As the largest tenant in Federal Way's Evergreen Corporate Center, HomeStreet Bank went all in and expanded their office space with the recent purchase of the 112,000 square foot Evergreen Corporate Center for $15.65 million, or approximately $139 a square foot, from California-based LBA Realty on Jan. 18th.
"HomeStreet Bank moved their people down here because they were paying, at the time, $38 a foot up in Seattle, now they'd be paying $58 a foot, so it was a good move for them," said Bill Frame, president of Kidder Mathews. "Since they have 50 percent occupancy of the building, it started to make more sense for them to own it, because they can control their costs," he added.
Frame estimates there's about a $20 per square foot difference in the Seattle market versus the Federal Way market, making Federal Way a "hidden gem." While the process of moving businesses to consider that market has been slow, Frame said people are starting to figure it out.
Built in 1979, the Evergreen Corporate Center, located at 33520 Sixth Ave. S, is a two-story Class A commercial office space that is currently home to HomeStreet Bank, according to public records. The building provides approximately 112,000 square feet of office space and sits on a 10.41 acre lot, according to LBA Realty's Web site. The building also provides ample parking with 371 stalls.
Weyerhaeuser previously owned the property and sold it to LBA Realty in December 2005 for $11.2 million. After Weyerhaeuser headed out of the market, the vacancy rates spiked. "If you look back in 2007-08 the vacancy, mostly due to Weyerhaeuser leaving the market, was 41 percent but now it's about 19 [percent], we've made a lot of progress, but it's been slow," said Frame.
In recent months, LBA Realty has completed a number of transactions in the Puget Sound region including a sale in December when the group sold its Time Square property in Renton for $54.4 million or $168 per square foot.
While Federal Way hasn't seen much activity in the office space realm, there has been a slew of transactions over the past six months in the multifamily asset class. Back in November of 2016, Arcadia Townhomes, a 309-unit property, sold to Priderock for $68.5 million. In September, a luxury apartment complex sold for $63.8 million to San Diego-based ConAm Group, a real estate management and investment company. And in October, Fairfield purchased The Retreat at Maple Hill Apartments for $41.9 million.
Frame said there are several advantages to the Federal Way market, including its close proximity to I-5 and Sea-Tac airport. Frame added that there is a lot of residential development and housing opportunities for a wide range of employees.
Looking at the HomeStreet acquisition, Frame hopes it will signal similar transactions in the future. "It's a great purchase for the city of Federal Way, because it's a stake in the ground for a large regional bank here in the Northwest that sees the benefits of being in the Federal Way market. That's a big win," said Frame.
Mark Clirehugh of Kidder Mathews also worked with Frame on the deal, representing the buyer.