2Q’11 PUGET SOUND MARKET REPORT
Puget Sound Investment Market KEY I N VESTM EN T SEATTLE
The Puget Sound investment market saw strengthening in the
also purchased the four-building, 280,000 square foot Class A
second quarter of 2011 with the sale of office buildings leading
complex, Plaza Yarrow Bay for $100M ($358/SF) in April of this
the charge.
year.
Diminishing vacancy levels and stabilizing rental rates
In the Seattle submarkets, tenants such as Amazon.com are
contributed to the uptick in sales levels and both will continue
paving the way for investment activity, stretching from Lake
to be driving forces in future investment activity as we head into
Union to the CBD. The lease-up of Seattle’s Class A towers
the third and fourth quarters.
has investors nationally looking to the Northwest for viable
the Seattle, Bellevue, Tacoma, Washington and
The Industrial and Retail sectors continue to struggle and will
opportunities.
Portland, Oregon markets. Providing client-centered
most likely lag behind until the more stabilized office assets have
The vast array of office product that is currently on the market
and value-driven real estate services to clients
been traded. Although there has been healthy activity across the
has been closely watched by investors locally and nationally
throughout the Pacific Northwest and beyond, we
region as a whole, the Downtown Seattle and Bellevue markets
and they are starting to make their move. Seattle Tower and
represent tenants, landlords, and investors in the
have been the key markets in Puget Sound, with a multitude of
Westlake have already selected buyers and other investment
office, industrial, investment sales, and retail sectors.
investment opportunities currently being marketed.
opportunities such as 505 First, 83 King, 818 Stewart and 1918
The highlight of the quarter was the sale of Bellevue CBD’s
Terry are all on the market as well stabilized “core” assets.
Key Center. The 488,000 square foot Class A office building was
These varying types of assets are all going to be eyed by
purchased by Kilroy for $217M ($444/SF). Additionally, Kilroy
investors as cap rates decline and $/SF increase.
BELLEVUE
TACOMA
Founded in 1993, Pacific Real Estate Partners (PREP) has over 35 brokers in four offices serving
WASHINGTON
PORTLAND OUR BROKERS:
Bill Cooper
Buzz Ellis, SIOR
Ann Chamberlin
Mark Flippo
Mark Friel
Tony Ford
Chris Hughes
Kristin Hammond
Laura Ford
Brent Jackson
John Lee
Lori Hill
Charlie Malley
Mark McFarland, SIOR
Erwin Park
Steve Schwartz
Paige Morgan
Wyk Parker
Daniel Seger
Tom Shimota
Nate White
JJ Shephard
Jeff Sholian, SIOR
Stuart Williams
Gabe Smith
Josh Stohr Joe Vaughan
SOUTHEND:
TACOMA:
Les Boudwin, SIOR
Steve Crantz
Scott Carter
Mike Horner
Andrew Stark
Andrew Miller
OREGON
$700
10.0% 9.0%
$600 8.0% $500
7.0% 6.0%
$400
5.0% $300 4.0% 3.0%
$200 Office Cap Rate
2.0%
Industrail Cap Rate
$100 Office
Casey Trees
PRI C E/SF & C A P RATE BY PRO D U C T TYPE
Cap Rate
David Abbott
Retail Cap Rate
Retail
PORTLAND:
Industrial
EASTSIDE:
$/SF
SEATTLE:
$0 2005
2006
2007
2008
2009
2010
2011
1.0% 0.0%
www.pacific-re.com | (425) 974-4000
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2Q’11 PUGET SOUND MARKET REPORT
2Q’11 PUGET SOUND MARKET REPORT
