A hotel developer is buying a downtown Seattle parking lot for $16.75 million, almost twice what the property was previously under contract for, underscoring strong demand for hotels in the city.
Stanford Hotels, a San Francisco-based developer, was approved to buy the property by a court last Friday after it outbid Colorado-based Stonebridge Cos., which had a contract to buy it for about $8.5 million, said Craig Hill, a broker at NAI Puget Sound Properties.
An official at Stanford Hotels said the company had no comment. A King County Superior Court judge overseeing the receivership approved the sale last week, records show.
The 12,960-square-foot property at 1903 Fifth Ave., on the corner of Stewart Street and across from The Westin Seattle, has been mired in court proceedings for two years.
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New York developer Abraham Leser and his investment companies paid $30 million in November 2007 for the property, but lender U.S. Bank pushed it into receivership in 2011.
Hill said the transaction would close this week. The sale works out to about $1,292 per square foot.
While U.S. Bank said in a recent court filing that the parking lot is worth no more than $2.5 million, the sale price likely takes into account the zoning, which allows buildings up to 500 feet high.
Chris Kraus, head of PKF Consulting’s Pacific Northwest practice, said last year’s average occupancy rate in downtown Seattle hotels was almost 78 percent. That was the highest rate on record going back to 1989, he said.
Downtown hotels are on track to meet or beat that record again this year, and it’s pushed up prices, too: In August, one of the busiest months of the year, the Seattle metro area’s average daily room rate was up 11 percent
from the same period last year, he said.
“The downtown market is functionally operating at capacity,” Kraus said. With occupancy at record highs and room rates increasing, he said, conditions are favorable for new hotel development.
Stanford Hotels already is planning a 283-room, 15-story hotel next to the Amazon.com campus in South Lake Union, records show. It bought the property at the corner of Terry Avenue North and Thomas Street from Bio-Rad Laboratories last December for nearly $6.4 million.
Sanjay Bhatt: 206-464-3103 or email@example.com On Twitter @sbhatt