Seattle Trophy Office Tower to Change Ownership in $625M Deal

Hudson Pacific Properties and Canada Pension Plan Investment Board signed a deal to acquire a 668,000-square-foot building in the city’s downtown.
1918 8th Ave. building in Seattle. Image via Google Street View

Hudson Pacific Properties Inc. and Canada Pension Plan Investment Board will soon add the trophy office tower at 1918 8th Ave. in Seattle to their jointly owned portfolio of assets. The partners will acquire the approximately 668,000-square-foot building from institutional investors advised by J.P. Morgan Asset Management, for $625 million.

Hudson Pacific and CPP Investments are expected to close on the acquisition of 1918 8th Ave. by year’s end. 

Standing 36 stories above the Denny Triangle neighborhood in downtown Seattle, 1918 8th Ave. made its debut in 2010 as a development project of Schnitzer West. In 2011, J. P. Morgan purchased the asset from the developer for $350.5 million, according to King County records. Today, the LEED Platinum-certified property is 98 percent leased, with Amazon serving as anchor tenant in a 460,000-square-foot space that the e-commerce giant committed to in 2011, before the ownership change. RBC Wealth Management and KPMG are also among the names on the tenant roster at the building, where the average remaining lease term is 10 years.

READ ALSO: Top 10 LEED-Certified Buildings in Seattle

Office users have been drawn to more than the asset’s premier office space—1918 8th also features a host of amenities, including ground-level retail space, a central conferencing facility, a fitness center and a location within two blocks of light rail, streetcar service and dozens of bus lines.

Hudson Pacific will possess a 55 percent stake in the joint venture that will own 1918 8th, leaving CPP Investments with the remaining 45 percent interest, per terms of the sales agreement. Additionally, Hudson Pacific will take on property leasing and construction management responsibilities. The joint venture partners plan to place a secured, non-recourse loan for roughly 50 percent loan-to-cost from an unidentified institutional lender.

Buying and Selling in Puget Sound

Seattle’s office market is suffering the same pandemic-related uncertainties as most other major metros across the country; however, the investment community remains keen on the city and buyers and sellers are beginning to get off the sidelines. “In a solid sign of future growth, sales activity has rebounded slightly, and pricing is up year over year,” according to a third quarter 2020 report by Colliers International. While sales volume is down 78.3 percent year-over-year in Seattle, the average price per square foot increased 66.2 percent over the same period.

Recent office transactions in Seattle include Wright Runstad & Co., Shorenstein Properties and J.P. Morgan Asset Management-advised investors’ sale of the 345,500-square-foot Block 16 office building in The Spring District to a Brookfield Asset Management Real Estate Fund for $365 million.