The Peterson Report Commercial Real Estate Blog

Lease: Measurement Systems International Renews Tukwila Lease

2009-05-26T09:06:00.000-07:00

Image courtesy of CoStar.com

"Measurement Systems International renewed its 28,375-square-foot lease at 14240 Interurban Ave. South in Tukwila, WA.

The manufacturing company occupies the entire first floor of the 56,750-square-foot office building. The property was constructed in 1989 and is in the Fairway Center Complex.

Michael George and Nick Fletcher of Colliers International handled the transaction for the landlord, O'Keefe Development."

You can find the article HERE.

Sale: AMB Collects $27.3M in Puyallup Industrial Sale

2009-05-26T08:50:00.000-07:00

Image Courtesy of CoStar.com

"Ozark Automotive Distributors acquired the industrial building at 1602 Industrial Park Way in Puyallup, WA, from AMB Property Corp. for $27.3 million, or about $71 per square foot.

Completed in 2008, the 388,000-square-foot building is on 23.7 acres in the AMB River Front Industrial Park. Ozark Automotive Distributors intends to occupy the building, which delivered last year and is currently vacant.

Tony Kusak of Cushman & Wakefield represented the buyer. Mike Roy and Bruce Valentine of Neil Walter Co. represented the seller. "

You can find the article HERE.

Sale: IKEA Purchases its Building in Renton

2009-05-26T08:47:00.000-07:00

Image courtesy of CoStar.com

"Furniture retailer IKEA acquired two building in the Northwest Corporate Park in Renton, WA, from AMB Property Corp. for $32.8 million, or about $43 per square foot.

The two buildings are at 600-630 and 800-850 SW 43rd St. They were constructed in the 1970s and collectively total almost 800,000 square feet.

IKEA occupies both buildings and recently signed a 10-year renewal. The properties were on the open market for about a month prior to the sale. IKEA will continue to occupy the facilities.

Brett Harzell, Dara Longo and Barbara Emmons of CB Richard Ellis represented AMB Property Corp. Les Boudwin of Pacific Real Estate Partners and Tony Beatty of NAI BT Commercial represented IKEA."

You can find the full article HERE.

Article: Survey: Recession clips angel investments

2009-05-26T08:43:00.000-07:00

In the PSBJ last week, an article focused on the lack of Angel Investing due to the economic woes. Click HERE to read.

"Angel investments decreased in 2008 from 2007 because of the recession, according to the Angel Capital Association.

Angel investment groups surveyed by the Lenexa, Kan.-based association in March and April reported that average investment activity per group decreased by 9 percent in 2008 from 2007, though several angel groups increased investments because they saw new opportunities during the recession, the association said in a Monday release..."

Article: Online Spending for Commercial RE up!

2009-05-20T21:17:00.001-07:00

Interesting article on the spending habits of CRE companies. Click here to read the full article.

"Spending for online commercial real estate marketing is projected to reach a record $2.9 billion in 2009, according to Williamsburg, Va.-based media research firm Borrell Associates Inc. That represents a substantial increase from the previous record of $2.5 billion in 2008, according to Borrell.

The figures document the trend toward increased use of the Web as a marketing tool. Nearly half of all spending for commercial property marketing last year, 48%, was allocated online, Borrell reports. That includes e-mail marketing and spending for property-related Web sites.... "

Article: Level Unemployment Rate

2009-05-20T21:04:00.000-07:00

The following from PSBJ gives an update on the monthly unemployment rate and it's current trends.

Washington April unemployment rate stays the same

Puget Sound Business Journal (Seattle)

“The unemployment rate in Washington State stayed the same at 9.1 percent last month compared with March.

It’s the first time the rate didn’t rise in more than a year, state officials said.

In Seattle, the unemployment rate actually decreased in April to 7.9 percent from 8 percent a month earlier. In April 2008, the unemployment rate in Seattle was 4.3 percent.

According to the Washington Employment Security Department, there were 200 fewer unemployed people in the state last month compared with March.”

Article: Update... Commercialization of Paine Field

2009-05-20T20:48:00.000-07:00

In an article by John Wolcott of the SCBJ, an update on the commercialization of Paine Field is featured. Click the article title to read on...

Airline service getting closer, Horizon’s Russo tells Private Enterprise Council

Airline service at Paine Field continues to move closer, Horizon Air Marketing Vice President Dan Russo told the Snohomish County Private Enterprise Coalition (PEC) in March.

“We are continuing to negotiate in good faith with Snohomish County Executive Aaron Reardon’s office, including planning for the terminal we’ll need, he said. “But we will not make our original Apr. 1 launch time. However, that was initially the date we used in our December 2008 letter to the county to get things going. Now, we’re just adjusting it.”

Article: Survey finds long-term optimism among world's small businesses

2009-05-18T21:54:00.000-07:00

"Small-business leaders worldwide remain optimistic about their long-term prospects despite the economic downturn, even though only 37 percent expect their companies to do better this year than last, according to a survey released Monday." Click the image to follow and read on!

Article: Financing IS out there!

2009-05-18T21:42:00.000-07:00

In Monday's PSBJ, the article below update's the status of the SBA guaranteeing ARC loans. Read on!

Help is on the way for small-business owners struggling to made debt payments.

Starting June 15, the U.S. Small Business Administration will start guaranteeing America’s Recovery Capital (ARC) loans.

These are deferred-payment loans of up to $35,000 that will be made available to established, viable, for-profit small businesses in need of short-term help to make their principal and interest payments on existing debt. The loans are interest free and 100 percent backed by the SBA.

Article: Puget Sound Truckers Feeling the Pain

2009-05-18T07:32:00.000-07:00

In an article from the Puget Sound Business Journal by Steve Wilhelm, the Puget Sound Trucking Industry is featured. Please click on the link to continue to read!

"Puget Sound region truckers are trying new survival tactics, including squeezing new revenue from the agriculture market, as they struggle to compensate for the precipitous drop in cargo this year.

Moving apples, potatoes and onions from Eastern Washington is part of the new diet for the Seattle operation of Mason-Dixon International, formerly Harbor Freight, said Operations Manager Julie Tallant.

“We’re having to branch out,” she said from her South Seattle office. “We’re starting to do some domestic things, to fill the gap.”

Trucking companies in Washington state and the rest of the nation are struggling because the recession has diminished the movement of domestic and international cargo. The downturn has reduced consumer spending as well as factory orders."...

Article: What the Bank Stress Tests Tell Us About Commercial Real Estate

2009-05-13T20:09:00.000-07:00

The following article on CoStar.com by Mark Heschmeyer is a great read on how the Banks could be affected by their CRE holdings in a worst case senario. There are some interesting statistics in the article, click the article to read on!

"If the current economic malaise brings down any of the largest banks in the country, commercial real estate likely WON'T be the culprit. Office, industrial and retail properties specifically are even less likely to bring down the nation's top banks.

The 19 largest U.S. banks, which account for 70% of the bank holdings of this country, were the focus of the U.S. Federal Reserve 'stress tests' results released this past week. Under the worst case scenarios envisioned for the current recession, commercial real estate losses would cost those banks $53 billion in losses this year and next...."

NAI Global ranked 4th on National Real Estate Investor’s (NREI’s) Top 25 Brokerage Survey for April 2009

2009-05-13T08:33:00.000-07:00

Click the image to see how the competition sizes up!

