By Meghan Hall
Los Angeles, Calif.-based Kilroy Realty has made a substantial investment into downtown Seattle as questions surrounding the future of work and urban office uses remain. In a deal that closed on Friday but just recorded, the developer and property owner acquired 2001 Eighth Ave., also known as West Eighth, for $490 million, or just under $909 per square foot of the total asset. The seller was a limited liability company–RAR2 West 8th LLC–affiliated with Deutsche Asset Management.
“We believe the Denny Regrade submarket continues to be extremely well-positioned for strong rental growth over the coming years and West 8th, which offers an unrivaled location, will help deliver solid earnings growth and value creation for our shareholders,” said John Kilroy, chairman and chief executive officer.
The property’s value has only appreciated over time, and the building has traded a number of times in recent years. Deutsche Asset Management originally acquired the Class A, 516,985 square foot building in the spring of 2016 for $370 million, or about $740 per square foot. Deutsche purchased the property from AEW Capital Management, who initially acquired the building in 2013 for $278.7 million.
The building was originally completed in May 2009 and is within the South Lake Union submarket. It features 497,798 square feet of Class A office space and 18,000 square feet of retail space. Amenities include an outdoor terrace, onsite childcare facility, a full-service restaurant, and coffee bar.
Tenants include Casey Family Programs, as well as Seattle Children’s Hospital Research Institute, who has signed a 10-year lease for 61,000 square feet, according to previous reporting by The Registry. The institute occupies the fourth through six floors. Amazon is also a major tenant in the building and anchors the property. The company leases 70 percent of the building through April 2023 at rents “significantly below market,” according Kilroy.
Kilroy has been expanding its reach in Seattle, and over the years has found success with its Puget Sound properties. In 2020, the company announced that its Seattle portfolio was 100 percent leased. The announcement came as GitHub, a subsidiary of Microsoft, signed up to take 61,000 square feet at Skyline Tower in Bellevue. In June of 2019, Kilroy and Apple struck an agreement for a full building lease for 333 Dexter, which totals 635,000 square feet. Like West Eighth, the building is located in South Lake Union. Kilroy is also working to develop a 900,000 square project at the site of the Lloyd Building along Olive Way, Stewart Street, and 6th and 7th Avenues.
As of the end of 2020, Kilroy’s stabilized portfolio totaled 14.6 million square feet of mostly office and life sciences space, according to a statement from the company. That space was 91.2 percent occupied and 94.3 percent leased. The company also has a number of development projects in the pipeline that includes a total investment of $1.6 billion.