S. Lake Union plan: Sell off 5 buildings, build 8 more
Paul Allen’s Vulcan Inc. says it will sell all five of its South Lake Union apartment buildings and put the proceeds into more office and apartment projects in a new wave of construction for the booming neighborhood.
Seattle Times business reporter
Paul Allen’s Vulcan Inc. plans to sell all of its South Lake Union apartment buildings and invest the proceeds into eight new office and apartment projects, launching another flurry of construction in the former warehouse district.
The 872-apartment, five-building portfolio is located within blocks of Amazon.com’s headquarters. Based on recent apartment sales in Belltown and Capitol Hill, analysts say they’d expect Vulcan’s portfolio to fetch more than $400 million.
Vulcan put the apartment buildings on the market this summer to be bought together or individually, spokeswoman Lori Mason Curran said Friday. “We are expecting final offers in the coming weeks.”
Alcyone, Alley24 and Stack House are across from the Cascade Playground, while Rollin Street Flats and Borealis sit on busy transit corridors. Another Vulcan apartment project called The Martin, a 188-unit high-rise in Belltown, is already under contract to a buyer whom Curran didn’t identify.
Big investors such as insurance companies and pension funds have shown a huge appetite for property in South Lake Union because of Amazon.com’s job growth and the area’s rising rents. In December 2012, Amazon bought its 11-building campus from Vulcan for $1.16 billion.
On Thursday, a San Francisco company paid about $508,000 a unit for The Gatsby Apartments in Capitol Hill, records show. In April, Joseph Arnold Lofts in Belltown went for about $515,000 a unit, according to commercial real-estate brokerage JLL.
Vulcan’s portfolio could fetch anywhere between $450,000 and $600,000 a unit, said Seattle apartment broker Kenny Dudunakis of Berkadia. That could mean total proceeds between $392 million and $523 million.
Plans to sell the apartment properties were first reported Friday by the Seattle Daily Journal of Commerce.
Curran said the proceeds will pay off debt and be invested into developing three blocks near Lake Union, a full block at Westlake Avenue and Denny Way and a few parcels in between.
If all the proposed Vulcan projects get built, they would add more than 1,650 new apartments, nearly 1.3 million square feet of office space and 86,000 square feet of retail to the neighborhood, according to a Seattle Times analysis of Vulcan’s filings with the city.
Vulcan, which has developed 5 million square feet in South Lake Union, already has permits for two six-story office buildings on Eighth Avenue North that were designed with biotech users in mind.
The block at Westlake Avenue and Denny Way, part of which is now a playfield, would be turned into an 18-story office building and a 41-story apartment tower.
More than 800 apartments would be built in three 16-story buildings located between Mercer and Valley streets. Last year, the city spurned an earlier Vulcan proposal to allow a trio of 24-story towers in the area, known as “Block 59,” in exchange for nearby land for affordable housing and social services.
The developer goes before the city’s design review board over the next two months to get feedback on the various projects.
“We’re going to keep doing what we’ve been doing there and maintain the vibrant community it’s become over the last 10 years,” Curran said.