Complete: Auburn Commerce Center

2009-05-13T07:23:00.000-07:00

Photo Courtesy of GVA Kidder Matthews

The Auburn Commerce Center completed construction this week in Auburn, WA. The facility is 53,650 square feet and has the flexibility to divide from one up to four units. The facility offers the ability for a tenant to lease space or purchase their unit as a condo. Each of the four condo units has front-end loading (two dock high doors and one grade level door). The facility only offers about 1/1000 SF parking ratio. The Auburn Commerce Center arrives fashionably as "Condo-ing" for smaller industrial users becomes more readily available (The Northend Market received Sound View Center @ Seaway early in the first quarter 2009, which offers a similar but more flexible product).

Sale: 11831 Bev-Ed Business Park Everett, WA

2009-05-12T14:07:00.000-07:00

The 32,400 square foot building located at 11831 Beverly Park Road in Everett, WA sold to a private investor on Tuesday, 5/2/2009.

Image courtesy of CoStar.com

Sierra Construction Co. owned the facility since the 2007 build and sold it to a private investor for $4.35 million, or about $134 per square foot. This facility is currently leased to Electric Mirror. This is a good sign for the Northend Industrial Market, posting another recent sale for a healthy price. Hopefully this points to a halt in price slashing and a stabilization of the market and overall economy…

2009 Q1 NAI-PSP Market Report

2009-05-11T17:35:00.000-07:00

Click here to view the 2009 Quarter 1 Market Report produced by NAI Puget Sound Properties.

Leased: T-Mobile Expands & Extends

2008-12-08T12:23:00.000-08:00

According to GlobStreet.com, "T-Mobile USA Inc. is expanding its corporate headquarters with a new building, according to Bentall Capital LLC, which manages the wireless company’s 990,000-square-foot multi-building campus in Bellevue, WA for owner SITQ. The campus, known as Newport Corporate Center, is located at the intersection of Interstates 90 and 405 and houses 3,500 T-Mobile employees."

Image Courtesy of GlobeStreet.com

It was also reported by GlobeStreet.com that "Bentall says the deal calls for SITQ to develop a 165,320-square-foot, six-story facility with underground parking that will connect via sky bridge to an adjacent building, and for T-Mobile to extend its lease for an additional 360,225 square feet of space through 2015."

It is good to see at least one of the major eastside companies planning growth for the years to come!

Seattle CBD Vacancy to Increase by +4%

2008-12-03T11:14:00.000-08:00

By the end of March, JPMorgan Chase & Co. said it will vacate all of the office space that the bank currently occupies in Seattle except for 600,000 square feet in WaMu Center. The result will be approxiatlly 1,000,000 square feet of office space coming on the market.

Image Courtesy of CoStar

The firm inherited approximately 1.6 million square feet of office lease obligations when it acquired WaMu. According to the DJC, "The office space is no longer needed because the firm will lay off 1,500 of its 4,200 employees in Seattle by the end of January. It will retain 1,900 employees at double salary during a transition period... By the end of 2009, JPMorgan will have 800 employees downtown, and will likely then lease or sell some of its space in WaMu Center."

JPMorgan Chase owns 600,000 square feet in the 944,000-square-foot WaMu Center. Landlords of the other buildings Washington Mutual will be vacating may not get paid much for the unexpired term because WaMu is in receivership, the responsibility for those leases go to the FDIC and it is save to assume that the government will offer itself "favorable" terms of any assumed lease or lease buyout.

Seattle No. 1 in Commercial Real Estate

2008-10-31T12:21:00.000-07:00

Great article from the Seattle Times by Eric Pryne, click here to check it out.

The forecast, "Emerging Trends in Real Estate 2009," was released last week by the Urban Land Institute and PriceWaterhouseCoopers. It bases its assessment of the overall commercial real-estate situation and individual markets on surveys and interviews with about 700 developers, investors, lenders, brokers and other professionals.

Vacancy Rates for Seattle Office Market Could Hit 15% in 2009

2008-10-08T08:50:00.000-07:00

Brokerage firm Cushman & Wakefield predicts by the end of next year Seattle's downtown office vacancy rate could hit 15 percent and rents could be falling because of the deteriorating economy, substantial spec space coming on line and potential downsizing by local firms.

Photo By Benjamin Minnick
Starbuck’s 288,000-square-foot building at 505 First Ave. S. is among those being constructed in downtown Seattle without an announced tenant. Kinzer Real Estate Services said in July that Starbucks would put the building and Starbucks’ adjacent 185,000-square-foot 83 King building up for sale, while also working to lease those spaces. The building is slated for completion in early 2010.

Cushman Senior Director Matt Christian made the forecast as part of the firm's third quarter 2008 market update released Thursday.

Vacancy “could be in the 12 percent to 15 percent range” and “as we look longer term rents are certainly going to go down,” he said.

Here's why: There are no announced tenants for the 2.2 million square feet of office space slated for completion in 2009, he said. Seattle-based Safeco — recently acquired by Liberty Mutual — is also expected to start downsizing to become more efficient, and another Seattle firm, financially troubled Washington Mutual, could unload more of the 1.6 million square feet it leases or owns downtown.

“Nobody knows what's going to happen to WaMu,” Christian said. “Do they give back 100,000 square feet, do they give back a million square feet. ... A million square feet could have a big impact on downtown.”

This means better deals for office users, who are seeing downtown landlords offer increased tenant improvement packages and free rent, said Christian.

For full article, visit the Daily Journal of Commerce.

WaMu & The Current Seattle Market

2008-10-02T13:09:00.000-07:00

JPMorgan Chase is busy mulling its acquisition of Washington Mutual and how it will integrate the thrift into its Chase brand. The beneficiary of the nation’s largest bank failure says it's too early to know what exactly the deal means for WaMu’s branches or its office space, such as its new headquarters tower.

Image Courtesy of CoStar

WaMu occupies more space than any other company in Downtown Seattle. It owns the 42-story, 900,000-sf WaMu Center at Second Avenue and Union Street, which was completed two years ago and likely will take on the Chase brand, and leases an additional 700,000 sf in nearby buildings, including its former headquarters at 1201 Third Ave. and also 1415 Second Ave. and 1111 Third Ave.

Chase’s West Coast headquarters are located at 560 Mission St. in San Francisco. Chase currently subleases much of the space but could consolidate operations in the building as leases expire, according to local industry sources. WaMu also is actively subleasing most of its leased space. Of its 700,000 sf of leased space in Downtown Seattle, WaMu has subleased approximately 190,000 sf and is marketing an additional 350,000 sf, most of it in 1111 Third Ave.

See GlobeSt.com here for full article.

Sale: North Creek Parkway Center

2008-09-03T11:17:00.000-07:00

KBS Real Estate Investment Trust I, a public non-traded REIT has acquired the North Creek Parkway Center from RREEF, a 205,707-sf commercial class B office and flex complex in Bothell, a Seattle suburb located 10 miles north of downtown Bellevue, WA. The sale price was $41.11 million, or $199.87 per sf.

Image Courtesy of CoStar

North Creek Parkway Center consists of six one- and two-story tilt-up concrete buildings with glass and aluminum exteriors. The buildings range in size from 16, 596 sf to 61,042 sf. The late 1980s development sits on 13.52 acres within the -acre North Creek master-planned business park.

Merger: Jones Lang LaSalle and The Staubach Company

2008-06-17T10:47:00.000-07:00

It's always great to hear about competitors consolidating...

"Under the terms of the agreement, Jones Lang LaSalle will pay $613 million, with $123 million in cash and $100 million in stock paid at the transaction close and the balance paid out in cash over five years, for all of the outstanding capital stock of Staubach Holdings, Inc. The agreement also calls for potential earn out payments of up to $114 million that are subject to the achievement of certain performance metrics measured over a period of up to approximately four and one-half years after the closing. The transaction is expected to close in the third quarter subject to Hart-Scott-Rodino approval as well as other customary closing conditions. The transaction details have been posted on Jones Lang LaSalle’s Web site and will be discussed on a conference call tomorrow, June 17, at 9:30 a.m. EDT."

