July 14--Seattle shopping center Pacific Place was sold Monday for $271 million, or more than $774 a square foot, believed to be a record price for retail real estate in the region.
National real-estate management firm Madison Marquette said it partnered with offshore investors, whom it declined to identify, to acquire the 350,000-square-foot urban mall from Pine Street Development, which completed the five-level project in 1998.
"That's a big number for Seattle," said Dan Fasulo, managing director of Real Capital Analytics in New York, referring to the price per square foot. "This is a super unique asset, so there are only a handful of properties on the West Coast that would trade like this."
About $14 million of Pacific Place's sale proceeds will go to the United Way of King County, said Matt Griffin, a partner in Pine Street Development and chairman of this year's United Way campaign.
"I'm proud of our guys for doing that," he said. It's believed to be the first time locally that the United Way has received a donation directly linked to the sale of commercial real estate.
Pine Street Development put Pacific Place on the market in January to take advantage of strong institutional investor appetite for Seattle commercial real estate.
The regional mall is 90 percent leased and anchored by
Pacific Place occupies a full block bounded by Pine Street and Olive Way and Sixth and Seventh avenues.
The 1,200-stall underground garage wasn't part of the sale; the city owns the garage.
The Pacific Place purchase is the largest that Washington, D.C.-based Madison Marquette has done in the Pacific Northwest in the past 15 years, said Chad Eisenbud, its director of investments.
"It's a beautiful trophy asset. It's irreplaceable," Eisenbud said. The acquisition "is consistent with our plans companywide to acquire larger infill investments in core gateway markets that have a lot of growth."
Last October, Madison Marquette acquired the 200,000-square-foot Bellevue Galleria for $87.6 million. It also owns Capitol Hill's Broadway Market and Town Center at Lake Forest Park and manages Issaquah Commons, Lynnwood Center and Westwood Village in West Seattle.
Pacific Place, which Griffin's Pine Street Group developed and managed, is credited with playing a key role in reviving a section of downtown that 20 years ago was seedy and going downhill.
In 1992, the historic 10-story Frederick & Nelson department store closed on the block bounded by Fifth and Sixth avenues and Pine Street and Olive Way.
Griffin and his investors struck a deal with the
Pacific Place, which was developed as part of this three-block project, and the flagship Nordstrom opened in 1998.
"When we started the three-block project, downtown Seattle was headed downhill like many downtowns in America," Griffin said in a statement Monday.
"All four corners of Sixth and Pine were boarded up and other retailers were leaving downtown. With the leadership of Mayor Norm Rice, City Council, Nordstrom and the local investors, the slide was reversed."
The founding investors included the Behnke Family, Costco founder Jeff Brotman, saxophonist Kenny G, telecom mogul John McCaw,
In 1996, Griffin said, these investors joined with the Multi-Employer Property Trust, one of the nation's largest real-estate equity funds, to buy the site.
"They're located in absolutely the epicenter, whereas they weren't before," said Dick Outcalt, principal of Outcalt & Johnson Retail Strategists. "You have the tremendous growth of South Lake Union and the offices and the restaurants and the in-city residential."
The new owners have an opportunity, he said, to create a more welcoming entrance on the mall's northwest corner to draw in passers-by.
Pacific Place's eye-popping price shows that foreign investors continue to compete aggressively for commercial real estate in the Seattle area. There were about 15 offers for it, Griffin said.
"It's a unique asset that's well located in the heart of a booming technology neighborhood, and it will continue to perform very well," said Don Wise, CEO of Seattle-based Metzler Realty Advisors, which is advising Asian and Middle Eastern investors who want to buy real estate in the United States.
Seattle, New York, San Francisco and Houston are all attracting interest from foreign buyers seeking relatively low-risk investments in places with strong technology economies and high quality of life, Wise said.
The Pacific Place record price "demonstrates the wisdom of both the city and the private sector focusing on the retail renaissance in Seattle almost 20 years ago," he said. "Their commitment at that time has been appropriately rewarded. It's a great result for the investors."
Material from Seattle Times archives was included in this story. Sanjay Bhatt: 206-464-3103 or firstname.lastname@example.org On Twitter @sbhatt