TriStar, RFR Strike Deal for Seattle Offices
TriStar Capital and RFR Capital have agreed to pay a Stockbridge Capital partnership about $285 million for a new office building in Seattle that’s fully leased to Facebook.
The duo worked out a deal after making an unsolicited offer via Newmark Grubb for the 335,000-square-foot Dexter Station, at 1101 Dexter Avenue North in the tony South Lake Union neighborhood. The $850/sf price tag works out to a capitalization rate of about 4.5%. Eastdil Secured is advising San Francisco-based Stockbridge and its partner, Capstone Partners of Portland, Ore.
This will be the second big acquisition in the same neighborhood this year by the team of TriStar and RFR. In January, the New York firms purchased the 291,000-sf Urban Union building, at 501 Fairview Avenue North, from developer Schnitzer West of Seattle for $268.9 million, or $924/sf. Amazon.com has a 20-year lease on the entire 12-story property, which was completed in 2015.
Dexter Station, which is leased to Facebook for 10 years, was designed by renowned architect Frank Gehry and was finished a year ago. It features the bells and whistles common at properties geared toward technology-sector tenants, such as eight outdoor terraces, open floor plans, bike storage, showers and a 100-seat conference center. The 10-story building also has a landscaped rooftop park with views of Puget Sound and downtown Seattle.
South Lake Union is one of the most-desirable neighborhoods for tech companies in Seattle. Facebook’s building is close to the landmark Denny Park and the neighborhood’s hip restaurant and bar scene.
The unsolicited bid by the TriStar-RFR team reflects the continued strong demand for tech-centric properties four years into the city’s economic recovery. The market’s 90.1% average occupancy rate is the highest in 10 years. Rents rose 4.9% on average last year, according to Marcus & Millichap, and are on track to jump at least 4.4% this year, despite a wave of construction.
CORRECTION (9/18/17): This article has been corrected. The original version gave an incorrect location for Capstone Partners, which is based in Portland, Ore.