company has been on a buying spree in recent months, snapping up properties on the Eastside. In January, the firm paid $155 million for Redmond East and Canyon Park East. Once again, the seller was Los Angeles-based Kennedy Wilson. Both assets were held in the same closed-end fund, Kennedy Wilson Fund VI. Alco purchased Redmond East for $80 million, or about $276 per rentable square foot. In the second deal, Alco acquired Canyon Park East for $75 million.
In the fall of 2020, Alco also purchased two commercial buildings in Kirkland for $27.5 million. Alco purchased the assets from Systima, a manufacturer for the space and defense markets. The capital for Alco’s recent purchases has come from its recent sale of a Portland telecommunications hub known as the Pittock Block. Alco sold the asset for $326 million in December.
Heading into 2021, the Eastside office market remained tight. In Redmond, vacancy for office space remained at 7.6 percent, with rental rates between $27 and $37 per square foot triple net. Suburban markets such as Redmond have benefitted in recent months not just because of their location, but because of their growing tech and life sciences bases, notes brokerage firm Broderick Group in a recent report. Such conditions have maintained an environment favorable to investors and landlords, even in the face of coronavirus.