On LinkedIn.com, JLL has posted and is looking for positions as it appears that it will be growing its presence in the great Seattle area.

2008 Q1 Market Report

2008-05-14T10:38:00.000-07:00

Click here for the NAI Puget Sound Properties 2008 Q1 Market Report.

Clise Portfolio Pulled from Market

2008-04-28T16:02:00.001-07:00

Due to the lack of access to debt capital, the Clise family has pulled its 12-acre assemblage in the Denny Triangle which is considered to be one of the largest metropolitan portfolios in the nation.

Image Courtesy of the Seattle P-I

The property could support as much as 13 million square feet of development and currently consists of mostly parking lots and low-rise buildings. The expected price for the portfolio was estimated to be in the $600 million range and cost an estimated $7 billion to build out.

Bellevue: Tale of Two Futures

2008-04-07T16:58:00.001-07:00

In one of the hottest office markets in the U.S., there is a story unraveling that will have a significant impact on all office leases to be inked in the Bellevue CBD over the coming 12-18 months; that story’s name is City Center Plaza.

Image Courtesy of CoStar

The 26-story 571,806 square foot building is roughly 96.3% (550,656 square feet) of office and 3.7% (21,150 square feet) of retail. There are 29 (5 of which are under construction) Class-A office buildings in the Bellevue CBD. Recently the Puget Sound Business Journal reported that Microsoft had backed away from potentially leasing the entire building for its future growth plans, but some inside sources claim the contrary.

Should Microsoft absorb the office portion of the building, the tech giant would easily be the largest tenant in downtown Bellevue. In addition, Bellevue CBD rates would most likely increase (to a point) as a reflection of simple supply and demand principles.

Should Microsoft opt out of leasing City Center Plaza then the building would represent an opportunity for smaller Bellevue CBD tenants. In addition, a vacancy of this size would help maintain the current “leveling out” we have seen in Bellevue office market rental rates since this past fall.

Bellevue's First LEED Building

2008-03-18T15:49:00.000-07:00

Although this blog is generally directed toward real estate happenings on the west side of the lake, this article from the Daily Journal of Commerce was too good to pass up. As more and more existing buildings strive to reach creative ways to "go green," (our U.S. Bank Centre location in downtown Seattle being no exception) Jones & Jones Architects is helping an educational center "go green" from the ground up - in Bellevue. (read U.S. Bank Centre's new green initiative below)

The Mercer Slough Environmental Education Center in Bellevue has been a project in the works for eight years, and it's finally breaking ground. Situated around a 320-acre wetland nature park and on a 40% slope of land, this 10,000 square foot project is far from your ordinary development. The structure will have the overall perk of existing in the midst of nature with minimal negative impact: "Pilings and a steel substructure support the buildings, rather than flattening the ground to create a base. This will allow water to flow underneath when it rains. Cantilevered footings allow the building to extend up to 15 feet over the base so visitors will be close to trees but the structure will be further away from the roots."

Rendering courtesy of the Daily Journal of Commerce.

Other cool features will include vertical wheelchair lifts to "tram" up and down the hillside, installation of a natural ventilation system and the utilization of recycled materials to complete the functionality of the structure. The project is expected to be awarded with a LEED silver certification, making it Bellevue's first LEED (Leadership in Energy and Environmental Design) building.

To learn more about the Mercer Slough Environmental Education Center's features, development and costs, please contact me and I will forward on the Daily Journal of Commerce's original article on this topic.

In the meantime, ponder these facts compiled by the U.S. Green Building Council:

In the United States alone, (non-certified) buildings account for:
• 65% of electricity consumption
• 36% of energy use
• 30% of greenhouse gas emissions
• 30% of raw materials use
• 30% of waste output (136 million tons annually)
• 12% of potable water consumption

NAI & Brand Awareness

2008-03-10T16:18:00.000-07:00

The results of the 2007 Lipsey Co. Top 25 Commercial Real Estate Brands survey are in, NAI Global leaped over both Jones Lang LaSalle and Grubb & Ellis to rank #4 in the 2008 survey.

The 2008 Top 10
1. CB Richard Ellis
2. Cushman & Wakefield
3. Colliers International
4. NAI Global
5. Jones Lang LaSalle
6. Grubb & Ellis
7. Coldwell Banker Commercial
8. The Staubach Company
9. ONCOR International
10. GVA Worldwide

“Gen Y” and Real Estate

2008-02-27T11:01:00.000-08:00

A recent article in the Seattle P-I highlighted the potential future shortage of real estate professionals. While the article focuses on the residential side of the industry, which I cannot speak to and is very different than the commercial side, I would tend to agree that the majority of agents are older; in the commercial industry they tend to be in the “+45” age range.

From my experience, I would say that the challenge for young people entering into a career in commercial real estate is the large amount of freedom that they will have. If a commercial real estate career is all someone has known in their professional life, they may find the freedom overwhelming at first as there are a myriad of approaches one can take in regard to entering this business.

High schools and colleges have become so structured (that is not a criticism) that young people are used to having a program or path to “plug into”. Yes, these programs and paths have many options, but the mile markers are clear and typically there is an abundance of people to tell a student what to do.

The one hope I have for people like myself and those coming after me are our innate ability to multitask. Commercial real estate is a new challenge every day, even those with “systems” set in place need to adapt their schedule on a daily basis to get the job done and best serve their clients.

As Web 2.0 medium (Facebook, LinkedIn, etc.) continues to enter into the workplace (NAI, our global commercial real estate partner, has released its own social network in beta form for NAI brokers to use and collaborate with), the need for the ability to multitask and execute a plan while simultaneously adapting to immediate “fires” is essential.

If you have any questions or thoughts for me on this subject, please let me know.

Lease For Life

2008-02-21T15:21:00.000-08:00

Lease for Life is my response to a belief that we are all called to live for more than just ourselves. All too often the business world seems to exist solely for profit, gain, growth and domination. Alone, these elements of business may lead to profitability and success, but at what cost?

Lease for Life is an attempt to take the key indicators (profit, gain, growth) of “good business” and couple them with charity, compassion and love.

Lease for Life knows no race, religion, color or creed; it simply exists to make the necessary commercial real estate sale and lease transactions count for more than just dollars and cents.

If you have any questions or comments, please feel free to contact me directly.

2007 Q4 Market Report

2008-02-20T14:31:00.000-08:00

Click here for the NAI Puget Sound Properties 2007 Q4 Market Report.

BioMed & South Lake Union

2008-02-19T10:38:00.001-08:00

BioMed Realty Trust has plans to add about 100,000 square feet to its Fairview Research Center at Mercer Street and Fairview.

Image Courtsey of the DJC

BioMed has been aggressively buying biotech space locally and plans to double the size of a laboratory building it is constructing. The DJC had this to report,

"Late last month, BioMed purchased the expansion site at Fairview and Republican Street from Nelchina Point LP for $3.9 million, according to public records. That's $181 a square foot for the half-acre, which now houses a two-story office building constructed in 1959."

In addition to BoiMed, Alexandria Real Estate Equities has also recently purchase a number of Seattle properties to be used for future biotech, research, and development space.

Changing the Way Seattle Grows

2008-02-12T10:50:00.000-08:00

The Seattle City Council has a variety of proposals in front of it that would make a significant impact in the way Seattle will grow. These proposed amendments to the city’s comprehensive plan, which determines city zoning and planning policy and can be amended only once a year, are filled with green initiatives. Also, as you will see below, there is a desire to continue to “upzone” many parts of the city.

