Originally published: bizjournals.com
A South Lake Union apartment and office property partially leased to Amazon has sold for $115 million in an off-market deal, buyer Timberlane Partners said Wednesday.
The price is around a quarter less than the property’s assessed value of nearly $154 million, and about $35 million less than what project developer Vulcan Real Estate sold the asset, Stack House apartments and the Supply Laundry Building, for nine years ago to institutional investors advised by J.P. Morgan Global Alternatives.
The trade is the newest on the growing list of real estate assets to see values fall by double-digit percentages. Timberlane has capitalized by acquiring 719 apartment units for over $250 million. The company says that makes it the Pacific Northwest’s most active multifamily investor in a market where investment sales have all but dried up.
“With values this far below replacement cost, now is the time to buy the best assets in the best locations,” Timberlane Managing Director Jon Hallgrimson said in a press release. “Stack House is exactly that.”
He helped broker the 2015 sale to J.P. Morgan and said when the chance arose to buy it now, “I knew we should jump on it.”
Buying multifamily assets is smart. Not only are prices low but rents are expected to jump in the coming years due to the anticipated lack of supply in two years due to high-financing costs suppressing construction starts.
Ninety-six percent of the 278 apartments are leased, and the property is not offering concessions, said Timberlane, which wouldn’t disclose the average per-square-foot rent.
The asset at 1280 Harrison St. consists of the seven-story apartment building and the approximately 32,000-square-foot historic brick-and-beam Laundry Supply Building where Amazon inked a 10-year deal in 2014 for 26,000 square feet. It’s unknown whether Amazon plans to renew as company representatives were not available Wednesday evening to comment.
Stack House, which is named for the 140-foot smoke stack on the circa-1906 laundry building, has a total of around 8,500 square feet of retail, including Metropolitan Café and Deli and Impress Orthodontics. Restaurant Rigoletto operated at Stack House but closed, and a Title Boxing Club is “coming soon,” according to its website.
At the heart of the block, with a north-south alley and an east-west walkway, is open space. The project is flanked by a biofiltration system that treats millions of gallons of stormwater flowing toward Lake Union.
The project is LEED-platinum certified, with the historic structure using at least half the energy of the national average for a building of its size and type of use, Vulcan’s website says.
The acquisition was made through the closed-end private Timberlane Acquisition Fund, along with an equity partner that Timberlane didn’t name.