By Jon Peterson
As commercial assets across the region gain interest from a wide group of investors, owners of properties in outer regions of Puget Sound are starting to test the market for their existing assets. One of these is Newton, Mass.-based RMR Group, which has decided to put up for sale the 111,908 square foot office asset located at 840 North Broadway in Everett. The pricing guidance on this property is in the neighborhood of $28 million, or around $250 per square foot, according to sources familiar with the sale of the property.
The seller is working with CBRE as the listing agent on the sale. The people who are representing the seller on the transaction include Tom Pehl, an executive vice president, at the firm’s Seattle office and Charles Safley, a senior vice president, who also works out of the firm’s Seattle office. CBRE declined to comment when it was contacted for this story.
RMR has owned the asset since June 2012, when it acquired the property for $20.5 million, or $183 per square foot, according to sources that track the sale of office assets in the greater Seattle market. The new sales price on the property, if achieved, would come in well below the replacement cost for this property, which industry experts believe is now over $500 per square foot.
If the pricing guidance holds firm, the cap rate on the transaction would be in the range of 8 percent, as stated by sources familiar with the property. This return would be based on the property’s new operating income.
The types of buyers that would likely be attracted to the asset are REITs, income investors, family offices and high net-worth individuals, according to industry sources.
The property is comprised of two buildings. Building A has a total of 71,780 square feet, Building B is 40,128 square feet in size. Both facilities are 100 percent leased to the State of Washington, which occupies the buildings for its Department of Social and Health Services unit. The in-place rents in the property are slightly below market rates, according to sources, and they will not expire until November 2025.
The Everett office market has performed relatively well from a vacancy standpoint than some other markets around Seattle. According to data compiled by CBRE, the vacancy in Everett was at 13.5 percent at the end of 2021. This compares to 16.4 percent across the greater Puget Sound region, with 18.2 percent in downtown Seattle and 23.3 percent in the Southend. Everett has seen rental rate growth by 82 percent since 2011 with asking lease rates coming in at $25.75 per square foot on a triple-net basis at the end of 2021.
RMR currently holds a portfolio of 21 assets in the greater Pacific Northwest region, as stated by the real estate investment firm on its website. These assets are located in Seattle, Bellevue, Bothell, Kent, North Bend, Renton, Richmond, Spokane and Portland/Vancouver.