By Jon Peterson
Seattle-based Vulcan Real Estate has sold two parcels of land on ground leases that are located beneath the University of Washington School of Medicine research facilities for $133.6 million. The land is located at 850 Republican Street in South Lake Union, also known as UW Phase I and II. The asset represents a 2.4-acre, full-block site with three laboratory and office buildings totaling 361,000 square feet, according to Vulcan. The buildings are owned by the University of Washington and are subject to a ground lease.
The sale prices of the two parcels are approximately $98.9 million for 850 Republican and $34.7 million for 815 Mercer, according to sources familiar with the transaction.
The buyer of the assets is Honolulu, HI-based Shidler Group that specializes in owning assets such as these. “Of the 28 ground leases we acquired in the past three years, I’m most proud of this project. Vulcan has delivered to UW School of Medicine one of the finest biomedical research facilities in the country,” said Jay Shidler, a manger partner for Shidler, in a prepared statement.
Completed in 2005 and developed by Vulcan Inc., the Phase I building was an adaptive re-use of the former Puget Sound Energy “Blue Flame” office building located on the south side of Mercer Street between Eighth and Ninth avenues North. In 2008 Vulcan completed development of the full-block site with Phase II, consisting of two new five-story state-of-the-art office and research buildings. A third laboratory building (UW Phase 3.1) is situated on the block to the west and that ground lease was not part of the Shidler transaction.
Vulcan sold the property through two real estate firms. One was CBRE, whose efforts were led by Tom Pehl and Lou Senini from its Seattle office. Kevin Shannon of Newmark Grubb Knight Frank was also involved in the transaction. CBRE declined to comment when contacted for this story.
Vulcan sees this as a major project for the Seattle market. “UW Medicine’s presence in South Lake Union contributes greatly to this vibrant and collaborative research community. The successful transaction of the underlying ground lease is testament to the value the University of Washington adds to the neighborhood,” said Ada Healey, vice president of real estate for Vulcan, in a prepared statement.
Vulcan has plans for what it will do with the proceeds. This is to re-invest the capital towards its continued development efforts and new land and value-add investment opportunities in the region.