EQ Office Grows Seattle Footprint in $1.2B Deal

The company acquired two 1980s-vintage, Class A office towers and plans to reposition them. The move more than doubles the firm’s square footage in city.
U.S. Bank Centre. Image courtesy of CBRE
U.S. Bank Centre. Image courtesy of CBRE

EQ Office has acquired two large Class A office buildings in Seattle—U.S. Bank Centre and 999 Third Avenue—increasing its presence in Seattle to 3.1 million rentable square feet of Class A office space. The combined purchase price of the two buildings was $1.2 billion, an EQ spokesperson told Commercial Property Executive.

EQ, the U.S. office portfolio operating company wholly owned by Blackstone, will manage both properties and plans to reposition them. U.S. Bank Centre will feature an upgraded retail component aimed at both office tenants and downtown Seattle residents, while 999 Third Avenue will have an improved exterior plaza.

The sellers were not disclosed, but per Yardi Matrix data, the owner of 999 Third Avenue was Ivanhoe Cambridge, which had acquired the building from Beacon Capital Partners for $389.9 million in 2013. The owner of U.S. Bank Centre, at 1420 Fifth Ave., was Bentall Kennedy, which had purchased the building in 1998 from Hazama Ando Corp. for $237 million.

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999 Third Avenue. Image courtesy of EQ Office
999 Third Avenue. Image courtesy of EQ Office

The two buildings, about a third of a mile apart as the crow flies, are similar in size and vintage. The 47-story property at 999 Third Ave. encompasses 983,599 square feet and was completed in 1983. Meanwhile, U.S. Bank Centre, delivered in 1989, is 44 stories high and totals 943,575 square feet. Their combined occupancy is 84 percent, according to EQ Office.

EQ currently owns and manages two properties in Seattle, The Exchange and 800 Fifth Avenue In one of 2019’s biggest deals in the Pacific Northwest, EQ acquired the latter from Hines Interests earlier this year for $540.4 million.

Office vacancy in Seattle rose from 7.0 percent to 7.5 percent in the first quarter, driven in part by a few sizable move-outs, according to a first-quarter report from Colliers International. Even so, there are few blocks available for large tenants, and about three-quarters of the 4.2 million square feet under construction is preleased.

Class A office rents in the Seattle CBD ticked up slightly in the first quarter, to $50.72 per square foot, but were up a substantial 6.4 percent over the previous year, also per Colliers. Unsurprisingly, tech and internet tenants are the main drivers of demand throughout the Seattle metro.