By Jon Peterson
San Francisco-based Swift Real Estate Partners has put on the market for sale the 72,218 square foot Bellevue Terrace office building in Bellevue located at 3633 136th Place SE. The pricing guidance on the sale is in the range of $26 to $27 million, according to sources that are familiar with the sale of the property.
Swift declined to comment for this story. The real estate investment firm has chosen Newmark to be the listing agent on the sale. Among those working on the marketing efforts include Kevin Shannon, co-head of US Capital Markets, and Nick Kucha, vice chairman, Pacific Northwest Capital Markets.
Swift had been the owner of the property for the past five years. It had acquired the property for $17.4 million in 2016, according to public records. Should the pricing guidance be reached, it would come in the range of $360 to $374 per square foot, which would put it well below replacement cost, presently estimated in the range of $500 to $550 per square foot.
It is projected that there will likely be two types of buyers interested in the property. One of those groups would be private capital sources. The second could include institutional capital sources that view the property as either a light value-add asset or core plus type of property.
Bellevue Terrace is a three-story multi-tenant office building. The current asset is 65 percent leased to eight tenants, and there are now two vacancies in the property. The existing leases have a 15 percent rollover in the first four years with the remaining leases averaging 5.1 years remaining in their lease terms. The in-place rents are likely just over 15 percent below current market rents, according to some estimates.
Since 2017, Swift has invested approximately $3.2 million or $45 per square foot to improve the property. This included $2.4 million for tenant improvements, $330,000 for various lobby upgrades, $174,000 for market ready work, $113,000 for roof coating, $100,000 for asphalt replacement, $42,000 for amenity area upgrades and $35,000 for HVAC updating.
Bellevue Terrace is located in the Eastside office market in Bellevue. This Puget Sound sub-market has a current vacancy of 5.5 percent, according to sources that track this information in the greater Seattle market. The sub-market has a total market inventory of 34.3 million square feet. Over the past eight quarters the region has see a total of 10 percent rental rate growth.