Home Commercial Shidler Puts Microsoft-Leased Bellevue Campus Back on Market, Current Value is ~$190MM

Shidler Puts Microsoft-Leased Bellevue Campus Back on Market, Current Value is ~$190MM

Seattle, Shidler Group, JP Morgan Chase Bank, Schnizter West, Bellevue, Advanta Office Commons, Microsoft, University of Washington
Image courtesy of CollinsWoerman

By Jon Peterson

Honolulu-based The Shidler Group has decided to put back on the market for sale the 601,000 square foot Advanta Edge Campus in Bellevue. The office asset has a current value of $190 million, according to sources that are familiar with the property, and this initiative follows an earlier marketing effort by the owners who first put the property up for sale in January of 2020.

The seller has been working with Newmark Knight Frank as the listing agent on the sale of the property since its initial marketing efforts earlier this year. Among those working on the sale include Kevin Shannon, co-head of the capital markets team, and Joe Lynch, executive managing director. The planned sale of the property had been paused during the initial outbreak of COVID-19.

As with nearly all properties owned by Shidler, this property, too, has a ground lease on the asset, which is set to expire in 97 years. The land underneath the land had been owned by Shidler, but has been donated to the University of Washington. 

Shidler has had a long practice of acquiring properties and splitting up the land from the physical assets. When Shidler purchased this asset in March of 2018, it did the same. At that time, Shidler paid $224.85 million, or around $375 per square foot, for the property. The seller at the time was JP Morgan, which in turn owned the property since 2010, when it bought it from Bellevue-based developer Schnitzer West for $240 million.

Image courtesy of CollinsWoerman

The property is 100 percent leased to Microsoft. The new owner of the property may be able to add some additional income once the current lease comes up for renewal in three years. The in-place rent in the property is around 30 percent below market rents, according to estimates. Microsoft has been the only tenant in the property since it was developed in 2008-2009 by Schnitzer West. Also, the tenant has invested $120 million of its own capital into the property.

Given that it has a ground lease and only three years left on the Microsoft lease, the property could end up getting a little less interest. According to one estimate, this scenario may be favorable to domestic capital sources, as opposed to foreign capital sources, which typically favor a longer-term lease in the property. Either way, this sale will test the market and set a bar for office sales in the Bellevue submarket.

The CollinsWoerman-designed Advanta Edge Campus property, located at 3005 160th Ave. S.E., contains three seven-story office buildings built in 2008 that total approximately 600,000 square feet as well as an adjacent 8-story parking garage built in 2007 containing 1,158 stalls, according to public documents.

According to the property listing on Schnitzer West’s web site, the three-building office property offers easy access to Interstate-90 and Interstate-405. The energy-efficient campus also includes a landscaped outdoor plaza as well as an on-site conference and training center, fitness facility and media center.

Image courtesy of CollinsWoerman