Seattle Enjoying Strong Office Investment Sales in 2012

Seattle, Washington

This past August, Paul Allen's Vulcan Real Estate, based in Seattle, put the 1.8 million-square-foot Amazon.com headquarters, located in downtown Seattle, up for sale. As of this month, Amazon.com has a $1.16 billion ($644 per square foot) contract on the 11-building complex that may close before the end of 2012, says Ann Chamberlin, managing director at Jones Lang LaSalle in Seattle. Amazon began moving into the building in stages beginning in fourth quarter 2011, she says.   

"Amazon didn't expect to buy the building, but Vulcan, wanted to free up money for more development," says Chamberlin. "This is a good time to sell investment properties," she says. Seattle commercial real estate has become sought-after by institutional investors in the last couple of years, notes Chamberlin.

Vulcan has developed more than five million square feet of office space in the South Lake Union submarket, where the Amazon complex is located. It is one of strongest submarkets in downtown, with less than a 3% vacancy rate. "That is very low, given that overall, Seattle's office market vacancy rate is about 14%, "says Chamberlin. The strength of this submarket can be attributed to the strong technology and bio-medical businesses in the area, she says. "Microsoft has been the driver for the East Side market," including downtown Bellevue and the South Lake Union submarket is driven by Amazon."

Noting the strong investment sales market in the Seattle area, Chamberlin says, "The Amazon headquarters sale could well set a record," with regard to price, for all of North America."  

Institutional buyers, including the Principal Financial Group, Cole Real Estate Investments, JP Morgan Chase and Kilroy Realty Corp., among other institutional players, have gravitated to Seattle in the last couple of years, while foreign buyers started to show increased interest in the Seattle office market in late 2011, says Chamberlin