By Jack Stubbs
In one of the largest office property sales of the year, on July 10th, Boston-based real estate investor Pembroke Real Estate acquired the fully-leased 400 Fairview Building in South Lake Union for just over $338.425 million, or approximately $970 per square foot, according to public records filed with King County. Pembroke Real Estate acquired the property from a joint partnership between TH Real Estate—a unit of TIAA—and its partner, Swedish development and construction giant Skanska.
TH Real Estate acquired its 90 percent stake in the property for $235 million in 2015 from Skanska, which retained 10 percent ownership and served as the operating partner for the property, according to a statement from the companies at the time.
Jason Flynn and Reid Rader of Eastdil Secured represented Skanska and TH Real Estate in this transaction.
The 14-story Class A building was constructed in 2015. Some of the tenants of the office space in the LEED Gold building include Delta Dental; technology manufacturer Impinj; lifestyle company Tommy Bahama; communication company Wireless Advocate; and mobile electronics retailer Car Toys, while the 18,000 square foot open-gather ground-floor retail space is leased to a number of locally cultivated artisan bakeries, restaurants and retailers including Kai Market by Uwajimaya, Bar Harbor, and mBar.
The acquisition marks Pembroke’s first property in Seattle, and an expansion of its West-Coast portfolio, joining 140 New Montgomery and 100 California Street in San Francisco.
“400 Fairview is a significant investment for Pembroke. Not only are we expanding into a new market, but this first acquisition in Seattle demonstrates our continued commitment to our U.S. markets, and the growth of our global portfolio,” said Pembroke vice president Cory Saunders in a statement released by the company. “Seattle has been a target market for us due to its long-term growth potential and operational synergies with San Francisco, where we currently manage two assets. We take a thoughtful approach to real estate that is future-focused, and 400 Fairview’s flexible and efficient work spaces coupled with its dynamic retail mix and curated amenities perfectly complements our global portfolio.”
According to Skanska USA’s web site, Tommy Bahama was the first company to take space in the SkB Architects-designed office property, relocating its corporate headquarters to the space in 2015.
The sale of 400 Fairview follows the listing of two properties fully leased to Amazon in South Lake Union, which has been at the center of recent transactions in Seattle. The approximately 812,000 square foot Troy Block complex, owned by USAA Real Estate and marketed by HFF, could commend bids of over $800 million, or approximately $1,000 per square foot, while the 131,000 square foot building at 202 Westlake Avenue North, for sale by GLL Real Estate, is valued at $125 million or approximately $958 per square foot, according to estimates made by Real Estate Alert in a mid-April report.
The price per square foot sales price also smashes predictions made in a first quarter 2018 Puget Sound region office market forecast report written by Colliers International. The region saw $605.8 million of transaction volume in 27 office transactions averaging $248 per square foot. The report predicted that several properties could trade for above $700 per square foot, a figure eclipsed by the recent sale.
Pembroke is an international real estate advisor that acquires, develops and manages properties and places in the world’s leading cities, according to a statement released by the company. By combining a global point of view with local expertise, Pembroke creates and manages mixed-use and office environments that deliver the best outcomes for tenants, the surrounding communities, and its investors. The Pembroke portfolio includes signature properties in key global markets including Boston, London, Munich, San Francisco, Stockholm, Sydney, Tokyo, and Washington, DC.