By Meghan Hall
A South Lake Union parcel—one of the few remaining developable plots of land in the neighborhood—has hit the market for a second time after its previous buyer walked way. Vancouver, B.C.-based Onni Group had intended to buy the property for $25 million from H5 Capital, who has been working to entitle the property for a 41-story residential building.
“This is really the last 400-foot zoned site that could achieve a 10,000 square foot floor plate left in South Lake Union,” explained Ross Klinger, executive vice president at Kidder Mathews, the firm who has been hired to market the property for sale. “It really is going to be a premium site with fantastic views and right there in the heart of South Lake Union.”
The parcel, located at 121 Boren Ave. N., currently has an approved Master Use Permit and has already gone through Seattle’s design review process. According to project documents, the tower can accommodate 432 apartment units and parking for 246 vehicles. A 1,800 square foot retail area is also included in the plans, and will be located on the ground floor.
A one-story commercial building on the site would be demolished, but the existing Seattle Times building would remain and will be connected to the new development in design and feel. The proposed building is designed by local firm VIA Architecture and will emphasize pedestrian amenities, landscaping and traffic features. The podium of the structure would include part of the Seattle Times Building and play off of its 1929 character. Plans allot for a Daylight Garden Court, which will allow for light and space between the Seattle Times Building and new residential tower.
“The overall tower design approach honors and respects the existing Times Building by establishing a 25’ spacing gap to the new building,” states VIA on its website. “This allows daylight and views between the buildings, creates a landscape and amenity opportunity, and reveals exposed structural columns that support the new tower nine floors above.”
H5 Capital is choosing to sell the property with entitlements as the firm, which operates normally as a data center owner and operator, does not typically redevelop property. Onni had originally paid H5 Capital $1 million for an exclusive option to purchase the property nearly a year ago, but walked away, citing “unforeseen, unprecedented and material consequences of the COVID-19 pandemic” in legal documents. H5 has since filed a breach-of-contract suit.
Klinger could not comment on the deal, but stated that because of its location and its product type, investor interest in the property has been fairly good.
“There’s so little inventory like this in Seattle. I think that long-term, because of the time it takes to entitle and build and stabilize a site, the deal velocity is still there, whereas in other asset classes it may not be as prevalent,” stated Klinger. “People are still looking for land because of [the time frame]. We’ve had some nice interest but it is available for sale again.”
Klinger believes that the investors’ appetite for multifamily product will continue, as in-migration and tech employment provide a strong basis for housing demand. Over the course of the past several months, occupancy rates have dipped only about one percent, while rental rates are remaining stable, equivalent to an annualized increase of 2.4 percent, according to a June analysis released by Kidder Mathews’ multifamily investment team led by Dylan Simon and Jerrid Anderson. Additionally, renewal rates are inching back to historic averages, and after peaking in May at 6.8 percent, collection losses are also beginning to moderate. While the Puget Sound has also experienced job loss, the four highest-wage-earning sectors saw growth.
“Amazon owns about 50 percent of their Seattle real estate, so they’re committed to Seattle, and Seattle is at the leading edge of technology talent, with high salaries and net migration,” said Klinger. “Over the last seven to eight years we’ve had over 40,000 come into the region every year…You can’t build big communities anymore because land is so scarce.”