Denny Triangle buildings sell for nearly $480 million
In King County's biggest property sale so far this year, affiliates of JPMorgan Chase have bought two neighboring office towers from Seattle developer Schnitzer West.
Seattle Times business reporter
Affiliates of JPMorgan Chase bought two neighboring Denny Triangle office towers Wednesday for nearly $480 million, providing fresh evidence of the appeal of new buildings with long-term, blue-chip tenants and predictable revenue streams in this unstable investment climate.
JPMorgan paid Seattle developer Schnitzer West $350.1 million for 36-story 1918 Eighth and $129.3 million for 14-story 818 Stewart, according to county records.
The 1918 Eighth transaction is the biggest property sale in King County so far this year.
Schnitzer put the two buildings up for sale in May, shortly after Amazon inked a long-term lease for more than two-thirds of the office space in 1918 Eighth.
According to commercial real-estate database Officespace.com, the buildings together are 94 percent leased — the kind of occupancy buyers like.
Dan Ivanoff, Schnitzer's founder and managing member, said the company received formal expressions of interest in the two buildings from more than 80 buyers.
That's three times the number that went after the two Bravern office towers when Schnitzer put that downtown Bellevue complex on the market last year, he said.
Schnitzer sold The Bravern office buildings last fall for $410 million. The price per square foot was about the same as the company got for 1918 Eighth and 818 Stewart.
But the sale of the Denny Triangle buildings is an even bigger coup for Schnitzer, said Leigh Callaghan, senior vice president with brokerage Colliers International.
Microsoft, which leases all The Bravern office space, almost certainly is paying higher rent than tenants at 1918 and 818, he said. That should have made the Bellevue complex more appealing to buyers.
"I think Schnitzer did very well [with 1918 and 818]. That's a darn good price," Callaghan said. "It's a great deal for Schnitzer, given where they were six or seven months ago."
Before Amazon signed, 1918 Eighth was just 20 percent leased.
The 818 Stewart building was completed in 2008, 1918 Eighth a year later. They were part of a big wave of new downtown office buildings — 3 million square feet altogether — that came to market after the economy collapsed.
Most have begun to fill only over the past year or so.
Schnitzer will still manage both Denny Triangle buildings for the new owner, senior investment director and partner Mike Nelson said.
But now that the sales are complete, Schnitzer's focus will shift, Ivanoff added.
"We were a net seller last year, and we'll be a net seller this year," he said. "We'll be a net acquirer next year."
What will Schnitzer buy, or build? Ivanoff wouldn't say, other than to rule out condos. "It's as unusual an investment landscape as I've seen," he said.
The company still holds two downtown office-development sites — one at Fifth Avenue and Madison Street, the other at Eighth Avenue and Stewart Street — and will consider building if demand picks up, Ivanoff said.
The Schnitzer/JPMorgan Chase deal comes on the heels of the sale of two other mostly leased office properties this summer.
In June, Kilroy Realty of Los Angeles bought downtown Bellevue's Key Center from Beacon Capital Partners for $217 million.
And earlier this week, Starbucks sold its two-building Pioneer Square complex — 505 First South and 83 King Street — to Spear Street Capital of San Francisco for $125 million.
Eric Pryne: 206-464-2231 or firstname.lastname@example.org
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