By Meghan Hall
The Puget Sound’s commercial real estate market continues to plug along, with more modest assets continuing to trade. In a more recent transaction, which closed on March 26th, a private investor purchased Tukwila’s Fairway Center for $13.45 million, or about $171 per square foot. The investor is based in Newcastle, Wash., and is associated with AAIC Fairway LLC. The seller is Kirkland-based Shelby Company, LLC, an entity tied to The Schuster Group.
“Our vision with this asset was to purchase a quality suburban office/flex complex in a prime central location in Seattle/Tukwila with a history of high occupancy and solid cash flow, but with significant deferred maintenance and management, and put together a comprehensive re-positioning plan to increase the quality and value of the asset,” states The Schuster Group on its website, which highlights the Fairway Center as one of the office assets in its portfolio. Through strategic investment in various sustainable improvements, building renovations, and tenant improvements, and intensive hands-on management, we stabilized this property and significantly increased occupancy, revenue, and value.”
Located at 14220-14240 Interurban Ave. S., The Schuster Group originally purchased the property back in June of 2016 for $12.8 million.
An offering memorandum obtained by The Registry shows that Kidder Mathews was marketing the property for sale, and that preliminary guidance pricing on the property was $12.8 million, or about $160 per square foot, the same price initially paid for the property several years ago. The two-building, 78,461 square foot office and flex complex was originally constructed in 1991 and sits on nearly six acres of land. The property is currently 95 percent leased to several different tenants, including Measurement Systems International, who has been a tenant for over 25 years since 1989, and Cerium Networks. The two largest tenants, according to Kidder Mathews, occupy 46 percent of the property.
The asset has also recently undergone extensive interior and exterior renovations, and was originally offered below current replacement costs of $225 per square foot to $240 per square foot. Amenities include a common kitchen area for tenant use, common areas, an on-site fitness center, shower facilities and bike racks, and outdoor space via the foster Golf Course and Green River Trail.
Nearby development includes the 1.68 million square foot Westfield Southcenter Mall and the Landing at Renton, a 607,000 square foot mixed-use development with retail, dining and housing. According to a fourth quarter report released by Kidder Mathews on the regional office market, average asking rents in South King County sat at around $30 per square foot and vacancy sat at 13.38 percent.
