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June 24, 2014

SLU isn't just for Amazon: Lab projects and maybe a residential tower in Seattle for Alexandria

Puget Sound Business Journal

Marc Stiles

There's very little lab space available in Seattle, and Alexandria Real Estate Equities plans to change that by starting construction soon on one or more projects around Lake Union, company CEO Joel Marcus said Monday.

Curiously, one of the projects that Alexandria has teed up could have a residential tower, something that is unusual a company that has typically focused on life sciences buildings. This new residential project is next to's headquarters. This wouldn't the first residential project for Alexandria. Marcus said the company is doing residential development in Cambridge, Massachusetts.

Alexandria has sold other Seattle properties to concentrate on the Lake Union area, which, in addition to Amazon's headquarters, also has a significant number of life sciences businesses.

Marcus said Alexandria has has four development sites, and he expects to begin building on one or more of them "in the next couple of months."

Alexandria's bullish outlook shows the strength of the life-science industry around Lake Union, which is home to big-name research institutions and health-care providers. The Economic Development Council of Seattle and King County says the life-science sector employs more than 22,000 people throughout the country.

There is virtually no Class A life-science space available for lease in Seattle and only small pockets of older space, according to commercial real estate company Kidder Mathews.

"With one or two exceptions, there just isn't any landlord-direct or sublease spaces available," a Kidder report states.

Pasadena, Calif.-based Alexandria, a publicly traded company that has been active in Seattle for 18 years, already has five properties in South Lake Union. These properties, which total nearly 750,000 square feet, are clustered at the southeast end of Lake Union near the Fred Hutchinson Cancer Research Center and Seattle Cancer Care Alliance.

In addition, Alexandria has four development sites: At 400 Dexter Ave. N., due south of UW Medicine's research facility, is where Alexandria is planning an 11-story project. Last month Alexandria applied to the city for a master-use permit for the project that will have 252,000 square feet of office, lab space or both. "We are talking to tenants," Marcus said.

At 124 Terry Ave. N., next to Amazon's headquarters, is an old four-story warehouse. The company likely will do a project with a mix of uses, an Alexandria spokesman said. City records show that Alexandria is seeking a master-use permit to develop a 238-unit residential tower with 80,000 square feet of office space.

In a separate construction permit application, the company said it could change the fourth floor of the warehouse to a research-and-development lab, and gut the interior of the entire building and rebuild it.

The company's two other development sites are at 1150 and 1165 Eastlake Ave. E., next to Bristol-Myers Squibb's ZymoGenetics facilities, which are in a 100-year-old steam plant and an adjacent building. Alexandria owns both buildings.

  • At 1150 Eastlake, Alexandria has submitted initial information to the city for a permit to build a six-story lab/office building totaling 181,250 square feet.
  • The plan for 1165 Eastlake is to add 70,000 square feet of research lab space, a small amount of retail space and underground parking for 85 cars to an existing building. This is according to a building permit application that Alexandria filed with the city late last year.

"Demand (for life science space) is very strong in South Lake Union," said Marcus, who declined to say which of the development projects Alexandria might start first. He did say that construction wouldn't start until the company pre-leases some space.

Alexandria handles leasing in-house with John Cox, the company's senior vice president in Seattle, in charge of that. In May, Alexandria sold a full block in South Lake Union to Holland Partner Group, which develops mostly apartments, for $19 million. Marcus said the market had evolved since Alexandria bought the site for $16 million, and now that property seems better suited for a multi-family project. Before that Alexandria sold a property on Seattle's First Hill for $42.6 million to Trammell Crow Co. In a joint venture with equity partner Washington Capital Management, Trammell is building a 190,000-square-foot medical-office building on the site at 1124 Columbia St.

For the full story, go to Puget Sound Business Journal.

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