Flynn Likes Chances With East Valley Office Center

RENTON, WA-Flynn Properties appears primed to hit a home run with East Valley Office Center, a 275,000-sf, two-building office development on 14 acres here that it picked up empty early in the year for $10 million, which equates to just $36 per sf. As a result, even with plans to spend at least another $10 million completely renovating and upgrading the asset, the San Francisco-based firm expects it still will have the lowest cost option in the submarket.To boot, East Valley Office Center will be the most recently renovated property in the submarket with the largest floorplates, and remains one of the most visible sitting at the intersection of Interstate 405 and State Route 167, two of the most heavily traveled roads in the region. Indeed, Michael George of Colliers International, the leasing agent for the development, tells GlobeSt.com he’s had “almost an abnormal amount of interest form larger users.” All told, George says he’s been in conversation with tenants whose requirements would fill 150% of the available space.”We’ve had much more interest than we projected,” Flynn Properties president Greg Flynn tells GlobeSt.com. “We’ve had some very active conversations for pretty big leases that are still in the works; we planned on it taking several years (to lease up the property), but now there’s a decent shot we will beat that.”Since acquiring the property in February, Flynn Properties has been busy assembling a team to reposition the property and seeking the necessary governmental approvals for the renovation. In addition to George, that team includes CollinsWoerman, architect; Foushee and Associates Inc., general contractor; EGIS Real Estate Services, construction management; and Flynn Properties general manager Mike Benoit. Benoit came over from Unico Properties, which used to own most of the space with which the East Valley Office Center is competing for tenants, including the vacant 132,000-sf Three Renton Place office building.East Valley Office Center is located at 1600 Lind Ave. SW. Benoit tells GlobeSt.com the remodel will include complete renovations of all common areas; the addition of several previously nonexistent amenities including a food service area with open seating, a fitness center with lockers and showers and meeting facilities; improvements to the courtyard between the two buildings; significant landscaping upgrades, and; a new curb cut off the main street. The renovations are scheduled to start in the fourth quarter and be substantially complete by the beginning of next year.Current class A triple-net asking rates in the Renton market range from $12 to $17 per sf. Including the purchase price and the renovation, Flynn’s cost in the building equates to $72 per sf. Even if Flynn Properties’ all-in cost in the asset somehow rose to $100 per sf, which isn’t likely, basic math says it could still fill up the building at the low-end of the aforementioned rate range and have an investment with a double-digit capitalization rate. By comparison, the full-service annualized asking rate for space in Three Renton Place is $19 to $21 per sf. “I think we can compete with anybody,” says George.