Seattle Emerges as a Top Office Market Despite Downturn
1918 Eighth Ave., a 668,886-square-foot office tower in the South Lake Union/Denny Triangle, was recently acquired for $625 million by Hudson Pacific Properties and Canada Pension Plan Investment Board.
SEATTLE—The South Lake Union/Denny Triangle submarket remains healthy, more so than many other US office markets, say CRE experts specializing in the Seattle market. One lofty example is 1918 Eighth Ave., a 668,886-square-foot office tower, which was recently purchased for $625 million. Hudson Pacific Properties and Canada Pension Plan Investment Board acquired the asset.
Newmark’s co-head of capital markets Kevin Shannon, vice chairman and divisional head of international capital markets Alex Foshay, and executive managing directors Ken White and Rob Hannan, in cooperation with vice chairman Nick Kucha, represented the institutional investor/seller advised by JP Morgan Asset Management. Newmark’s vice chairman David Milestone and senior managing director Brett Green procured new financing for the buyer.
“Since the onset of the pandemic, Seattle has emerged as one of the top-performing office markets in the nation,” said Shannon. “The fundamentals are clearly healthier and the recovery of office-using jobs since the second quarter is far stronger than any other major market nationally, which is contributing to the resilience of its fourth-quarter sales velocity.”
1918 Eight Ave. has access to Seattle’s retail core and is near a variety of hotels and urban residential options. The property is located within two blocks of light rail, streetcar service and dozens of bus lines.
“1918 Eighth Avenue is one of Seattle’s elite office assets given its superb tenancy, stellar physical characteristics and tremendous location in one of the country’s premier office markets. HPP and CPP have acquired a gem,” adds Hannan.
Built in 2010, the LEED Platinum-certified 36-story property features 6,697 square feet of ground-floor retail space, a central conferencing facility, a 4,000-square-foot exclusive fitness center, a “great room” lobby design, skyline views and outdoor patio space.
“Seattle went into the COVID-induced downturn with single-digit vacancy rates and even with the increase in sublease space since the pandemic, still today enjoys a single-digit availability rate unlike other coastal gateway markets,” Shannon tells GlobeSt.com. “The overall credit quality is stronger in Seattle as well and is led by big tech with companies like Amazon, Microsoft and Facebook all taking big blocks of space in the market since the pandemic hit.”
According to Newmark research, the South Lake Union/Denny Triangle submarket has recorded 4.9 million square feet of positive net absorption since 2015, dropping the direct vacancy rate by 600 basis points to 3% as of the third quarter while witnessing a 40% appreciation in average rental rates. The submarket’s recent performance is particularly impressive given the 5.4 million square feet of new office inventory delivered during the same period. Those deliveries increased the rentable inventory by nearly 45%, making South Lake Union/Denny Triangle the fastest-growing submarket in the region during the past five years.