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January 27, 2015

Children's looks for more office, R&D space in Seattle

Daily Journal of Commerce

Nat Levy

Seattle Children's Research Institute needs more space for research and offices, and could build a new structure to house them.

A 600,000-square-foot research and office building is being considered for a site at 1920 Terry Ave.

The Research Institute's director of communications, Kathy Porada, said discussions about a new building are just starting.

"Our research institute is running out of space," Porada said. "We are looking at many, many options, this (new building) only being one." Another possibility, Porada said, is renting space in an existing building.

A public document about the project lists the name of the international architecture firm Aedas.

Property records show Seattle Children's owns the entire block bound by Stewart and Virginia streets, and Terry and Boren avenues. The block has surface parking and a vacant retail store, according to property records.

The research institute occupies a total of about 330,000 square feet in three adjacent buildings downtown and at Seattle Children's main hospital in Laurelhurst. All the space in these buildings is occupied, Porada said, so Seattle Children's must look elsewhere to expand.

More than 1,100 Seattle Children's employees - including doctors and nurses who also see patients at the hospital - do some work related to the research institute. The institute focuses on a number of medical issues, from cancer to gene therapy to childhood obesity.

Research organizations looking to grow in Seattle have nowhere to go right now, as there is essentially no existing space available, said Bill Neil, a partner and senior vice president at Kidder Mathews. There is research space on the Eastside - particularly in Bothell - but rarely does a Seattle research or biotech company move part of its operations to the Eastside, or vice versa.

"If you get too far away from the mothership you start to feel like a second child," Neil said.

The hot spots for research facilities in Seattle are South Lake Union, Denny Triangle and Eastlake, Neil said.

Only a few new research buildings are planned in these neighborhoods in the near future.

Because of the extra equipment needed, biotech and research buildings tend to be more costly, so developers like to have at least half of the space pre-leased before starting construction.

BioMed Realty Trust is constructing a 122,000-square-foot building at 500 Fairview Ave. N., according to a report from Kidder Mathews. Neil said Novo Nordisk and NanoString Technologies leased all but 40,000 square feet in that building, which is expected to open early next year.

Alexandria Real Estate Equities is planning a 134,200-square-foot office and lab building at 1165 Eastlake Ave. E., and Alexandria is also planning an 11-story office building at 400 Dexter Ave. N., but it is unclear if it will be set up for research operations.

Research organizations typically don't stray too far from the biotech and health care clusters in this area, Neil said. Proximity to other companies - and organizations such as the Bill & Melinda Gates Foundation and Fred Hutchinson Cancer Research Center - allows for more collaboration.

One other option Children's could look at, Neil said, is Amgen's campus along the Seattle waterfront. The campus is 765,000 square feet, with land banked for future development if needed.

Amgen announced last year it planned to close its operations in Washington and sell the campus. Neil said Amgen hasn't put the campus on the market yet.

The campus would make sense as headquarters for a biotech or a tech company like Amazon.com, Tableau Software or Google, Neil said.

"There's some likely players in town that might look at (the Amgen campus), and Children's could be one of them," Neil said.

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