Buildings sold near Market set record

A little more than a year after buying two office buildings near Seattle's Pike Place Market, a New York real-estate investment company has sold them at a per-square-foot price that sets an area record.

Tishman Speyer Properties, which bought the Marketplace I & II buildings for $56 million in May 2006, sold them last week to an investment fund managed by BlackRock for $83 million, King County property records show.

The price for the 125,000-square-foot complex is nearly 50 percent more than what Tishman Speyer paid.

It amounts to $665 a square foot — a record for Seattle-area office buildings — and is likely to bolster the area's reputation as a hotbed of commercial real-estate activity, brokers said.

"We like Seattle," said Marcus Amaro, vice president of acquisitions for BlackRock in San Francisco. "It's a top-ranked market. And we like what's happening with employment. Job growth is very strong."

Marketplace I & II, at 2001 Western Ave., are seven- and four-story buildings and include a parking garage with 426 spaces. Revenue generated by the parking garage, popular with visitors to Pike Place Market, contributed to BlackRock's purchase, Amaro said.

The garage "fills up by 11 a.m. every weekday, and by lunchtime, it's very difficult to get in there," he said.

Tenants at Marketplace include Cutters Bayhouse restaurant, Coast Hotels and Resorts, and Scout Media.

Real-estate investors from throughout the world have been buying Seattle-area office buildings at a record pace, citing a diversified economy, trade ties with Asia and favorable quality of life.

John Miller, senior managing director of Cushman & Wakefield's Northwest region, said the Market Place sale "reinforces the fact that a lot of investors look at Seattle as undervalued."

Miller noted that Seattle office rents, while rising, are still lower than in other cities such as San Francisco.

The average annual asking rate for premium office space in downtown Seattle is $32.77 a square foot, compared with $45.15 in San Francisco, according to brokerage Cushman & Wakefield.

Asked if BlackRock will raise rents, Amaro said it expects to "take advantage of what's happening in the market."

Raising rents helps investors who pay what many consider to be top dollar for Seattle-area office buildings to justify their prices — and possibly allows them to turn around and sell the buildings for more.

The previous record was $575 a square foot, set in 2006 when New York's Brickman Associates paid $175.7 million for downtown Bellevue's Civica Office Commons.

Brickman already plans to sell the complex, Miller said. The reported asking price: $750 a square foot.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com