In the latest sign of mounting national and international interest in Seattle commercial real estate, New York-based private equity firm KKR & Co. has purchased the F5 Tower in downtown Seattle and the Summit office complex in Bellevue for a combined $1.2 billion.
The Summit complex made up the bulk of the price tag, going for $756 million, seller Hines Global REIT confirmed, making it the most expensive Puget Sound transaction this year.
That would mean the F5 Tower sold for roughly $440 million. KKR declined to confirm the purchase price, and F5 Tower seller Daniels Real Estate did not immediately return a request for comment.
The purchases mark KKR’s entry into Seattle’s real estate market.
“We are excited to be making these two real estate investments in the Puget Sound Region, a market we believe has attractive long-term growth driven by a highly educated employee base, attractive cost of living relative to other top tier markets in the U.S. and high-quality of life,” said KKR managing director
Recent years have seen a swarm of purchases by global real-estate investors in the Puget Sound commercial property market, including the sale this fall of two Facebook-occupied Seattle buildings to the billionaire owner of fast fashion chain Zara.
F5 Networks, the Seattle internet and networking infrastructure company, leases all the office space in the 44-story F5 Tower, completed in 2018. A 189-room hotel in the tower’s lower 13 floors, currently vacant, will be operated by the South Korean chain Lotte, the Puget Sound Business Journal reported last week. Swanky Los Angeles-based hotel brand SLS had originally planned to occupy the space, but unexpectedly pulled out of the deal in October 017.
The lobby of the glassy tower shelters the shell of the Beaux Arts-era First Methodist Episcopal Church, which developer Kevin Daniels restored to the tune of $37.5 million. It currently operates as an events space called The Sanctuary, though that seems likely to change: the city granted a permit in September to turn the former church into an Equinox fitness center.
The Summit complex, on Northeast Fourth Street and 110th Avenue Northeast, is two completed office towers occupied in part by Amazon, leasing through WeWork. A third, under construction, is expected to open in mid-2020. Amazon has pre-leased the entire building. Under the terms of the lease, Hines will continue developing the site.
Hines Global REIT acquired Summit from Ivanhoe Cambridge in 2015 for $319 million.
Both properties will be managed by Seattle-based Urban Renaissance Group.