Image Courtesy of Kevin Ebi

Amendments already submitted, courtesy of the Daily Journal of Commerce:

Capping I-5: An amendment suggested by the Department of Planning and Development would allow the city to construct lids over I-5 to connect First Hill and Capitol Hill with downtown. It doesn't have funding and hasn't yet had public meetings, but the amendment would set the framework for such a policy.

Stopping Burke-Gilman in Ballard: An amendment from the North Seattle Industrial Association would prevent construction of bike trails within 100 feet of an existing short line railroad franchise that is in or next to the Ballard Interbay manufacturing and industrial center. That would halt planning and development of the “missing link” of the Burke-Gilman trail, which is now in the works. Eugene Wasserman, who wrote the amendment, says it is unsafe to build bike paths close to truck and rail transport and hurts the maritime industry.

Protecting tree canopy: A proposal written by Ilze Jones of Jones and Jones Architects and Landscape Architects would set goals and policies for increasing the city's tree canopy. Kit O'Neill and Cheryl Trivison are co-sponsors of the proposal, which would make trees an element for consideration in land use planning and recommends the city set aside 48,000 acres for trees. The proposal also suggests naming a tree czar to head a department that manages the tree canopy policy.

Investing in solar: An amendment suggested by Kurt Zumdieck would have Seattle City Light invest in solar energy and develop solar energy infrastructure.

Among the amendments are several requested zoning changes to the city's future land use map. Such requests often precede a request to up-zone a specific project. For example, last year, Nitze-Stagen requested an amendment to the city's comp plan that would allow Starbucks to expand its office space at the Starbucks Center beyond current size limits as long as existing industrial uses remain the primary use. Future council action would be required before Starbucks could actually expand its office space there.

Here are some of the future land use map changes requested in this year's amendments. All would still require zoning approval for specific developments:

Upzoning South Lake Union: Redesignating the area in South Lake Union now designated industrial to commercial/mixed-use land. The proposal was written by DPD and precedes a comprehensive rezone of the area expected in 2009.

Ballard upzone: Redesignating a block and a half immediately north of the Ballard Bridge from industrial to commercial/mixed-use. The proposal, written for developer Urban Commercial Properties would redesignate the block between 15th and 17th avenues northwest and from 49th to halfway between 50th and 51st streets northwest. The developer wants to build a 65-foot to 85-foot mixed-use development on the site with affordable housing, light industrial, office and retail.

Harbor Avenue corridor upzone: Redesignating the Harbor Avenue Corridor now within the Duwamish Manufacturing/Industrial center as commercial/mixed-use. This proposal was written by John McCullough.

Stadium East upzone: Removing the Stadium East property from the Duwamish Manufacturing/Industrial center and redesignating the site as part of the downtown zone. This would allow a mixed-use office project on the site bounded by Airport Way South to the north and east, and by interstate ramps to the south and west. The proposal was written by John McCullough for Urban Visions.

South Downtown upzone: Redesignating areas within the Livable South Downtown study area from industrial to commercial/mixed-use. The affected land is north of Royal Brougham Way between state Route 99 and I-5, and north of Dearborn Street and east of I-5 to the east side of Rainier Avenue. The proposal includes removing land from the Duwamish Manufacturing/Industrial center. The proposal was written by DPD.

The Inevitable: SBUX and AT&T

2008-02-12T08:38:00.000-08:00

For many, the pain of paying for something that “should” be free was almost enough of a reason to walk across the street to Tully’s. Starbucks announced yesterday that it will start offering a mix of free and paid wireless Internet service in most of the U.S. shops, beginning this spring.

Image Courtesy of www.iphoneworld.ca

AT&T says that the majority of its broadband internet customers will have free unlimited Wi-Fi access at Starbucks. The Associated Press reports that,

“Starbucks said it will give customers who use a Starbucks card two hours of free wireless access per day. More time than that will cost $3.99 for a two-hour session. Monthly memberships will cost $19.99 and include access to any of AT&T's 70,000 hot spots worldwide.”

Needless to say, I now have one less reason not to get an iPhone.

NAI Global Convention 2008

2008-02-01T08:03:00.000-08:00

I have been in Las Vegas all week with 1,250 of my fellow NAI colleagues. Aside from our intense networking and brainstorming sessions, which you can see pictured below, we have been inundated with key economic trends and forecasts which I look forward to sharing with you early next week.

Enjoy the weekend!

Yale Campus on South Lake Union

2008-01-22T14:00:00.000-08:00

The Yale Campus, to be built on two blocks of the South Lake Union, will be one of the largest projects built in that neighborhood at 776,000 square feet. Four new buildings will be built for office, biotech and retail purposes, three of them four stories and one seven stories high. Blume Co. owns the project, as well as one of the blocks.

Since 2003, more than 4 million square feet of space have been developed in that area, making this additional development a promising one as the work and residential communities continue to grow there. Needless to say, Amazon.com has already made plans to lease 1.6 million square feet in 11 different buildings.

This is an exciting time for the South Lake Union area. We will do our best to keep you updated on its growth and development as information is released.

Crane to Close Fifth Avenue

2008-01-18T10:09:00.000-08:00

I just read this and thought you may appreciate it...

A crane will be erected in the 300 block of Fifth Avenue this weekend to work on a building at that location. The work will require closing Fifth Avenue from James to Terrace streets on Saturday and Sunday. The intersection of Fifth and Terrace will also be closed. All roads are expected to reopen at 7 p.m. Sunday.

Courtesy of the DJC

NAI Puget Sound Properties Relocates, Opens New Office

2008-01-16T13:39:00.000-08:00

We have relocated our Bellevue office to Lincoln Plaza. Our new Bellevue address is:

11235 SE 6th Street, Suite 130
Bellevue, WA 98004

Image Courtesy of CoStar

Also, our new Seattle office is now open in the U.S. Bank Centre building. Our new Seattle address is:

1420 Fifth Avenue, Suite 2670
Seattle, WA 98101

Image Courtesy of CoStar

Lease: Amazon in SLU

2008-01-16T11:59:00.000-08:00

I just wanted to cover one of the largest HQ relocations we have ever seen in Seattle. Amazon.com will begin to occupy 1.6 million square feet of office in Vulcan's South Lake Union project in the beginning of 2010 and be fully moved in by 2011. The value of this lease transaction is roughly $1.5 billion.

Enter 2008

2008-01-16T10:43:00.001-08:00

I hope you all had an enjoyable holiday season. As I am now back up to speed, I look forward to inundating you with the latest commercial real estate news, events, and insights.

As always, if I can ever serve you in anyway please contact me and let me know.

Seattle Recognized for its Walkability

2007-12-10T16:27:00.000-08:00

Photo courtesy of Ryan Peterson

For being one of the nation's largest metropolitan cities without an efficient rail transit system, Seattle was recently ranked sixth out of 30 cities surveyed for "walkability" by the Brookings Institute.

According to the Puget Sound Business Journal, the survey calculated 30 "walkable urban places divided by population." Unsurprisingly, 65% of these areas are serviced by some type of rail system. Interestingly enough, placing first was Brookings' own city, Washington D.C. Others to make the list (in no particular order) were San Francisco, Portland, Denver and Boston.

Perhaps Seattle will outrank a few other cities on this list once the S.L.U.S. opens Wednesday, as Brookings did not include this mode of transportation in its assessment of Seattle's accessibility.

