A Minnesota company has paid $21.1 million for an Issaquah property that sold for $50.5 million a dozen years ago.
The two buildings in the Sammamish Park Place campus on the north side of Interstate 90 once housed medical device company Spacelabs Healthcare, which moved to Snoqualmie. That was several years ago, and the Issaquah buildings never leased out. The lender, Bank of America (NYSE: BAC) took the properties back in a deed-in-lieu of foreclosure process a little over a year ago.
The competition for the buildings was stiff and multiple offers were received, said Scott Davis, a CBRE (NYSE: CBG) broker who worked on the sale. Investors have been buying leased-up office buildings along I-90, and to find a vacant one with so much upside in this frothy market is rare, he said.
The new owner, Minneapolis-based Onward Investors, plans to make significant improvements to the buildings, which have a total of 202,500 square feet of office and flex-industrial space, Davis said.
"It's just a phenomenal buy," said real estate broker Gary Guenther, a Kidder Mathews broker who didn't work on the deal.
Onward takes over at a time of rising rents when more and more tenants are looking to lease space in lower-cost suburbs. Companies can lease space in Issaquah for at least 25 percent less than they can in downtown Bellevue.
"I think they're going to hit a home run with this," Guenther said.
These two Sammamish Park Place buildings were built about 25 years ago, and once housed Microsoft. When New York City-based Lexington Realty Trust (NYSE: LXP) bought the property in 2004, Spacelabs Healthcare was the tenant and had a 10-year lease. Lexington subsequently borrowed $32.8 million from Bank of America against the asset, records show. Spacelabs moved out several years ago, and the buildings have been vacant since.
Onward and its leaders are no strangers to the Puget Sound-area real estate market. Company co-founder John Solberg was president and CEO of Opus Northwest in the late 1990s, when Opus was one of the Seattle region's most active developers. Onward officials were not immediately available.
CBRE's Davis marketed Sammamish Park Place for sale with colleagues Lou Senini and Tom Pehl. Onward has hired Davis and Rick Hart to find tenants for Sammamish Park Place.
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Marc Stiles covers real estate for the Puget Sound Business Journal.