German investor Deka Immobilien has acquired Lakefront Blocks in Seattle's South Lake Union district in an $805 million deal. The 635,000-square-foot office building is spread over two city blocks, each with two six-story office buildings, and is anchored by Google and has been called the "best core office offering on the West Coast" last year by the brokerage team that worked on the deal.
Lakefront Blocks came to market in September 2021 in a deal brokered by Newmark's Kevin Shannon, vice chairman Nick Kucha, executive managing directors Ken White and Rob Hannan and senior managing director Michael Moll. The blocks were marketed independently and Deka Immobilien was the highest bidder on each deal.
The property was completed in 2019 and includes views, sustainable design features and strong credit tenancy. The property has retailers, a public alley and pedestrian- and cyclist-friendly amenities, open space and a skybridge.
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It isn't surprising that one of the year's best office investment opportunities is in the Seattle market. The city has performed well through the pandemic, despite widespread office dislocation. In May, the sublease space in Downtown Seattle had a net reduction of nearly 100,000 square feet. This was the first time since January 2021 that the market had a net reduction, according to research from Colliers International. The Eastside market also saw a contraction with sublease space down more than 53,000 square feet. Seattle has a total sublease supply of 4.3 million square feet, while the Eastside market has a total market supply of 1.7 million square feet. Since the start of the pandemic through May, the sublease supply in Seattle has increased 3.2 million square feet, while the Eastside market has gained 1.5 million square feet since the start of the pandemic. Thanks to the contraction in May, the sublease supply represents 5.4% and 5% of the total inventory.
Other signs of strength have been the investment activity. In addition to this Deka Immobilien deal, Boston Properties officially entered the Seattle market in July. The firm has struck an agreement to acquire Safeco Plaza, a 50-story 800,000-square-foot, LEED-platinum certified, class-A office building. The property is expected to have a gross purchase price of $465 million. And, Skanska broke ground on its newest project, an office building titled The Eight, next month in Bellevue, WA. The project represents the city's first speculative office building development within the past six years.
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Kelsi Maree Borland
