July 13, 2018

After rehab and expansion, Beacon sells Maritime Building for $186M

Rendering by NBBJ [enlarge]

The 1910 warehouse now has eight stories and 187,000 square feet of offices, leased to Big Fish Games.

Beacon Capital Partners bought the Maritime Building, at 906 Alaskan Way, for $13 million in 2015, and completely renovated and expanded it for new tenant Big Fish Games. Now Beacon has sold the property for $186 million.

The deal hasn't been recorded yet by King County, but Beacon's website says the property sold in an off-market transaction. A Beacon representative confirmed the sale, but provided no details. Public records indicate that Beacon paid off its loan from Bank of America at the end of April.

The buyer was STRS Ohio, that state's teacher retirement system. STRS Ohio did not respond to DJC queries, but it now lists the Maritime Building as a recent acquisition on its website.

Brokers were not announced.

JLL's first quarter Seattle office market overview says the building sold for $186 million, with a cap rate of 4.1 percent. If that price is accurate, the deal was worth about $877 per rentable square foot, including the retail. JLL says the transaction has closed; but that doesn't necessarily mean JLL brokered the deal.

Developed as a warehouse in 1910, the Maritime Building used the address of 911 Western Ave. for most of its history. It originally had five stories and about 140,000 square feet.

After the 2015 sale, Beacon proposed an eight-story addition, which was rejected by the Landmarks Preservation Board in 2016, after the building was landmarked.

Beacon then changed its plan to a three-story addition, working with architect NBBJ and Turner Construction.

The building now has eight stories and 187,000 square feet of offices, which were fully leased to Big Fish Games in 2016. The company will move in soon, and the DJC will feature that new space next week.

John Hansen at CBRE and Jesse Ottele and Cavan O'Keefe at NKF represented Beacon in the long-term Big Fish lease. Big Fish was represented by Clark Fadden (formerly Suite Partners).

On the ground floor is about 25,000 square feet of retail/commercial space in three bays that has yet to be leased. JLL was the last known broker for that space. However, there are no leasing signs in the windows. The basement-level parking has about 70 stalls, some of it available to the public after 6 p.m.

The Maritime Building's value will be tremendously enhanced when the Alaskan Way Viaduct on its west side is removed. The first portion of that $94 million demolition is expected to begin this winter, with Kiewit as the contractor.

When Beacon bought the building in June of 2015, tunnel boring machine Bertha was being repaired in a waterfront rescue pit during a two-year delay in that project. At the time, there was considerable uncertainty and risk that the tunnel might not be completed, and a viaduct-replacement solution might not be found.

By the time Big Fish's lease was announced, in November of 2016, Bertha was back at work.

The tunnel is set to open this fall.

Last September, privately held Beacon sold the Exchange Building for $156 million. Its website no longer lists any current investments in Seattle. Beacon previously owned and sold Columbia Center, Wells Fargo Center and 1201 Third Ave. It owns over 150 properties nationwide, with an undeclared value.

STRS Ohio is a financial partner, along with Pacific Life, in Kinects apartments, which Security Properties recently completed at 1823 Minor Ave. in the Denny Triangle. The 41-story, 357-unit project opened last summer.

STRS Ohio says that real estate totals $8 billion, or 10.2 percent, of its overall $78.1 billion investment portfolio.