By Jon Peterson
Des Moines, Iowa-based Principal Real Estate Investors has decided to put up for sale the 148,652 square foot Lincoln Plaza office property in Bellevue. The pricing guidance on the sale is approximately $78 million, according to sources aware that the asset is marketed for sale.
Principal stated in an email that it did not have any information to share on the sale at this time. The company hired the CBRE office in Seattle to be the listing agent on the sale, and the team marketing the property includes Tom Pehl and Lou Senini, both senior vice presidents at the firm. CBRE declined to comment when contacted for this story.
The seller had acquired all three buildings for Lincoln Plaza in June 2005. The real estate manager had purchased the property on behalf of its core open-ended commingled fund that goes by the name of U.S. Property Account. This is a commingled fund that focuses on investing on a nationwide basis within the four main property types of office, industrial, apartments and retail.
The three office buildings are located at 11225, 11235 and 11245 SE 6th Street. The asset was first developed in 1987, and the current occupancy in the property is 90 percent. There is a total of around 20 tenants in the property with the largest tenant occupying less than 12 percent of the asset.
The new owner should be able to add some value to the property going forward. One part of this would be to lease up the empty space in the buildings. There also is a mark-to-market opportunity, since the current rents are around 10 percent below market rates, and there will be access to nearly 75 percent of the rent roll over the next five years. The property features a weighted average lease term of 3.1 years.
Another option for the new ownership would be to make the property more attractive to its potential tenants by expanding the on-site amenities. This could include adding conference areas, a fitness center and food options.
Lincoln Plaza is located within the Eastside office market in Bellevue. This sub-market of Seattle is proving to be very resilient and has seen a number of transactions over the last year. Office rents in this region are up by 9 percent since the first quarter of 2020, according to sources that track this data.
The region has very strong demand from tenants. Space requirements in the market are now at 2.3 million square feet, with an average space requirement of 24,000 square feet. 64 new tenants started looking for space in the region in 2021, according to industry reporting.