Next time you're thinking about going downtown, consider trying a new mode of transportation, be it by foot, bus or streetcar, to find out for yourself just how "walkable" your city really is.

Sale: 5th & Stewart Site

2007-12-06T14:12:00.000-08:00

Public records say the 12,960 square foot parking lot on 5th and Stewart in downtown Seattle was purchased for $30 million by Multi Capital of New York (MCNY), and at no little cost, with a price tag of roughly $2,315 per square foot. When construction is finished, the site will house a 46-story multi-use building.

Image courtesy of the DJC

Though purchased in May 2006 from the Seattle Monorail Authority, MCNY's plans for interiors of the building were revealed this past summer. According to the Daily Jounal of Commerce, those plans include "a 175-room five-star hotel, about 200 condos, 13,000 square feet of retail and 250 parking spaces on the site."

While Don Fosseen, the first vice president of investment properties with CB Richard Ellis, admits the steep price MCNY paid is at a high per squarefoot cost, he compares it to other pricey sites recently sold downtown which also have a high potential for success based on what can be built on-site. In other words, the price reflects what can be done with and on the property.

And yet, even these comparisons don't pale MCNY's purchase: $2,315 per square foot still surpasses a downtown site purchased by Embassy Development Corp. last month for $596 per square foot; it also surpasses the $772 per square foot deal for a condo project site purchased by Opus Northwest.

SLU Streetcar Opens December 12th

2007-12-05T14:37:00.000-08:00

You can ride the S.L.U.S. for free starting December 12th to the end of 2007. Starting in 2008, you can ride the $50M streetcar (all 1.3 miles of it) for a nominal fee of $1.50 for adults.

Image courtesy of City of Seattle

See more from the PSBJ here.

Sale: Benaroya Buys MTI Campus

2007-12-03T12:36:00.000-08:00

NAI Puget Sound Properties' own agents, Jeff Forsberg and Arie Salomon, represented the buyer and seller in this $30 million, 10-building transaction.

Photo courtesy of CoStar

The former 710,654 square foot Microchip Technology Inc. campus, located at 1111 39th Ave. SE in Puyallup, went for roughly $42 per square foot. The nine-year old campus completed construction in 1998 by Matsushita for $220 million.

The campus has been renamed the South Hill Business & Technology Center. Unique features include environment friendly technology and walking trails for employees to enjoy, as well as easy access to highways 167, 512 and I-5.

NAI PSP Re-Brands Website

2007-12-02T11:08:00.000-08:00

Check out our re-branded website, here!

Sample Screen Shot

Q3 Market Report

2007-11-26T08:39:00.000-08:00

Click here for the PDF version of the NAI Puget Sound Properties Q3 Market Report.

Kitsap SEED

2007-11-19T09:49:00.000-08:00

I recently caught wind of an interesting project that broke ground this past October. The project has been named the Kitsap SEED (Sustainable Energy and Economic Development) and consists of a 75-acre site that is located on Port property southwest of Bremerton.

Image Courtesy of Kitsap SEED

The aim of the development, which is striving for a LEED Platinum rating, is to be a center for not only sustainable energy practices, but for new companies within the green sector as well.

Read the Port of Bremerton announcement here.

Lease Renewal: Adobe

2007-11-09T09:07:00.000-08:00

Adobe Systems, locally stationed in Fremont's Lake Union Center since outgrowing Pioneer Square space in 1998, announced renewal of its lease for another thirteen years - through 2020. Clearly, Adobe is keeping up with the "big boys" in its efforts to stick around.
Adobe's decision to remain in Seattle was made after other giant corporations in the area, including Google, Microsoft, Expedia and Yahoo, also announced plans to remain in the Puget Sound region. Adobe's senior director of global facilities services, Randy Knox III, claims Seattle's Adobe, comprised of 500 employees, is proud to be a part of this corporate community.

Surrounding tenants of Adobe identify its company employees as being great neighbors and leaders of the community, donating time and efforts toward charity programs and projects.

I find Adobe to be yet another noteable company worthy of representing Seattle's impressive corporate world.

Introducing: The Spring District

2007-11-06T09:44:00.000-08:00

The 36-acre former Safeway plant near Bel-Red Road in Bellevue has been sold to Wright Runstad and Co. They will name the mixed-use area the Spring District after its natural setting and features.

Photo courtesy of the Daily Journal of Commerce

According to the Daily Journal of Commerce, plans for the property include constructing "3 million square feet of office space, 1,000 housing units and about 80,000 square feet of retail there."

Wright Runstad and Co.'s president is expecting to see a transformation in the functionality of the property, transitioning from its former industrial use to a place where some will work and shop, and others will call home.

Wright Runstad and Co. is no stranger to developments of this nature and size. Other Seattle projects of WR&Co.'s include 1111 Third Avenue, the Second & Seneca building, Washington Mutual Tower and renovation of the former U.S. Marine Hospital art deco tower on Beacon Hill that Amazon now uses as its headquarters.

Details on Yahoo!'s Bellevue Office

2007-10-22T21:11:00.000-07:00

As previously reported, Yahoo! is leasing 115,114 square feet at One Twelfth @ Twelfth in Bellevue. This will serve as an engineering office. It is estimated that the new Yahoo! office can accommodate roughly 500 – 600 employees.

More from the Seattle P-I here.

Three Architects to Design New SLU Buildings

2007-10-17T08:55:00.000-07:00

One additional point of interest in regard to the new Vulcan buildings in South Lake Union is that three architects will be used to ensure the development is diverse in design.

Image Courtesy of the Seattle P-I

More on the three architects as described in the Seattle P-I;

"In the first phase, one building will be built on the full block bordered by Terry and Boren avenues, between Harrison and Republican streets.

A second building will be built on the northeast corner of Terry Avenue and Mercer Street, and will likely hold bigger stores than the others in the project, Coleman said. The buildings will be designed by NBBJ, and will be between four and five stories tall, Coleman said.

The buildings in the second phase also will be four to five stories, and will be built on two sites bordered by Terry and Boren avenues, between Mercer and Republican streets. LMN Architects will design those.

The last two will be between Terry and Boren avenues, between John and Harrison streets. Callison Architecture will design those buildings."

More information on South Lake Union here.

More Buildings Planned for South Lake Union

2007-10-12T14:14:00.000-07:00

Vulcan recently announced that it intends to build roughly 1.5 million square feet of office space in six-block area by the new South Lake Union Trolley… Excuse me, I meant Streetcar.

Schnitzer West, who currently has some of the largest development projects underway on either side of Lake Washington, is a joint venture partner on this project.

As I read the Seattle P-I’s account of the recent Vulcan news, one particular sentence stuck out in my mind, “The project, which will include two 12-story buildings and will require the Seattle City Council to increase height limits in the area…”. It is not often that city government is so accommodating to developers and land owners, which I can account for in two short points; the city agrees with the vision held by Vulcan and other developers for the SLU area AND the city will undoubtedly make considerably more money once the area is transformed.

Read the article from the P-I here.

More Green News

2007-10-10T09:58:00.000-07:00

Everyone’s favorite outdoor retail co-op, REI, has made recently made news in regard to one of this blog’s favorite ongoing topics, green building. As a leader in green building design, REI will be remodeling its Boulder, Colorado store to LEED Certified Silver status.

Image Courtesy of REI.

The newly remodeled 42,000 square foot Boulder location will reduce its energy consumption (primarily electricity), by 20% and its water by 30% against industry standards.

As reported from CoStar, “Green elements of the building include Solatubes, skylights, solar thermal for hot water, and solar electric power. In addition, several natural and recycled building materials were used in the store's construction.”

Gensler provided the design consultation for this REI location.

