By Meghan Hall
Well-positioned assets with big-name tenants are continuing to attract eager investors, even as the market ebbs and flows. In a deal that closed at the end of last week, the Microsoft-leased Advanta Office Commons in Bellevue traded for $169 million. The buyer, according to public records, is affiliated with Talon Private Capital and PGIM. The property was sold by The Shidler Group, who is based in Honolulu and has owned the asset for several years. Public documents indicate that the sellers retained ownership of the ground lease associated with the property.
The property is located at 3005 160th Ave. and contains three seven-story office buildings originally constructed in 2008. Together, they total 600,000 square feet. Designed by architecture firm Collins Woerman, two of the buildings are connected by a 25-foot high, 100-foot long glass roof atrium space that contains amenities such as an oversized fireplace, water feature and flat-panel monitors. The property also encompasses an eight-story parking garage with 1,158 stalls.
The asset is 100 percent leased to Microsoft, and the in-place rent for the property is about 30 percent below market rate, according to estimates. Microsoft has been the only tenant in the building since it was first developed by Schnitzer West between 2009 and 2010. As the property’s tenant, Microsoft is also estimated to have invested $120 million of its own capital into the property. Microsoft’s lease is expected to last until 2023.
The Shidler Group acquired the asset in March of 2018 for $224.85 million, or about $375 per square foot. Shidler paid about $200 million for the three buildings and an additional $24.85 million for the land on which the structures sit. At the time, the seller of the property was JP Morgan, who had owned the property since 2010.
In January of last year, the company announced its initial plans to sell the ground lease that goes with the asset. Sources that track office sales in the region estimated the value of the transaction could be about $210 million. The ground lease is set to expire in 96 years, and the land has been donated to the University of Washington.
Then, in September of 2020, The Shidler Group place the asset back on the market. At the time, The Registry reported the property had a value of $190 million, according to sources familiar with the property. The sale had been paused due to the initial outbreak of COVID-19.
The Shidler Group had been working with Newmark Knight Frank as the listing agent, including Kevin Shannon, co-head of the capital markets team, and Executive Managing Director Joe Lynch.