SEATTLE—American Realty Advisors and Vulcan Real Estate have completed a deal for Vulcan's sale of 2201 Westlake Avenue, a fully-leased best-of-class office/retail property in the heart of South Lake Union. The building is currently leased to high-profile office and retail tenants, including Amazon and global health innovator, PATH. Located at the corner of Westlake Avenue and Denny Way, 2201 Westlake is a 12-story 317,000 square-foot LEED Gold certified high-rise building developed by Vulcan in 2009.
“Opportunities to acquire a newly-constructed building with high-quality tenants at a 'Main and Main' location are rare,” said Drew Hess, senior director, investment group for American. “This purchase secures a fully-leased class A asset at an ideal location and still offers strong rental growth opportunities beyond an attractive risk-adjusted return.
“Overall, this type of property checks off all of the boxes: great urban location, great tenants, and new high-quality construction and amenities,” Hess added.
In the last decade, more than $6 billion in public infrastructure and private development has been invested into the South Lake Union neighborhood, driving significant growth for Seattle. As a result, the area has become one of the West Coast's top-tier locations for leading firms in global health and technology.
Amazon currently occupies more than half of the property, which is situated directly on the South Lake Union Streetcar line and integrates the next generation in technical standards.
The all-concrete 12-story structure incorporates large office floorplates ranging from 22,000 to 39,000 square feet, expansive window lines, 14 foot floor-to-floor heights throughout the building, 336 parking stalls in a five-level subterranean garage, raised- floor HVAC distribution, and 23,400 square feet of high-quality retail space directly across the street from Whole Foods.
“We were very pleased by the broad interest we received from institutional investors,” said Ada Healey, vice president of real estate for Vulcan Inc. “The pricing reflects both the exceptional quality of the asset and the highly-desirable characteristics of the Seattle office market.”
“Tenants are seeking creative environments where they can not only recruit talented employees, but also locate as many people on one floor as possible, making the large open-floor plates flexible, efficient, and collaborative,” continued Hess. “The open ceilings and construction features also provide lower ongoing re-tenanting and operating costs, which in turn lead to higher net operating income for investors.”
In addition to office space, the ground floor of the building takes advantage of the location with high-value retail space, currently occupied by Bang & Olufsen, West Elm, Einstein Bagels, and Ann Sacks Tile & Stone. American is acquiring all of the office and retail components of the mixed-use building that also includes 135 residential units known as the Enso condominiums.
Vulcan intends to invest the funds from the property sale toward its continued development efforts, as well as new land and value-add investment opportunities throughout the region.
CBRE handled the transaction with a team led by Kevin Shannon and supported by the local CBRE office.
With nearly $7 billion in assets under management, American Realty Advisors is an investment manager to institutional investors, and has provided real estate investment management services for over 27 years. Seattle-based Vulcan Real Estate directs all real estate investment activities for Vulcan Inc., a Paul G. Allen company.
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David Phillips
David Phillips is a Chicago-based freelance writer and consultant with more than 20 years experience in business and community news. He also has extensive reporting experience in the food manufacturing industry for national trade publications.
