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Originally published August 30, 2012 at 1:05 PM | Page modified August 31, 2012 at 7:20 PM

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Vulcan putting Amazon campus up for sale

Paul Allen, who sparked South Lake Union's intense growth spurt, is ready to sell the 1.8 million-square-foot complex leased by Amazon.

Seattle Times business reporter

Vulcan puts Amazon campus up for sale

Paul Allen's company, the driver of South Lake Union development, offers the 11-building complex for sale at a time when fully leased Seattle office properties are fetching high prices. Source: Vulcan


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Paul Allen's Vulcan Real Estate is looking to sell the centerpiece of fast-growing South Lake Union, the 1.8 million-square-foot headquarters complex, and some real-estate experts say it could well fetch more than $1 billion.

Seeking to cash in on more than a decade of intensive investment in the neighborhood, Vulcan put the complex up for sale Thursday, months before the last of the 11 buildings is scheduled to be finished.

Vice President Ada Healey said Vulcan decided to sell now to re-balance its real-estate portfolio, which she said is too heavily weighted toward office investments, and to free up capital for still more development.

Vulcan has spearheaded the transformation of long-neglected South Lake Union, developing more than 5 million square feet of commercial and residential projects.

The Amazon complex and the 320,000-square foot Westlake/Terry building that houses Group Health also listed for sale earlier this month — together account for more than 40 percent of that built portfolio.

While Vulcan has sold undeveloped parcels, this is the first time it has put completed buildings up for sale.

But Healey said the listings don't signal a reduced commitment to South Lake Union. Vulcan still owns 30 acres in the neighborhood that it plans to develop, she said.

And she wouldn't rule out buying still more property.

A change of owners for the Amazon complex is unlikely to have much direct impact on South Lake Union. But Jerry Dinndorf, president of the South Lake Union Community Council, characterized it as an opportunity for the neighborhood.

"If they're going to take the cash and use it to do more development in South Lake Union, I see it only as a good thing," he said.

Healey wouldn't say how much Vulcan hopes to get for the Amazon complex — the listing doesn't include an asking price.

But "given the quality of the tenant and the long-term nature of the leases, we feel that now is a very good time to test the market," she said.

Amazon's South Lake Union leases, written in 2007 before the market tanked and rents fell, extend well into the next decade.

While Vulcan won't confirm it, the complex cost approximately $700 million to develop, according to several published sources. Amazon projected five years ago that it would pay $1.5 billion for rent, operating expenses and tenant improvements during the lease terms.

Newer, well-leased downtown office towers that have sold over the past year have fetched prices of up to $540 per square foot. Vulcan's broker, Kevin Shannon, of CBRE, represented the sellers of several of those buildings, including the 42-story Russell Investments Center and 36-story 1918 Eighth.

If the Amazon complex, which includes 100,000 square feet of retail space, fetches a similar price, it could sell for $1 billion.

That's within reason, several Seattle brokers said.

"I don't see how it's going to go any lower than that," said Craig Hill, senior vice president with NAI Puget Sound Properties. "It's in South Lake Union, where everything is happening these days."

But the complex may not appeal to some investors wary of casting their lot with a single tenant, he said — even if it's Amazon.

Another broker, who requested anonymity, questioned whether the Amazon complex would sell for as much per square foot as the downtown towers.

"You're looking at low-rise versus high-rise," he said — the Amazon buildings top out at 12 stories. "And, sure, South Lake Union is a hot submarket, but it's not the CBD [central business district]."

Greg Inglin, senior vice president with Colliers International, disagreed.

"South Lake Union is one of the hottest submarkets in the U.S. now," he said. "They [Vulcan] would be at the top of the list for any institutional investor."

Vulcan chose a great time to sell, said Jason Rosauer, senior vice president with Kidder Mathews. "There's a ton of capital looking to diversify, to buy real estate," he said, "and they all want to buy in Seattle."

The complex could end up going to several buyers. A listing flier circulated to brokers Thursday says the six phases of the campus are being offered individually.

Amazon itself could be among the prospective buyers, Healey said: "I would assume they would be one of the entities evaluating a purchase."

The company has plenty of cash. And, after renting all its office space for years — Amazon's Seattle leases now approach 3 million square feet — the company became a buyer earlier this year, announcing plans to build a three-tower high-rise complex in the Denny Triangle.

An Amazon spokeswoman did not return a call seeking comment.

Amazon's Denny Triangle plans didn't influence Vulcan's decision to list the South Lake Union complex, Healey said.

Vulcan began building the complex in early 2008. It stretches along Terry Avenue North and Boren Avenue North between John and Mercer streets, and includes nine new buildings and two renovated historic buildings.

The last building, on Boren between John and Thomas streets, should be finished later this year, Healey said.

Seattle Commons

Allen, the billionaire co-founder of Microsoft, first got involved in South Lake Union 20 years ago when he loaned a nonprofit committee promoting the ill-fated Seattle Commons $20 million to start buying land for the big proposed park.

But after Seattle voters rejected the Commons for a second time in 1996, ownership of the 11.5 acres reverted to Allen.

Vulcan started buying more South Lake Union land a few years later. Its holdings eventually exceeded 60 acres.

Since the late 1990s the company has developed more than 3 million square feet of office and lab space, nearly 1,200 apartments and condos, about 300,000 square feet of retail space and a hotel in South Lake Union.

The company has an additional 200,000 square feet of lab and office space and 278 apartments under construction, and is seeking permits for an additional 580,000 square feet of offices.

Besides Amazon, companies headquartered in Vulcan's South Lake Union buildings include Group Health, Tommy Bahama, architecture firm NBBJ and global health nonprofit PATH.

While South Lake Union has been Vulcan's chief focus, it also owns commercial buildings in the International District, Issaquah, Redmond and Tempe, Ariz.

The company is building an apartment tower in Belltown and seeking permits for an apartment project in the University District.

Eric Pryne: 206-464-2231 or

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