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October 17, 2013

Grosvenor Buys 11 Office Buildings in Seattle Suburb for $167M

By Scott Baltic, Contributing Editor

SEATTLEGrosvenor Americas, of San Francisco, has acquired a group of 11 Class A office buildings in Bothell, Wash., a Seattle suburb, from owner/developer Schnitzer West LLC for $167.5 million, the parties announced late Tuesday.

The office buildings total 712,460 square feet and are part of the 125-acre Schnitzer North Creek office campus. CBRE represented Schnitzer West, which will continue to provide on-site property management.

Schnitzer North Creek includes 24 office buildings totaling more than 1.1 million square feet. The campus was built around North Creek, providing extensive natural green space. The property has direct access to I-405 and is only a 20-minute drive from downtown Seattle.

The 11 buildings purchased by Grosvenor Americas were completed between 1999 and 2009, and their current average occupancy is 86 percent, a spokesperson told Commercial Property Executive. Noteworthy tenants include AT&T, Puget Sound Energy, Google and Vertafore, a producer of insurance software.

“This transaction … furthers our strategy of investing in gateway markets with highly educated and well-trained work forces,” Michael Beattie, chief investment officer for Grosvenor Americas, said in a release. “We believe the area will experience higher growth than many parts of the U.S. over the next several years.”

“Seattle’s Eastside submarket continues to absorb significant amounts of office space,” added James Delmotte, senior vice president/investment for Grosvenor Americas. “Controlling a critical mass of office space in Bothell will allow us to actively manage our tenants’ changing space needs.”

Amenities at North Creek include a data infrastructure with access to multiple data providers, a 1.2-mile jogging track and 18 parcourse fitness stations, a childcare center, a deli, and service to or near the campus by four bus routes. Three hotels are adjacent to the campus, and numerous restaurants are within walking distance.

This was Grosvenor Americas’ first office acquisition in the Puget Sound region, but the company owns (wholly or in joint ventures) nine multi-family communities in the region, totaling 1,954 rental apartments and townhomes.

Accelerating job growth in Seattle-Tacoma, particularly in the tech sector, is driving office space demand, which in turn is spurring a rise in investor interest in office buildings, according to a third-quarter report from Marcus & Millichap.

The overall vacancy office space vacancy rate in Seattle’s Eastside submarket is 13.6 percent, with asking rents averaging $30.13 per square foot, according to the report.

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