Clarion Picks up Seattle's 32-Story Qwest Plaza for $137M
- Apr 04, 2012
By Gail Kalinoski, Contributing Editor
CenturyLink has sold 1600 Seventh Ave., a 32-story, downtown Seattle office building, to Clarion Partners for $137 million. The telecommunications giant will continue to have offices in the 598,000-square-foot tower but retailer Nordstrom will be leasing most of the space.
Clarion, a New York-based real estate investment manager, made the purchase on behalf of a separate-account client in an off-market transaction. Clarion was represented by Urban Renaissance Group, L.L.C., which will also be the local property operator. A team from Newmark Knight Frank Global Corporate Services – Victor Frandsen, Tim Harrington and Alan Polacsek – represented CenturyLink in the sale along with Eastdil Secured. The NFK team also handled the CenturyLink lease negotiations with Clarion.
CenturyLink, which merged with Qwest Communications last year, will remain as a tenant in about 260,000 square feet. The office tower was built in 1976 by Pacific Northwest Bell as its headquarters and has been continuously occupied by that company’s successors.
Nordstrom committed to a long-term lease for over 300,000 square feet, which will bring the building occupancy up to 88 percent. The company is expected to move in by the fall. The building is two blocks from Nordstrom’s downtown Seattle headquarters and flagship store and across the street from the Nordstrom Rack store in Westlake Center. With the addition of the new lease, Nordstrom will have over 1.3 million square feet of offices in the downtown, including space at neighboring 1700 Seventh Avenue, company spokesman Colin Johnson told Commercial Property Executive. He said consolidation may occur in the future as some smaller leases expire.
“We think this will be a good long-term solution for our current and future office space needs, so right now we feel pretty good about our space,” Johnson said.
He said Nordstrom will initially be on floors 25 to 32 but does have an option for “additional space as we grow.”
Asked whether its e-commerce operations would be moving into 1600 Seventh Avenue, Johnson said no decisions had been made about which departments will be located there.
“Our online business is and continues to be the fastest growing part of our business,” he said. “We are adding more jobs to support the online growth but also our overall growth as a company.”
Clarion and Urban Renaissance Group plan a “significant renovation” of the building. The dollar amount was not released but the companies noted the renovations will include upgrading the common areas, including the main lobby, and adding ground-level retail space and underground parking.
“We are thrilled to have been able to secure such high quality companies as Nordstrom and CenturyLink as tenants,” said Stephen P. Latimer, managing director at Clarion Partners. “We look forward to rejuvenating the building with the renovation and bringing in additional retail uses in this key location in the city.”
Clarion now manages over $1 billion of real estate in the Seattle area. In January, it bought Covington Esplanade, an 187,000-square-foot shopping center in nearby Covington, Wash., for $31 million from Ashton Capital.
The downtown Seattle market has been on an upswing that started in 2011 with the sale of several office projects to institutional investors at peak prices, according to a fourth-quarter 2011 market report by Broderick Group, a Seattle commercial real estate services firm. The office vacancy rate was 14.53 percent, down 1.35 percent for the quarter and 3.03 percent for the year, the Broderick Group report stated. It also noted that the downtown Seattle market had seen approximately 1.8 million square feet of absorption thanks to leases by major firms like Amazon.com and Boeing. In its 2012 forecast, the Broderick Group stated it was expected to be “another relatively good year for landlords in the downtown Seattle office market.” The firm specifically noted that Nordstrom was expected to “significantly increase their footprint in the CBD.”