By Meghan Hall
Two six-story, Facebook-leased office buildings in the South Lake Union neighborhood of Seattle have sold for top dollar, according for King County public documents. In a transaction that closed November 5th, Vulcan Real Estate sold both Arbor Blocks East and Arbor Blocks West for a combined $415 million. The buyer of the properties was Ponte Gadea, the real estate branch of a private capital, high-net-worth firm based in Spain.
The buildings, located along 8th Avenue North between Thomas and Harrison Streets, came online at the end of 2018, and Facebook moved in at the beginning of this year. Arbor Blocks East totals 196,200 square feet and sold for $210.8 million, or about $1,074 per square foot, while Arbor Blocks West totals 192,700 square feet and sold for $204.2 million, or $1,093 per square foot.
NKF’s Co-Head of U.S. Capital Markets Kevin Shannon, Vice Chairman Nick Kucha, Senior Managing Director Mike Moll, Executive Managing Directors Rob Hannan, Ken White, Alex Foshay, and Director Bill Delacy, in cooperation with NKF local expert Executive Managing Director Jesse Ottele, represented the seller, Seattle-based Vulcan Real Estate, according to a company statement.
“Once again, Vulcan has developed a trophy office product that has set an all-time record price per square foot for Seattle, which happens frequently in healthy coastal markets that possess strong rent growth fundamentals,” said Shannon in a statement.
The property also features about 4,000 square feet of retail and is surrounded by a large outdoor plaza and seating areas. The buildings were designed by Graphic Design Group and feature increase setbacks. At the center of the development is a large, four-block-segment to provide an open pedestrian realm. The western building has bioretention cells along its north and front edges, and the eastern building as numerous pocket seating areas. Both buildings have lower and roof-level terrace that function as outdoor workspaces for Facebook employees.
According to NKF’s third-quarter 2019 market report, the Lake Union office submarket has the lowest vacancy rate of all of eight of downtown Seattle’s submarkets at 2.8 percent. Year-to-date, it has seen just over 1.11 million square feet of net absorption, and currently has approximately 2.9 million square feet under construction.
“The ability to acquire a trophy bond-like investment in south Lake Union anchored by Facebook credit is incredibly rare,” said Moll in a statement.
The investment by Ponte Gadea comes just months after it acquired the 811,520 square foot Troy Block office complex, not far from Arbor Blocks, from Touchstone and USAA Real Estate in March. The Spanish firm paid $740 million, or nearly $912 per square foot to acquire the South Lake Union Property. At the time, the transaction was the largest single asset trade by volume in Seattle history.
Ponte Gadea was founded by Amancio Ortega Gaona, the same founder as global retailer Zara. Over the years, the company has also invested heavily in the San Francisco Bay Area and is no stranger to major acquisitions; in 2016, it purchased the well-known 360 Post Street Building, also known as the Tiffany Building for $135 million, or $1,365 per square foot. It also purchased Pacific Place in San Francisco for $475 million, or about $1,082 per square foot.