Click here for more info from REI on their newest green location.

Ongoing Topic: Green Building

2007-10-05T11:14:00.000-07:00

Since the introduction of this blog, I have touched on the green building movement and the changes we will see in the Bellevue and Seattle skyline. As we watch the new construction that surrounds us, here are some items to consider;

Today buildings account for:
12% of world's water use
40% of world's greenhouse gas emissions
65% of world's waste output
70% of world's electricity consumption

Green buildings save:
30% in energy
35% in CO2 emissions
30-50% in water use
50-90% in waste costs

On Wednesday, I attended a “breaking ground” event for Schnitzer West’s 1918; a 36-story, 660,000 square foot, Class A office tower scheduled for completion in 2009. 1918 is striving for a Gold rating from LEED.

Although Corporate Social Responsibility (CSR) is working its way into how companies choose to do business, it is too early to tell whether companies will begin to look at a building’s green status (or lack thereof) as a determining factor when selecting office space.

Lease: Yahoo! Signs in Bellevue

2007-09-20T16:05:00.000-07:00

A few weeks ago I reported that Yahoo! was looking very seriously at leasing space in One Twelfth @ Twelfth in Bellevue.

“Rumor” has it that next Thursday Yahoo! will be announcing that they have signed a lease for 115,114 square feet at One Twelfth @ Twelfth.

Hello Yahoo!, goodbye downtown Bellevue vacancy.

CEOs Expect Economic Slowdown, Not Recession

2007-09-10T15:29:00.000-07:00

Today I came across an interesting article from the PSBJ concerning our economic future here in Washington Sate. Vistage, Inc. recently surveyed 80 Washington State CEOs.

Check out the article here.

The gist of the survey is that although the CEO confidence index is down from the previous quarter, Washington companies still expect to grow revenue and increase employee headcount.

However, in the Seattle/Bellevue downtown office market, an economic slowdown can change the way businesses react to leasing office space. Our commercial office rates continue to reach record highs as landlords continue to bump rents. Aside from “flagship” tenants (Fortune 500 companies, law firms, etc.) I expect to see CBD (central business district) vacancy increases as businesses will choose to move out of the downtown, A-class buildings until the market is corrected.

Lease: Microsoft Increasing Westside Presence

2007-09-07T14:53:00.000-07:00

Microsoft has leased 126,000 square feet of office space in the Westlake/Terry development, one of the latest South Lake Union offerings from Paul Allen/Vulcan, Inc. This lease brings Westlake/Terry to 100% occupancy. Asking rates for this building are $40 per square foot fully serviced. MSFT is scheduled to occupy in March of 2008.

Image courtesy of the Seattle P-I

But that’s not all. Microsoft is also going to lease 4,000 square feet in another Vulcan, Inc. property, 505 Union Station, as well as 36,000 square feet in the 111 South Jackson building ( 2 out of 3 – not bad, Paul).

All in all Microsoft has roughly 320,000 square feet of office on the Westside; the recent increase in this number is undoubtedly a move to accommodate (as well as to keep!) employees who live in or closer to Seattle. Competitors of Microsoft are always looking to recruit talent from the software giant. Along with some new initiatives and perks, these new locations will help MSFT retain its employees.

Bellevue is in the Spotlight... Again.

2007-09-06T07:57:00.000-07:00

I recently came across an article from the Portland Business Journal that caught my attention. It seems that Bellevue is making the news across the nation for its ever-rising commercial office lease rates. In the article, the writer describes how the once small suburb of Bellevue has surpassed Seattle in terms of not only lease rates, but also vacancy (or lack thereof) rates, with Bellevue’s vacancy at half of Seattle’s.

Check out the article from the Portland Business Journal here.

Image courtesy of Wikipedia

Sale: World Trade Center North

2007-08-29T10:54:00.000-07:00

The World Trade Center North Building, completed in 2000, has been sold to investment management group TIAA-CREF for $71 million. It is currently leased through 2010 by single tenant RealNetworks, Inc.

Photo courtesy of CoStar

Located near the piers, the North building was originally part of the Port of Seattle’s most recent waterfront project which also includes the west and east building towers. Wright Runstad and Co., also developer of the building, sold to TIAA-CREF for the equivalent of $530 per square foot.

Google Expands Kirkland Presence

2007-08-20T08:42:00.000-07:00

Google will occupy roughly 190,000 square feet of SRM Development’s Lakeview Plaza, which is currently under construction.

Photo courtesy of the DJC

This site, located at 747 Sixth Street in Kirkland, will be used for a Google research and Development Center.

Google employs 400 people at its current Kirkland office, which is roughly 60,000 square feet. Once in its new 190,000 square-foot facility, Google may have up to 950-1200 employees eventually working at this location (technology companies typically use between 150 and 200 square feet per employee).

Google also has a 30-person sales office and the 60,000 square feet it took in May (from Getty Images), both in Fremont.

GMI Moves to Bellevue

2007-08-15T14:25:00.000-07:00

Global Market Insite, Inc. has consolidated their company headquarters on Mercer Island with their Seattle office by moving to a new location in Bellevue.

Photo courtesy of CoStar

GMI has leased the 45,000 square feet formerly occupied by Onyx in the south building at One Twelfth @ Twelfth located at 1100 112th Ave. N.E. The lease term is five years, with options to take more space in the building in the future.

GMI will make roughly 10,000 square feet available for sublease.

Bennett Homes Buys Old Lexus Building

2007-08-14T10:02:00.000-07:00

Washington home-builder, Bennett Homes, has purchased the former Lexus building located at 11058 Main St. in Bellevue. The sale price for the 31,908 square foot office building was $5.81M, which comes out to roughly $182 per square foot.

Photo courtesy of CoStar

A few statistics in regard to the property you may find interesting; the seller bought the building in 1989 for $2.6M, the 2007 taxable land value is stated at $5,142,100 and is stated to increase to $7,141,800 for 2008.

When looking to comparable sales, Bennett Homes was able to capture this property at a good value. Similar buildings have been selling for over $200 per square foot.

New Game Plan for the Bellevue Galleria

2007-08-06T22:35:00.000-07:00

The new owners of the Bellevue Galleria are making some changes. The retail project with a history of higher-than-average vacancy has over 126,000 rentable square feet on the market as future office (not retail) space.

The downtown Bellevue office market has experienced a high level of absorption over the past few quarters with limited available product left. I, as well as many others, did not foresee the partial conversion from retail use to office, perhaps a paradigm shift was need to make this property a success.

Also, it should be highlighted that the layout is not the "traditional" office layout and the space is not easily broken up for smaller users. Most likely a large user will take all 126,284 rentable square feet or the second floor will be leased separately while the third floor and mezzanine will remain together.

It will be interesting to know what the spread (if there is one) will be between the asking retail and office rates as the two are typically/historically different (asking retail rates in downtown Bellevue have been as high as $60 per square foot, office a "mere" $40 per square foot).

Big Bel-Red Development

2007-07-30T17:23:00.000-07:00

Over the past 35 years, Seattle-based Wright Runstad & Company has developed, acquired, managed and leased high quality commercial office buildings located primarily in the Pacific Northwest. The company is now readying to try something new in its biggest undertaking in the company history.

In its third partnering with Shorenstein Properties of San Francisco, Wright Runstad plans to build a 36-acre complex in Bellevue that will have 3 million square feet of office space, 800 to 1,000 housing units and about 80,000 square feet of neighborhood-oriented retail.

Should light rail become a reality on the Eastside, this development would be a logical hub between Bellevue and Redmond. However, this poses a question worth visiting; what happens if light rail does not become an Eastside reality?

