UPDATED: January 16, 2017
A new regional record was set on Friday 13, 2017 when the price paid for rentable square foot for an office building reached $925.32. The deal came from New York-based companies TriStar Capital and RFR Holding when together, the companies purchased the Urban Union office building in Seattle’s South Lake Union Neighborhood from Schnitzer West for $268.9 million. Kevin Shannon, Ken White and Michael Moll from Newmark Grubb Knight Frank were the brokers on the sale which closed Friday the 13th.
Urban Union, the 12-story LEED Gold office tower located at 501 Fairview Ave. N, is a Schnitzer West-developed office building in South Lake Union with 290,647-square-feet of office space. Amazon announced the lease of the entire building in the first quarter of 2016.
Schnitzer West will continue to manage the building. The boutique office building features roughly 6,000-square-feet of retail space, which Schnitzer West recently leased to Henry’s Tavern and Sprout.
“Urban Union is an ideal opportunity to expand our presence in the dynamic South Lake Union neighborhood,” said David Edelstein of TriStar Capital in a press release. “The building’s design is best-in-class and it is located in one of the top performing submarkets in the country. We look forward to partnering with Schnitzer West as they continue to manage the building.”
The press release states the Class A+ office building features Schnitzer West’s signature “Great Room” concept which is wrapped with a two-story sculptural wood wall and glass blue cube in the entry. The building also includes “The Lookout,” an outdoor deck and rooftop meeting area with views of Lake Union and the Space Needle.
“Urban Union was developed to meet the needs of tomorrow’s mobile, multi-generational knowledge workers,” said Pam Hirsch, managing partner, Schnitzer West in a press release. “The timeless design and superb tenant roster make it a best-in-class investment opportunity. We look forward to partnering with TriStar Capital and RFR Holding to continue managing the investment on their behalf.”
While the record breaking sale of the KOMO Plaza topped sales prices at $928 per square foot, sources said no other straight office building sale in Seattle has been acquired for over $800 per square foot prior to this sale. The sale of the KOMO Plaza by Hines to GI Partners was an increase of 72.5 percent from when Hines purchased the building only five years ago.
Based on the property’s current net operating income, the cap rate is 4.5 percent. The lease with Amazon in this building runs for 16 years.
Last year’s over $4.3 billion in office sales nearly matched the total for 2015 and has far exceeded the 10-year historical average, according to JLL’s Seattle-Bellevue Office Local Insights report for the fourth quarter of 2016.
Additionally, in an August 2016 report from JLL, five of the 12 highest sales price per square foot over the past 12 years are Schnitzer West developed buildings. Those include Civica Office Commons in 2005 and 2006, Bravern in 2010, 818 Stewart in 2011 and 401 Terry in 2014.