A San Francisco company called Swift Real Estate Partners has acquired a nearly half-empty office building in suburban Bellevue.
Swift paid $18.25 million for Bellevue Gateway II, a three-story building south of downtown, and is upgrading the approximately 65,000-square-foot property, according to Joe Lynch of Kidder Mathews, who brokered the sale for Swift.
Office rents have climbed across the region, and downtown Bellevue has the second highest rental rates in the region. Because of this, some investors are focusing on buying assets in suburban markets to capture tenants who can't afford to be in the central business district but want to be near downtown. Gateway II is at 915 118th Ave. S.E., about a mile south of downtown Bellevue.
Swift's asking rent is $34 a square foot, including expenses. Average annual asking rates downtown for top-quality space now stand at about $42 a square foot.
The largest space in the building is around 25,000 square feet. It's only one of two spaces of this size available in suburban Bellevue, according to Lynch
This is the third suburban Bellevue asset that Swift has acquired. The company specializes in buying underperforming assets and repositioning them.
Walton Street Capital of Chicago sold Gateway II to Swift. After the real estate market crashed, Walton Street acquired Gateway II and 10 other properties at a low price when the previous owner, Whitehall Street Real Estate Fund, defaulted on a $900 million loan it had taken out to buy the portfolio.
A court had appointed a Seattle company, Talon Portfolio Services, to stabilize the building. Talon officials said they planned to spend tens of millions of dollars on improving the properties. Common spaces in Gateway II have been upgraded, and Lynch said Swift will now make improvements to the vacant office space.
In recent years, Walton Street has been selling off some of the assets, but was not marketing Gateway II for sale. Lynch approached Talon about buying the property, and Walton Street agreed to sell.
For the full story, go to Puget Sound Business Journal.
© 2016 American City Business Journals. All rights reserved.