China Vanke, the mainland's largest residential developer, has agreed to invest in a project to develop near Seattle, Washington's famed Space Needle.
The $200 million joint venture deal with California-based Laconia Development marks Vanke's first foray into the Seattle market, after the Shenzhen-based developer earlier took on US projects in San Francisco and New York.
For Seattle, Vanke's latest American project appears to be the first major investment by a mainland Chinese developer, after Asian investors from Hong Kong and Korea began venturing into the Pacific Northwest's hottest real estate market over the past few years.
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The Vanke-Laconia joint venture plans a 43-story residential building on what's now a parking lot located at 600 Wall Street in the northwestern US city.
The Seattle venture is envisioned as a 400-unit apartment mixed-use building, with one and two-bedroom units and retail on the ground floor. A city document filed on the project called for an "elegant, slender tower (that) will read as the architectural exclamation point" in the project's location.
Vanke primarily develops condominiums in China, so the Seattle rental project marks an unusual step. A Seattle Times report quoted a Laconia spokesman as citing the growth of Amazon's nearby headquarters as a reason for developing the project as a for-rent model.
The Vanke-Laconia deal has not yet closed, but a letter of intent has been signed between the partners and was announced during a recent China trade mission by Seattle Mayor Ed Murray. How big of an equity partner Vanke will be in the estimated $200 million project has not been determined. Laconia has owned the project's land for a decade, but the anticipated Vanke investment should jump start plans, with construction estimated to begin early in 2017.
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The Chinese development giant has been putting together its Seattle project for well over a year, according to David Wientjes, a Seattle-based partner in Kidder Mathews, west coast property consulting firm which advised both the buyer and seller in the transaction through its offices in San Francisco and Seattle.
"Vanke was initially focused on the (San Francisco) Bay Area and the east coast, and it's just sort of a natural progression, (that) as they became more entrenched in the Bay Area, they began looking at other markets" said Wientjes. Vanke took time to carefully research the Seattle market before agreeing to move forward, he added.
Vanke's first US project in 2013 was an investment in Tishman Speyer's Lumina condo project in San Francisco. Since then the company controlled by entrepreneur Wang Shi has invested in multiple residential projects in New York, as well as venturing into England last year.
Chinese Investors Spent $1.1 Bil on Seattle Property in 2015
Real Capital Analytics and the Seattle Times reported that overseas investors purchased $2.8 billion worth of property assets last year in the Puget Sound area, a 214 percent increase over 2014. Last July, Hong Kong-based Gaw Capital led the $725 million acquisition of the 76-storey Columbia Center office tower in Seattle, and Hong Kong's Great Eagle paid a reported $124 million for the Dexter Horton office block in the city during November. Gaw bought a second Seattle office project in October, spending $49.5 million to pick up a 27-story commercial block.
These three deals were part of nearly $1.1 billion in acquisitions of Seattle property by buyers from mainland China and Hong Kong last year.
Skip Whitney, a California-based Kidder Mathews partner, and head of the company's China Services division characterized the Chinese appetite assets on the west coast as "steady, consistent." A Vanke spokesman declined comment on the deal, saying it has not been finalized.