By Jon Peterson
An East Coast-based private investor has acquired the 88,225 square foot office building located at 428 Westlake for $81.5 million or $924 per square foot, according to sources that track the sale of office buildings in the region. The buyer was an entity called Karigo LLC, which is affiliated with Commonwealth Realty Trust, which has addresses in New Jersey and Maryland, according to public documents. Seattle-based Vulcan Real Estate is the seller.
Vulcan was represented in the sale by the Seattle office of CBRE. This company declined to comment when contacted for this story. The office building was put on the market for sale in March of this year.
The buyer of the property made this acquisition as a 1031 exchange deal. This transaction produced a low four cap rate, according to sources familiar with the property and details of the transaction. This return is based on the property’s current net operating income.
This building has been the corporate home of Tommy Bahama. This tenant moved out of the property last year as it needed more space that the building could accommodate and move to 400 Fairview Avenue North. 100 percent of the office space will eventually be taken by Amazon. This tenant is now completing its tenant improvements on the space and should be moving in around August or September of this year.
According to public documents filed with the King County Recorder, Amazon singed a ten-year lease to occupy 80,978 square feet of the building, or floors 2 to 6 on October 11, 2016. The lease commenced on April 1, 2017, and it expires on March 31, 2027. Amazon has the right of first refusal to purchase the landlord’s right, title and interest in and to the premises. The Seattle-based technology giant also has the right to at least two 5-year extensions on the lease.
There are some retail tenants in the building totaling around 7,000 square feet. These include an AT&T store, a Key Bank branch, a sandwich shop and a picture framing business. 428 Westlake was one of the first buildings that Vulcan had developed in South Lake Union. This property was first constructed in 2004. It was designed by Collins Woerman.
