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September 20, 2017  

TriStar, RFR Continue Seattle Buying Spree

TriStar Capital and RFR Holding have struck a deal to buy a new office building in Bellevue, Wash., for about $310 million — the duo’s third big-ticket deal in the Seattle area this year.

The 357,000-square-foot property, at 425 106th Avenue NE, is fully leased to Seattle developer Schnitzer West completed it last year and was preparing to begin a marketing campaign this month via Newmark when TriStar and RFR made their pre-emptive bid, equal to roughly $870/sf.

The 16-story building, called Centre 425, has many of the bells-and-whistles popular with technology and other “creative” firms — open floor plans, high ceilings, ample indoor and outdoor meeting space, a rooftop deck, and bike storage with showers and lockers.

The two earlier purchases this year by the TriStar-RFR team also involved new office properties fully leased to a single tenant. In January, the duo acquired the 291,000-sf Urban Union building in Seattle, also from Schnitzer West, for $268.8 million, or $924/sf. That 12-story property, at 501 Fairview Avenue North in the tony South Lake Union neighborhood, was developed in 2015. Amazon has a 20-year lease. Newmark also advised Schnitzer West on that deal.

TriStar and RFR, both of New York, followed that up in May by paying $285 million, or $826/sf, for the 345,000-sf Dexter Station, at 1101 Dexter Avenue North in South Lake Union. The duo had made an unsolicited offer for the 10-story building via Newmark. Eastdil Secured brokered the sale for a joint venture between Stockbridge Capital of San Francisco and Capstone Partners of Portland, Ore. Facebook leases the building, which was designed by Frank Gehry.

The TriStar team’s aggressive buying reflects core investors’ confidence in Seattle. More than $4.4 billion of office properties worth at least $25 million traded last year, and another $1.4 billion changed hands in the first half of this year, according to Real Estate Alert’s Deal Database. Sales have been brisk even amid increased supply. Some 2.6 million sf of office space was completed last and another 4.8 million sf is expected to come on line this year.