The rumored lease would be pure expansion, according to local brokers. Amazon reportedly has four years remaining on its 190,000-sf headquarters lease at Wright Runstad & Co.'s Pacific Medical Center in the Beacon Hill neighborhood and a somewhat longer term remaining on its 445,000-sf lease at Downtown's Union Station.
One of the big unanswered questions is the length of the lease. Local brokers say it may only be short term while additional space is developed for it at Pacific Medical Center. Wright Runstad has the necessary approvals in hand to build another 220,000-sf building there. Then again, although local brokers deem it unlikely, Amazon may be preparing to go more corporate.
A source with Equity Office Properties would neither confirm nor deny the Amazon lease--let alone term and rate detail--saying it announces leases only when the agreements are finalized. Wright Runstad president Greg Johnson declined to comment on whether his company is in negotiations with Amazon for an expansion of its existing headquarters campus, but did tell GlobeSt.com that Amazon previously preleased the planned building in 2001 but bought its way out of the agreement in 2002 after the dot-com bubble burst and it had to retrench. Amazon could not be reached for comment.
A source with Broderick Group, which has the leasing assignment for the building, declined to confirm the Amazon deal. However, he did confirm that there was about 365,000 sf being marketed as available in the building when his firm was handed the leasing assignment about three months ago and there is now closer to 190,000 sf being marketed as available. The difference is about the size of Amazon's rumored lease commitment.
The potential game of tenant tug-o-war between Equity Office and Wright Runstad comes about two years after the two went their separate ways following a six-year financial relationship. Equity entered the Seattle market in 1997 by buying 10 office buildings from Wright Runstad along with a minority stake in the company. They split up in 2003, with Equity swapping its interest in the company for a 20% stake in Bellevue's Key Center.
If the lease at BofA Tower does turn out to be long term or EOP is able to entice Amazon into making it so, it would go a long ways toward shoring up what has been troublesome vacancy for EOP. In April 2003, with the building only 76% occupied, Fitch Ratings downgraded $195 million in debt securities tied to the 76-story office Bank of America Tower Downtown.
Vacancy ultimately peaked at 27% at the end of 2004. If this lease with Amazon is finalized, vacancy in the building would be back down to about 13%. Full-service asking rates in the building range from $23 to $32 per sf per year, depending on the floor, the size of the lease, the length of the lease commitment and the creditworthiness of the tenant.
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