As is, the current infrastructure is inadequate to handle the end product of the planned development. City planning officials say they are working in congruence with the developers to bring adequate transportation as the project progresses in phases.

The Eastside, more so than Seattle, seems a logical proving ground for light rail as far as feasibility is concerned; the terrain is much more manageable than that of geographically rich Seattle. However, Bellevue’s population density makes justifying light rail difficult, but, the Wright Runstad project would definitely be a reason to take a deeper look into light rail as an “investment” in to future transportation.

The Price to Park

2007-07-30T14:57:00.000-07:00

For those working in downtown Seattle, it may come as no surprise that the city ranks 6th in the nation for most expensive parking rates, falling behind New York, Boston, San Francisco, Philadelphia and Chicago. Seattle also finds itself to be identified as one of eight cities labeled as having “limited” parking availability, meaning our lots are, more or less, always full.

While the national average for garage parking is $152 per month (based on findings from fifty central business districts), Seattle’s lowest rate of $189 exceeds that with its median at $275, up ten percent from last year. Yet, compare Seattle’s top rate of $320 to Manhattan’s of $630, and you may start to feel as though you’ve hit a bargain.

In an effort to “maximize return”, perhaps we will soon detect a shift in the professional worker’s mode of transportation in Seattle, be it carpooling, traveling by bus, or even streetcar opening at the end of this year. Or, perhaps some of us will answer the call to “urbanize” – move closer to where we work (for those who work in the city).

37 Buildings May Receive Historic Status

2007-07-25T21:57:00.000-07:00

If you are one to appreciate Seattle’s history and the physical remnants it has left behind, then the city’s efforts to preserve thirty-seven historical landmarks will come as good news. For building owners, the pending “historic” status merely hangs as a cloud on the build’s title and prevents the building from being modified or sold.

While the preservation of these thirty-seven nominated buildings may enhance the city’s appreciation for past architecture, revealing past events and time periods, property owners do not feel so optimistic, especially due to lack of notification. Delivering a letter to property owners announcing the nomination only one day before the public was informed could be a detrimental move on the city’s part. Some are asking why they were not informed at the point of initial consideration for such a nomination.

Pike Place Market was saved from demolition roughly thirty years ago, and today is a distinct and top attraction for out-of-towners (2005 tourism brought through 9 million people). But, losing some of Seattle’s “historic” buildings would make way for bigger and “greener” projects.

Not only would these new buildings greatly reduce Seattle’s pollution (yes, it’s true, there is more to pollution than car emissions), they would also offer more rentable square feet for Seattle tenants. Having more available space for these businesses in the downtown market would likely slow (not stop, nor reverse) the recent increases in lease rates.

Big Quarter for Venture-Funded Startups

2007-07-23T22:10:00.000-07:00

For the first time since 2000, startup companies brought more than $300M in venture capitalist funding in back-to-back quarters (Q1 - $391M, Q2 - $300.04M). The amount of deals in Washington is at a high (32 deals) since Q1 of 2001 (34 deals). Washington is ranked third in terms of dollars invested and fourth in number of deals.

In Washington, the main recipients of this quarter’s funding were health care ($135M) and software companies ($125M).

Venture funded companies unquestionably face many challenges, especially in terms of managing operating expenses. As downtown Bellevue/Seattle office space is no longer as viable for startup companies like office space was in the dot-com days (depending on strategy), startup companies are forced to the peripheral markets to attain manageable lease rates (after they move out of the garage of course).

One solution for this predicament is to find sublease space. I am currently employing this strategy with a venture-backed client, who wants to minimize the monthly overhead and have flexibility with a short lease term (24 months). In today’s market, 36 months is the minimum for most direct lease transactions.

While a sublease typically does not offer “luxuries” (tenant improvement allowance, new carpet and paint, etc.) beyond what exists, it should offer sub-market rates as the original lease terms were agreed upon before the market experienced today’s record increases and possibly a shorter term.

Turning a potential liability into an asset is an unquestionable display of economic responsibility… and you may even get a nod or two from your financial backer.

Read the Seattle P-I’s great article on the subject here.

The Galleria sells for $53.4M

2007-07-20T15:17:00.001-07:00

For those of us who lived in Bellevue in 1999, we can remember what a big deal the 182,000 square foot Bellevue Galleria was. No longer was it necessary to drive to Factoria, Kirkland or Cross Roads to visit a multi-screen theater on the Eastside.

As the Galleria was the second “major” retail center in Bellevue, it would be easy to assume that the property has done well over the years; unfortunately that has not been the case. By December 2000 the Galleria’s vacancy was 17%.

Today, the Galleria is 89% leased. An 11% vacancy for this type of retail property is one of the highest on the Eastside.

Concert Realty Partners, LLC had the Galleria on the market about 60 days before Rubin Pachulski Properties of Beverly Hills, California purchased the property.

The main challenges I see for the Galleria are access, geographic location, and competition. The Galleria can be challenging enough to access (in a car), especially during the Bellevue “going home” traffic; that problem will only escalate with the addition of The Bellevue Towers (although one could argue that the new towers will be great for the Galleria). As far as the location goes, if you drew a line at the Galleria running north and south, I would bet that the majority of its patrons come from anywhere west of that line, which puts Bell Square and Lincoln Center closer to the customers. Lastly, the competition in Bellevue is getting more upscale and attractive by the day.

Obviously, time will tell for the Galleria and perhaps there is enough Starbuck-sipping, Seven-wearing, Range Rover-driving clientele in the Bellevue market that the Galleria will do just fine.

Seattle Streetcar Estimated to Bring In 16,000 New Jobs by 2020

2007-07-20T11:46:00.000-07:00

The $51 million project began during Summer 2007 at South Lake Union, and is receiving the kind of response transportation advisor Michael Mann had hoped for: suddenly there are around 920 new housing units and 1.7 million square feet of office space under construction within blocks of the streetcar tracks. This kind of surrounding growth will make the streetcar a viable mode of transportation for many professionals in the area.

The streetcar will take roughly 1,000 trips each day next year, eventually reaching a total of 2,800 trips per day when the project is said and done. The city of Seattle predicts that by the time the project is fully complete, there will be 16,000 new jobs and around 8,000 new residents fit for using the streetcar as transportation – a huge indicator that South Lake Union’s office vacancy rates will either decrease or new construction will continue to keep vacancy rates at a constant.

Benefits of the streetcar include eliminating a need for parking and being viewed by both locals and visitors as a tourist attraction. The city may also not require a fare for rides, absorbing the costs for the first couple of years and later being covered by Metro Transit.

Downtown’s Westlake Center will serve as the main transportation center for the streetcar. The streetcar’s initial 1.3 mile route is expected to open in December of 2007.

Wells Fargo is all about the Green

2007-07-19T17:08:00.000-07:00

As further proof of the Green building trend, I thought I would highlight Wells Fargo’s recent announcement on this topic.

Wells Fargo has exceeded the $1 billion mark for offering loans related to efficiently-constructed buildings in terms of environmental “friendliness” and sustainability. Features such as water-efficient landscaping, recycling centers, efficient ventilation systems, ability to recycle rain, and on-site renewable energy sources are merely some of the characteristics one would expect to find in a LEED (Leadership in Energy and Environmental Design) certified building.

Seattle Justice Center, LEED Silver Certified

Since 2004, Wells Fargo has financed 19 LEED certified buildings in 10 states. There are currently more than 6,100 U.S. Green Building Council registered projects in the world (roughly 40 outside the U.S.); Washington State accounts for over 260 of the world's LEED certified projects.

