Seattle Commercial Real Estate News of the Day

Thursday, March 29, 2012

Seattle Times Daily Journal of Commerce Headline
Images: Amazon’s tower plan, Seattle’s new skyline

Real Estate Buzz: NW Mutual heads for big payoff on Russell

Modern design, retro touches: Here comes the new 520 bridge We hear the sale of Russell Investments Center — the most anticipated deal of the year — could be near.

People with knowledge of the deal have been tight lipped, but we found one source willing to give us some information.

“They’ve short-listed the buyer group to two, and they’re trying to pick a winning horse,” he said this week.

The real winner of course will be Northwestern Mutual, whose timing was impeccable. The company bought the 42-story tower at the market’s lowest point, paying just $133 a foot. When Northwestern took over the building was 58 percent vacant. Today, the property’s website shows it’s 97 percent leased.

Market observers estimate the landlord probably spent about $65 a square foot on improvements and broker commissions, so Northwestern Mutual is into the deal for about $200 a square foot. A comparable sale is the $525 a foot paid last year for 1918 Eighth, an office tower in the Denny Triangle.

When you’re talking about 886,000 square feet, which is the size of Russell Investments Center, you’re looking at a profit of nearly $288 million. That’s one heckuva payoff.

Look into CBRE’s e-commerce crystal ball

We’ve been wondering how landlords and others in the real estate business would react to the “Amazonification” of retail. On the brokerage side, CBRE has a plan.

This week, the company launched E-Commerce Group to work with online retailers.

What CBRE is doing makes a lot of sense. According to the company, modern warehouse distribution space in supply-constrained gateway markets was among the most improved in 2011, and e-retailers were a significant driver. Analysts project that e-retailing will account for roughly 18 percent of the $4.2 trillion retail sales projected for 2020.

E-Commerce Group is led by veteran industrial brokers back East and will offer clients advice on site selection and help with speed-to-market solutions via what the press release called “a constantly updated database of national and local proprietary market knowledge.”

Industrial broker Shawn Childs is the E-Commerce Group leader in Seattle. The world’s largest online retailer, Amazon.com, is headquartered here but E-Commerce Group’s growth is expected to be in places closer to big population centers.

“That makes the East Coast pretty attractive, and the West Coast closer to California pretty attractive,” said Childs. Other attractions besides population are transportation and real estate costs, and economic incentives such as tax abatement.

He said warehouse developers in Pennsylvania, Kentucky, Tennessee, Texas, Arizona and Nevada could capitalize on the growth of e-commerce.

And here? Childs said developers will see some benefit, but not as much as other places closer to larger cities.

Apartment hot spots

Some interesting new numbers about rent growth from Dupre + Scott shed light on why some spots are so hot for apartment developers in King County.

Countywide, rents have increased 4.7 percent over the last year. Two areas — the Central Area and Rainier Valley — had phenomenal growth, 19 and 27 percent respectively. But these numbers are an anomaly. New projects with significantly higher rents opened, and that skewed the data.

If we throw those out, the area with the highest rent growth was East118765 Bellevue. Rents there are more than 10 percent higher.

Five neighborhoods — First Hill, Magnolia, Bothell, Woodinville and West Seattle — saw rents jump about 7 percent. Capitol Hill and Factoria rents weren’t far behind, up about 6 percent.

O’Keefe and Moe brew up a deal

When we saw that Tom O’Keefe sold his Medina house to Chris Moe for nearly $1.68 million, we wondered how negotiations went between the two commercial real estate pros. Pretty intense, we guess.

“Your instincts about the negotiations are not far off,” said Moe, partner and manager of the Bellevue branch of Kidder Mathews. “It was 10 rounds of moving $5,000 at a time.”

Moe said O’Keefe is a “skilled and patient negotiator who is never at a loss when a creative solution is required to overcome a challenge.”

The three-bedroom house sits on less than half an acre on Evergreen Point Road. King County assesses it for about $1.15 million.

O’Keefe is the founder of Tully’s Coffee, and the principal and managing director of his self-named company that develops, acquires and manages data centers and other commercial real estate.

Here’s one interesting aspect of the deal: Moe said the two met on Thanksgiving morning at the Clyde Hill Tully’s.

Parking proposal gets mixed reaction
Puget Sound Business Journal
Amazon seeks to be good neighbor, not build corporate campus
Best Buy to close 50 big box stores in U.S.
Red Lion mulls possible sale
Seattle-PI.com
Apartment vacancies hit five-year low
US rate on 30-year mortgage back below 4 percent
City to repave 15 miles of north-end roads
Other News
Everett Residential Developments on the Rise
Solo Cup Will No Longer Be Going it Alone
Heather Meadows Sell for $4.1M
Starwood Goes Shopping for U.S. Malls
Investment Managers Display Moderate “Risk-On” Approach
U.S. economy grew 3 percent in last quarter of 2011
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About CRE Northwest

Specialist in office & investment real estate in Seattle & the Eastside
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