Russell paid bargain price of $115 million for Seattle tower

Russell Investments' parent company paid $115 million for the 42-story downtown Seattle tower known until recently as the WaMu Center, according to a document filed Thursday with King County.

The filing confirms reports that insurance giant Northwestern Mutual got the 3-year-old skyscraper for a bargain-basement price. The county lists the assessed value of the property for tax purposes at $300 million, and real-estate insiders said it probably would cost at least that much to build today.

A year ago the county appraised the property at $347 million.

"It's an incredible opportunity, and they [Northwestern Mutual] capitalized on it," said Bill Condon, vice president and managing director in brokerage Grubb & Ellis' Seattle office.

Russell announced Wednesday it would move its headquarters and 900 local employees from Tacoma to the tower at 1301 Second Ave. in 2010. President and CEO Andrew Doman said in a prepared statement that "the unique conditions of the commercial real estate market in Seattle" were a factor in the decision, but Russell officials would not elaborate.

The seller, JPMorgan Chase, acquired the 900,000-square-foot tower a year ago as part of its $1.9 billion takeover of failed Washington Mutual's banking assets. There was no price breakout for the tower, which had served as the thrift's headquarters.

"They basically got the real estate for free," veteran Seattle developer Douglas Howe, founder and principal owner of Touchstone Corp., said of Chase. "When you have virtually no basis in the building, you can sell it for what the market will pay."

The $115 million price tag reflects the depressed state of the downtown Seattle office market, Howe said.

What's more, Chase layoffs have largely emptied the building, and, while Russell has not disclosed how much space it will be leasing, it won't be taking all of the tower.

That means Northwestern Mutual will have to market much of the building to other prospective tenants — and big deals have been scarce lately.

But Condon and other commercial real-estate professionals said the low purchase price could allow Northwestern Mutual to undercut competitors. "At the price they purchased that building for, they can afford to be very competitive in their lease terms," Condon said.

The WaMu Center sale is by far the largest real-estate transaction in King County this year. The previous leader was the $53.2 million purchase of the Ballard Blocks mixed-use project in Seattle by another insurance giant, Principal Financial Group, in June.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com