Lincoln Property Snaps Up Seattle Creative Office Asset

LBA Realty sold 501 Eastlake, a five-story, multi-tenant building in the city’s South Lake Union district, for about $59 million.
501 Eastlake, Seattle (Photo courtesy of NKF Capital Markets)

In a $59 million deal, Lincoln Property Co. has acquired 501 Eastlake, a 103,494-square-foot, five-story office building in Seattle. NKF Capital Markets, which represented the seller, LBA Realty, said the creative office space in the city’s popular South Lake Union submarket attracted numerous bidders.

The property, built in 2002, is 79 percent leased to a high quality and diverse tenant roster, including the regional headquarters for Capital One, the lead tenant at 39,489 square feet, according to Yardi Matrix. Other tenants include PRO Sports Club, a health and fitness facility with 30,514 square feet; WeWork executive suites, 20,234 square feet; Howard S. Wright, a construction company with 13,171 square feet; and the University of Washington Prosthetics and Orthotics Clinic, Yardi Matrix reported.

The building has convenient access to Interstate-5 and SR 520 and is close to the South Lake Union streetcar.

“This is a highly coveted asset in Seattle’s most desirable market, South Lake Union. The size of this deal in the $50 million to $100 range for a multi-tenant asset was very attractive deal for capital and created significant bidding depth,” Kevin Shannon, NKF Capital Markets co-head of US Capital Markets, said in a prepared statement.

Other NKF Capital Markets team members representing the seller include Vice Chairman Pacific Northwest Nick Kucha; Managing Director Michael Moll; Executive Managing Director Tim O’Keefe and Director James Childress.

South Lake Union Surging

South Lake Union, which absorbed 4.6 million square feet since 2011, had a vacancy rate of 5.4 percent in the fourth quarter of 2017, according to NKF. Over the same period, Class A office rents have risen more than 70 percent helping fuel the submarket’s economic expansion. Last month, South Lake Union saw the city’s largest office property deal so far this year with the sale of 400 Fairview, a 349,152-square-foot, Class A office building, for $338.4 million. Pembroke, an international real estate advisor, bought the building from a joint venture of Skanska and TH Real Estate on behalf of its investors.

Seattle has seen a surge in office construction since 2015 with developers adding more than 10 million square feet, with nearly 60 percent of it in South Lake Union and Denny Triangle submarkets, according to Yardi Matrix.

Summer Office Sales

Further south on the West Coast, Lincoln Property Co. acquired 332 Pine St., a historic office building in the San Francisco financial district, earlier this summer in a joint venture with affiliates of Rockwood Capital for $38 million. The nine-story building has 51,522 square feet and was constructed in 1912. In a second joint venture this summer, Lincoln Property Co. teamed up with PCCP to purchase the 464,000-square-foot Valley Technology Centre, a Class A office and R&D complex in San Diego.

The NKF Capitals Market team has been busy as well, representing Steelwave in its sale announced last week of a two-building office campus in El Segundo, Calif., to Atlas Capital Group. Known as INSITE and located at 2030 Maple Ave., the site is an adaptive reuse project created at the former Raytheon research facility. Shannon and Moll were joined on that deal by Executive Managing Director Ken White, Senior Managing Director Rob Hannan and Managing Director Laura Stumm.