September 26, 2024

LMN designing 17-story life-sci tower for Trammell Crow

Rendering by LMN [enlarge]

Virginia is at right. To the left (north) of the tower, at Lenora, the developer is also planning an 11-story project.

No one's planning any new office buildings in Seattle, but what about life science? A few projects are underway, with others planned, while the life-sci market has softened somewhat.

Thus, Trammell Crow is nearing a master use permit for one life-sci tower in the Denny Triangle (which we'll recap below), but there's not yet been a land sale. Then, on the south end of the same half block, at 900 Virginia St., the developer and architect LMN are now proposing a second companion project on the corner of Ninth Avenue.

The 17-story tower would have about 324,000 square feet for labs, R&D and offices, plus a small amount of street-level retail. Five levels of underground parking could have about 180 stalls. The project carries a nominal value of $160 million.

Rendering by Perkins&Will [enlarge]

Perkins&Will is designing the building at 901 Lenora St.

Recent city filings say that Trammell Crow has two parcels under contract to purchase. They've long been owned by two local families, with the old buildings leased to Cornish College. Brokers are unknown.

LMN's design features some dramatic inset notches, terraces and beltlines. Retail bays would face Virginia. A large bike room is indicated at grade.

No design review is required downtown, under the mayor's three-year suspension of such review, in most cases.

Trammell Crow's north project on Ninth, at 901 Lenora St., did previously pass through design review. Perkins&Will designed that 11-story, 220,000-square-foot project, with the builder to be Howard S. Wright (a Balfour Beatty Co.).

That north project would replace a small family-owned office building. Lee & Associates is the broker there.

What about market demand? Also in the Denny Triangle, Trammell Crow previously developed and sold the empty new Boren Labs — its new moniker — right next to its nearly completed 1916 Boren Ave. The latter is already about 50% leased to Seattle Children's.

Meanwhile, there's competition from LPC West, BioMed Realty, Vulcan Real Estate and Alexandria Real Estate — with the latter's 701 Dexter project, LPC West's 222 Fifth Ave. N. and 1916 Boren the only active life-sci projects downtown. Everyone else is waiting, at a time when CBRE recently said of second-quarter leasing activity, “overall demand remained subdued.”

For the quarter, CBRE puts the downtown life-sci vacancy rate at 14.43%. About 847,222 square feet is now under construction downtown, says CBRE. We saw spikes in new building deliveries in 2021 and 2023, with a big dip in the regional vacancy rate between.

At a national level, CBRE says that Seattle life-sci asking rents dipped a bit, year-over-year. Our downtown figure of about $81 per square foot per year compares to $49 in Raleigh-Durham and $105 in Boston.

Over at Yardi/CommercialEdge, its August report sees an oversupply of life science. Its analysts write, “Coming out of the pandemic, lab space was in high demand. Developers rushed to respond, bringing millions of square feet to market in recent years through new developments and conversions of existing buildings. This year, it has become clear that developers over-responded to demand for lab space, leading to a supply glut in the sector.”

Even so, our region compares favorably to a national vacancy rate of about 19.4% in life science. CommercialEdge describes more of a go-slow than dead-stop market.

It concludes, “While the excess of space may take a while to work its way out, we expect life sciences to remain one of the strongest sub-use types in the office sector over the long run. Most life science work remains immune to remote and hybrid work, requiring carefully controlled physical spaces, and venture capital funding in the sector should pick up again as interest rates begin to come down.”

Along Ninth Avenue, Trammell Crow may pace its two MUPs, and land sales, accordingly.