By the end of this year or early next, a developer said he will be under construction on a trio of large office buildings in an unexpected place: Renton.
The three nine-story buildings are part of Southport, a 17.5-acre mixed-use project on Lake Washington. The office buildings will have a total of 725,500 square feet of space, and none of it has been leased. Further, office tenants aren't exactly flocking to South King County, where more than 14 percent of the office space is available, according to commercial real estate company Kidder Mathews. That availability rate is the highest in the region.
So the decision by Seco, the developer of Southport, seems exceptionally risky, especially with significant amounts of competing office space going up in Bellevue and Seattle.
"We will compete by location, product type and the unique character of a waterfront campus that is not possible elsewhere," Michael Christ, the head of Seco, said last week.
Construction is under way on another big project at Southport, which is just off of Interstate 405 between the Boeing (NYSE: BA) plant and Renton's Gene Coulon park. Southport's hotel will be a 12-story, 347-room Hyatt Regency. Previously completed were the 384 apartments and retail space in Southport, which is a couple miles south of the Seahawks' headquarters.
Christ said it will cost a total of $325 million to build the office buildings and a 2,100-stall parking garage. Seco is going to finance the work using a lot of its own equity, traditional construction financing and "a small tranche of EB-5 money," Christ said. The federal EB-5 program, which allows foreign nationals to invest in job-producing projects in exchange for green cards, also is financing development of the Southport hotel.
The record low cost of permanent financing is, in part, compelling Seco to gear up to build the office buildings, said Christ, who noted that, meanwhile, construction costs are going up.
"This is the cycle for this," he said.
Seco hasn't yet finalized a contract with a general contractor, though Exxel Pacific is doing the the pre-construction work. ZGF Architects designed the office buildings, and Seco is working with Kip Spencer of The Spencer Cos., to find tenants.
"We have been approached by a high-tech incubator and others as well," Christ said.
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