A Philadelphia-area company is betting big that the technology and gaming industries will keep the Eastside office market strong.
Equus Capital Partners paid $26.65 million earlier this month for two Redmond office buildings near the headquarters of Microsoft and Nintendo. The seller was SteelWave, a Foster City, California-based company with a Seattle office.
This building was one of two in the Quadrant Willows campus of Redmond that sold earlier this month for $26.65 million. The owner plans to upgrade the buildings and fill them up. They're now about 80 percent occupied.
Located at 11121 and 11241 Willows Road N.E., the assets in the Quadrant Willows campus are the only office buildings in Equus' Washington portfolio, which includes four apartment complexes. Equus follows other office investors to Seattle's suburbs. Because properties in outlying cities cost less than in downtown Bellevue and Seattle, buyers stand a better chance of getting higher returns on their investments.
The three-story Willows buildings house a range of companies, including AT&T(NYSE: T) and architecture and engineering company Otak. Together the buildings total 128,000 square feet and are about four-fifths full. Equus can raise the value of their new holdings by filling them up, and the company plans to upgrade the properties to lure tenants.
Equus Real Estate Director Robert Butchenhart noted the buildings' proximity to Microsoft and other technology and gaming companies. The Eastside has the headquarters for the highest concentration of interactive gaming companies in the country, according to Equus. Colliers International, in its fourth quarter research report, noted that game developers Bungie and Valve were among tenants looking for space.
"With our plans for additional and significant capital upgrades, we believe both properties will become even more attractive and sought after by tenants in the marketplace,' Butchenhart said in a news release.
This is the latest disposition by SteelWave, which operated as Legacy Partners Commercial until last year. Since last fall, it sold a four-building office campus in Kirkland, and the Seattle waterfront building that's topped by the landmark Post-Intelligencer globe. More about these sales is here and here.
SteelWave representatives were not available, but the company's broker, Joe Lynch of Kidder Mathews, said the company is deploying capital to "value add" buildings, meaning properties they can improve and lease up. He added that Equus, a private equity fund manager, is looking for other similar opportunities.
According to SteelWave's website, the company last summer bought an 18-building portfolio in the Canyon Park area of Bothell. It was acquired in a joint venture with NorthStar Finance Realty. The sale price was not available.
Lynch marketed the 18-year-old Willows buildings for SteelWave with Kidder colleagues Andy Miller, Bob Conrad and Dan Harden.
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