Kilroy Realty Buys $133M Seattle Site

The REIT purchased a downtown development opportunity that includes a vintage office building.
Lloyd Building. Image via Google Street View

Kilroy Realty Corp. has paid $133 million to acquire a five-parcel site in downtown Seattle, where the company plans to develop a sustainable project with about 900,000 square feet of office space. The REIT acquired the collection of parcels from Vance Co. in a deal that equates to roughly $2,229 per square foot.

Located blocks away from Amazon’s corporate headquarters, the parcels, which stretch between Fifth and Seventh Avenues and Stewart Street and Olive Way, are currently home to two office buildings, three parking lots and a parking structure. Kilroy announced that it will seek entitlements to develop a mixed-use project that, in addition to offices, will house roughly 25,000 square feet of street-level food and beverage retail along with underground parking.

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The properties include the Lloyd Building, a 10-story landmark office building at 601 Stewart St., and 500 Olive Way, a 31,000-square-foot office property fully leased to Bank of America. Built in 1926, the 47,000-square-foot Lloyd Building is roughly 75 percent leased under various short-term leases. Kilroy’s acquisition also includes an old parking garage at 600 Olive Way and surface parking lots at 1818 Sixth Ave. and 1825 Seventh Ave.

Kilroy said that the development’s 900,000 square feet of office space would include the full restoration of the Lloyd Building. The company is also evaluating options for the Seventh Avenue parcel, where in-place zoning allows for about 575,000 square feet of residential development.

Amazon’s neighborhood

The state-of-the-art project will aim to achieve the highest levels of sustainability including a carbon-neutral footprint, according to Kilroy’s statement. The site has quick access to multiple transportation links including the South Lake Union Trolley, Interstate 5 and the Westlake light rail station. Amazon’s high-rise campus is located north of the project at 410 Terry Ave.

Kilroy, a New York Stock Exchange-listed REIT, had a stabilized portfolio of about 13.3 million square feet of office space across the West Coast as of September 30. This past June, the company landed Apple as a tenant for its first ground-up development in Seattle, 333 Dexter, a two-tower project in the South Lake Union neighborhood. Apple will fully occupy the 635,000-square-foot campus, which is scheduled for completion this year.