Investors lining up for a piece of Seattle’s property comeback
Rosy office sector due to booming trade with Asia and job market recovery
(SEATTLE) The Seattle office market has made a spectacular recovery in the last few years. As a result, many real estate investors want to park their money there. No one knows that better than Alfred Clise.
Boom town: This year, Seattle was deemed the best place in the US to buy and sell office buildings in the Urban Land Institute’s annual survey of property professionals
His real estate investment company, Clise Properties, is selling a 5.3 hectare parcel in downtown Seattle that his family cobbled together over 80 years. The land, amounting to nearly seven blocks, now mainly occupied by parking lots and low-rise office buildings, has no asking price.
Still, there have been plenty of suitors. Mr Clise has fielded 69 requests for tours since he put the parcel on the market in June. It is the biggest piece of land for sale in any downtown in the country, brokers say, and could sell for as much as US$1 billion, according to an estimate by Real Capital Analytics, a national research and consulting company.
The Clises, one of Seattle’s oldest families, won’t sell to just anyone. The buyer, if one emerges by the family’s October deadline, must have a grand vision for the parcel - a development like Rockefeller Center in New York or Canary Wharf in London - or the family will not part with the land. Family members say they will not sell it in pieces.
‘You really can do anything you want with it’ because it is already zoned for a wide variety of uses, said Mr Clise, chairman and chief executive of Clise Properties and the fourth generation to run the company. ‘It’ll have a major impact and reshape the city.’ A buyer could put as much as 14 million square feet of offices, condominiums and rental apartments on the parcel.
Seattle is now on every investor’s shopping list. This year, the city was deemed the best place in the country to buy and sell office buildings in the Urban Land Institute’s annual survey of real estate professionals. Office vacancies are at a six-year low of 7.7 per cent, and downtown landlords are getting as much as US$50 per square foot (psf) annually, according to Grubb & Ellis, a real estate brokerage firm.
Booming trade with Asia and a recovery in the job market are the secrets behind the rosy office market. Blue-chip companies like Starbucks, Amazon.com and Microsoft call the Seattle area home and have been steadily hiring thousands of new workers and funnelling millions into the local economy.
Boeing demoralised the city when it moved its headquarters to Chicago a few years ago, but it still has extensive production operations in the area.
The unemployment rate has slipped by 2 percentage points, to 4 per cent, in the last few years, and Seattle seems to be doing better than ever.
‘It’s not just Microsoft and Boeing,’ said Kelly Mann, executive director of the Urban Land Institute’s Seattle office. ‘It’s Starbucks, Costco and a wide array of small companies that were started by people from those corporations that are driving the growth.’
It is a big change from a few years ago. Seattle’s economy, hammered by the tech bust and a drop-off in jet orders after the Sept 11, 2001 attacks, was on life support. Computer programmers, who had fielded multiple job offers only a year before, were suddenly out of work. Tens of thousands of people were laid off. Vacancy rates for offices topped out at 18 per cent, rents sank to US$26.30 psf and new construction ground to a halt.
Then, three years ago, Seattle emerged from its economic deep freeze. Companies resumed hiring, developers started building and the port handled record cargo shipments. The recession, which hit Seattle harder and lasted longer there than elsewhere in the country, was finally over.
The current construction surge might eclipse the last one. There are now 31 projects, with more than 7.5 million sq ft of space, on the books in the city. In a previous construction boom that ended in 2001, more than 4 million sq ft of office space was built.
A zoning change that occurred last year may help. In April 2006, the City Council allowed office, apartment and condo buildings to go as high as 500 feet in parts of downtown, up from an earlier maximum of 360 feet. Mr Clise’s parcel sits squarely in that section. — NYT
Source : Business Times - 09 Aug 2007
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