The landmark 29-story building sits on an 11-story pedestal at 5th Avenue and Rainier Street and is part of the six-block Metropolitan Tract that Seattle-based Unico Properties developed and manages in partnership with the University of Washington. Skilling Ward Magnusson Barkshire, which engineered the entire tract for the partnership, has been a tenant of the building for 25 years and a tenant on the tract for 40.
Despite that history with the property, engineering firm principal John Magnusson tells GlobeSt.com it was not an easy decision to make. Magnusson says the firm had as many as 12 options to choose from when they started looking, and that was after narrowing the field to Downtown office buildings that his company had engineered and that had enough contiguous space available to accommodate them.
Ultimately, Magnusson says it came down to two options: stay at Rainier Tower or move to the brand new IDX Tower, a 40-story, 845,000-sf office tower on the corner of Fourth Avenue and Madison Street. Developed by Houston-based Hines and CalPERS, the grand opening celebration was held in early December. IDX Tower is 84% leased, which matches the average regional occupancy rate. Rainier Tower, completed in 1977, is 99% leased.
"IDX is a great building and we were very, very tempted," says Magnusson. "At Rainier Tower, had we started out with the amount of space we now have I think we would have laid it out differently. A move to IDX would have given us a blank slate to work with."
Ultimately, says Magnusson, "it was the financial consideration combined with the ease of expansion and contraction" that helped the firm choose the old over the new. Specifically, Magnusson said their firm would have fit onto one floor at IDX, but contracting or expanding the operation would have been more complicated than at Rainier Tower. At Rainier Tower, the firm fits nicely onto one and a half floors already connected by a private interior stairwell, allowing for easier expansion or contraction.
As well, space in a 25-year-old tower is inherently less expensive than similar space in a brand new tower. According to officespace.com, Rainier Tower's $32 full-service annual asking rate for space between the 30th and 40th floor (accounting for the 11-story pedestal) is roughly equal to the triple-net asking rate for similar space at IDX.
Neither Magnusson nor Unico's Metropolitan Tract GM John Miller would reveal the lease rate on their 10-year lease agreement, but net effective rents have generally been running at a 10%-25% discount to asking rates once depressed-market concessions like months of free rent and above-standard tenant improvements are figured into the equation. Said Miller: "With all the new product in the market, especially the ones they've been involved with, we had to work pretty tough to keep this one."
Tim O'Keefe and Matt Christian from Colliers International represented Skilling in the renewal transaction. Jim Rock, director of leasing for the Metropolitan Tract, represented Unico.
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