$300M Seattle Office & Condo Sale

2007-07-18T20:55:00.000-07:00

901 Fifth Avenue office building (formerly Union Bank of California Building) has been sold by Boston-based Beacon Capital Partners ($1-billion Beacon Capital Strategic III) to Kennedy Wilson Inc. (KW Fund I) of Beverly Hills, California, in a joint venture with San Francisco-based real estate investment trust, RREEF. Kennedy Wilson also purchased the 5th and Madison condominiums in a separate transaction. When totaled, the transactions will account for nearly $300M.

Currently, 901 Fifth Avenue is undergoing its first renovation since 1999. After completion, the building will achieve LEED Certified Silver status, which is rare for pre-existing buildings. The redevelopment will total roughly $35M. In regards to the renovation, Kennedy Wilson states “[The] redevelopment process that will include a new lobby and entrance, upgrading of its common areas, and a pedestrian-friendly plaza highlighted by a water feature surrounding the building. Currently 58.5% leased, the Kennedy Wilson/RREEF joint venture plans to take advantage of the intense high demand for Class “A” office space in downtown Seattle, which has a 9% vacancy rate and experienced 2 million SF of absorption in 2006.”

For those who choose to work and live downtown, the 5th and Madison condominium tower is roughly 70% complete (scheduled to be complete this October). The project will boast 126 units of which 84 have been pre-sold at an average price per square foot of $631.50 per square foot. When Beacon Capital began the project, they had hopes to attain a LEED Certified Gold status. Green building is a trend, which I am happy to say, we are seeing more of in the Pacific Northwest.

Wi-Fi Makes Bellevue Another “Smart City”

2007-07-18T19:46:00.000-07:00

In November of last year, free wireless internet was introduced to Bellevue, Washington’s fifth largest city. Since then, Wi-Fi users have expressed satisfaction with the city’s movement toward this useful technological advancement.

Current Bellevue Wi-Fi coverage.

Bellevue’s decision makers thus far are satisfied as well. The Seattle Times claims leaders are “willing to foot the bill for the free service because they believe shoppers, tourists and residents crave connectivity, and will follow it to downtown areas and business districts.”

Although certain areas boast stronger signals than others, the initial 1.5 acre coverage is said to continue expanding, the goal in mind being a strong city-wide, high-speed signal. For example, users consider Bellevue Downtown Park a reliable location for connection.

Bellevue’s provider and Ohio-based Harborlink first directs Bellevue users to its own webpage to expose advertising, Harborlink’s main source of revenue. Users may then proceed to utilize the service at no charge. In return, the city of Bellevue receives 10% of Harborlink’s advertising revenue.

Seattle, Spokane, Renton, Kirkland, Federal Way, Kent and the King County Metro Transit are also conducting similar Wi-Fi experiments, although the success is not easy to measure, nor always measured in the same manner.

A Growing Market – Video Games

2007-07-18T17:10:00.000-07:00

Video games are not just for kids anymore.

Casual Games Association, a Seattle-based organization, is hosting the Casual Connect video-game conference at downtown Seattle’s Benaroya Hall scheduled to last through Thursday. Casual Games is sharing their industry findings to over 1,200 conference attendees – findings that point toward rapid growth not only in the video-gaming market but in its captive audience.

The unprecedented surge of nonviolent, casual games (a genre recently mastered by Nintendo’s Wii) have both men and women of all ages gaming not only on their television screen, but on personal computers and cell phones. Convention presenter Mark Cottam of MumboJumbo explains the audience as balanced and broad, “It’s broad in age. It’s broad in interest. It’s broad in professional careers.”

Expansion in this case translates to big bucks. Cottam predicts the video-gaming industry revenue to reach $2 billion next year, as opposed to a mere $15 million in 2002. Investors are taking note of this as well, and are putting their money where they smell success; Casual Games Association notes investments of over $200 million last year.

What these northwest gaming companies may now need to consider alongside industry growth and resulting competition within the market is a growing competition for space! On the east side of Lake Washington, huge amounts of new office product are being absorbed by large users like Microsoft, Eddie Bauer and Expedia. On the west side, rumors have already begun to circulate in regards to large office users looking to take down significant portions of the new offerings from both Vulcan and Schnitzer West.

It seems that expansion potential is on everyone’s mind; this afternoon I met a relatively small gaming company that anticipates that it will grow to roughly 80 employees in the next few years and wanted to know what opportunities existed in the building we were touring in. As a rough estimate, I would anticipate a software development company to typically need 125 square feet per employee – thus, that 80 person company should anticipate needing approximately 10,000 square feet.

"Innovation is in Our Nature"

2007-07-16T22:02:00.000-07:00

The title above, whether or not you know it, is Washington’s tagline. Another fact you may not know is that the second-annual Forbes.com’s Best States for Business ranking put Washington in fifth place (tied with Tennessee), which was the biggest increase (up from 12th) of any state this year.

Washington was the only state to finish in the top five in three (labor, regulatory environment and growth prospects) of the six categories (business costs, economic climate, growth prospects, labor, quality of life and regulatory environment). In addition, in the last three years Washington has had more businesses open per capita than any other state.

A major plus for our Washington economy is our low energy costs. Our state has the sixth-lowest energy costs in the country – 28% below the national average! That is great news for any CFO that recently committed their company to lease space in one of the many increasingly expensive Bellevue/Seattle CBD office buildings.

Investcorp Enters Into Joint Venture with Schnitzer West

2007-07-15T21:59:00.000-07:00

Investcorp International Inc. is now an equity partner in Schnitzer West’s latest Bellevue CBD development project, The Bravern. The transaction is valued somewhere north of $800 million.

"Under the terms of the joint venture, Investcorp will provide a majority of the project equity. Schnitzer West will provide a substantial portion of the balance of the overall project equity and will serve as the project's day-to-day investment developer." (Investcorp Website)

The Bravern will comprise of 748,000 square feet of office in two high-rise towers (which Microsoft has already pre-leased nearly 740,000 square feet of), 305,000 square feet of premium retail space, and 456 residential luxury-condominium units in two 29-story towers.

Click here for more renderings of The Bravern.

Expedia Inc. Relocates to Bellevue CBD

2007-07-14T10:07:00.000-07:00

The internet travel company will occupy 347,661 square feet (floors 3 through 18) of the 20-story Tower 333 which is currently under construction on the southwest corner of 108th Avenue NE and NE 4th Street. Expedia’s occupancy will account for roughly 87% of the building’s available office space (399,500 square feet). The remaining 12,500 square feet on the first floor is allocated for retail use.

According to a recent SEC filing, Expedia will enter the 10-year lease paying $25.85 per square foot base rent, which will increase to $35.85 by the end of the lease term. Expedia’s lease rate excludes operating expenses that make up a fully serviced lease rate. I would estimate that the operating expenses will be $9.00-$11.00, thus making the fully serviced lease rate something close to $34.85-$36.85.

In contrast, other existing downtown Bellevue office buildings are asking roughly $38.50-$40.50 (Skyline Tower), $36.47-$42.97 (Bellevue Place), $41.00-$43.00 (Civica Office Commons) per square foot for fully serviced lease rates.

Lastly, Tower 333 is the first high-rise office building on the West Coast to receive the U.S. Green Building Council’s LEED (Leadership in Energy and Environmental Design) Core and Shell pre-certification.

The Genesis

2007-07-13T21:01:00.000-07:00

With this web log I intend to bring together the most current and comprehensive commercial real estate information and other related topics. Along with my own commentary and insight, I will invite other professionals to contribute as well.

I look forward to providing you with some “food for thought”, and please feel free to contact me with any questions.