Puget Sound Investment Market
Puget Sound Investment Market
IN STI TUTI O N A L S A L E S
TO P L EA SE TRA N SA C TI O N S YTD
Office Sales Over $10M Class A & B Transactions Highest Price/SF Avg Cap Rate
Avg Cap Rate
SF
Submarket
1918 Eighth
465,000
Lake Union
2006
2007
2008
2009
2010
54
131
7
5
15
7
2
Renewal
Amazon.com
2201 Westlake
190,000
Denny Regrade
$459/SF
$575/SF
$575/SF
$342/SF
$405/SF
$548/SF
$444/SF
3
3Q 2011
Dendreon
Russell Investments Center
180,000
Seattle CBD
7.2%
4
Blend & Extend
Wells Fargo
Wells Fargo Center
173,000
Seattle CBD
5
3Q 2011
Isilon Systems
505 First
138,000
Pioneer Square Denny Regrade
2005
Highest Price/SF
Building
Amazon.com
43
6.3%
6.3%
6.1%
9.5%
7.2%
Industrial Sales Over $10M All Classes Transactions
Tenant
3Q 2011
2005
6.7%
2011-YTD
Occupancy/Type
1
2006
2007
2008
2009
2010
2011-YTD
6
PATH
PATH
2201 Westlake
112,000
7
3Q 2011
Seattle Genetics
RidgePoint at Canyon Park
81,000
Bothell
8
3Q 2011/Expansion
Zillow
Russell Investments Center
72,000
Seattle CBD
22
14
35
19
9
8
9
$109/SF
$131/SF
$164/SF
$142/SF
$100/SF
$186/SF
$272/SF
9
4Q 2011
KPMG
1918 Eighth
60,000
Lake Union
6.8%
6.8%
5.8%
5.8%
9.2%
7.3%
7.0%
10
3Q 2011
Expedia
Skyline Tower
54,494
Bellevue CBD
2005
2006
2007
2008
2009
2010
2011-YTD
22
28
19
4
8
7
8
$368/SF
$518/SF
$467/SF
$380/SF
$404/SF
$305/SF
$428/SF
6.3%
6.4%
5.9%
7.2%
8.8%
-
7.1%
Retail Sales Over $10M All Classes Transactions Highest Price/SF Avg Cap Rate
PR IVATE CA P ITA L S A L E S Office Sales $1M - $10M Class A & B 2007
Transactions Volume Average Size (SF)
2008
2009
2010
2011-YTD
73
52
18
18
10
$384M
$310M
$55M
$70M
$30M 44,610 SF
27,623 SF
24,570 SF
7,798 SF
30,939 SF
Average Price
$5.3M
$6M
$3.1M
$3.9M
$3M
Average Price/SF
$191/SF
$243/SF
$168/SF
$126/SF
$214/SF
2007
2008
2009
2010
2011-YTD
133
89
36
51
17
$478M
$299M
$111M
$162M
$71M 60,951 SF
TO P SA L ES TRA N SA C TI O N S YTD O VER $1 0M Sale Date
Buyer
Building
SF
$ & $/SF
Cap
1
6/11
Kilroy
Key Center
488,470
$217.22M ($444/SF)
6.2%
2
4/11
Kilroy
Plaza Yarrow Bay
279,650
$100.21M ($358/SF)
6.5%
3
5/25
Principal Financial
705 Union Station
253,769
$38.29M ($150/SF)
-
4
1/27/2011
Simms Commercial Dev.
1000 Denny Way
285,186
$36.00M ($126/SF)
9.0%
5
3/30/2011
Stockbridge Capital
Queen Anne Square
155,766
$34.00M ($218/SF)
7.2%
6
5/05/2011
W3 Partners
Legacy Corporate Center
103,176
$14.17M ($137/SF)
-
7
3/21/2011
Equity Residential
51 University
96,582
$11.75M ($121/SF)
-
8
6/30/2011
Stockbridge Capital
1100 Olive Way
38,346
$11.12M ($289/SF)
5.9%
Industrial Sales $1M - $10M All Classes Transactions Volume Average Size (SF)
29,278 SF
27,052 SF
34,147 SF
38,196 SF
Average Price
$3.6M
$3.3M
$3.1M
$3.1M
$4.2M
Average Price/SF
$123/SF
$124/SF
$90/SF
$83/SF
$92/SF
2007
2008
2009
2010
2011-YTD
182
209
77
58
25
$423M
$351M
$162M
$159M
$61M 17,179 SF
1 Key Center
2 Plaza Yarrow Bay
3 705 Union Station
4 1000 Denny Way
5 Queen Anne Square
6 Legacy Corporate Center
7 51 University
8 1100 Olive Way
Retail Sales $1M - $10M All Classes Transactions Volume Average Size (SF)
20,026 SF
11,601 SF
9,435 SF
16,681 SF
Average Price
$2.4M
$2.7M
$2.1M
$2.7M
$2.4M
Average Price/SF
$229/SF
$242/SF
$236/SF
$168/SF
$142/SF
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