Canadian investment group Brookfield Asset Management has closed on a deal to purchase an 11-floor office building in Bellevue’s Spring District that’s fully leased to Facebook, for $365 million, Spring District developer Wright Runstad & Company announced Friday.
The sale of the Block 16 building is the third-largest property sale recorded in King County this year, after Facebook’s purchase last month of REI’s former Spring District headquarters for $367 million and Expedia’s March sale of its old downtown Bellevue offices for $401.5 million to investment group KKR.
Wright Runstad CEO Greg Johnson said in an interview he believes the deal is a “strong signal that over the long term, investors believe that offices are going to be good investments.”
Overall, though, office investment activity is well down over last year, according to commercial brokerages, as investors wait to see how quickly white-collar employers return from remote work — if at all. Microsoft, for example, expanded its work-from-home options earlier this month, allowing some employees to stay away from the office for good.
But this building in particular has attributes that likely made it seem a safe bet amid the wider trend of investor withdrawal from the office market. Facebook has signed a 13-year lease on the property, according to a memorandum filed with the county, with an option to renew for an additional 12 years. The company, on track to become the area’s fourth-largest occupier of office space, is expected to hire many thousands of new employees in the region within the next few years. Seattle is already Facebook’s second-largest engineering hub, after its Menlo Park, Calif., headquarters.
The sale shouldn’t be seen as Wright Runstad pulling out of the Spring District, Johnson said. The developer and Spring District partner Shorenstein Properties, which together borrowed $107.5 million to cover construction costs on the building, “collectively made the decision that given the strong interest from buyers … let’s sell this one and book some profits from our standpoint,” Johnson said. “It enables us to have some capital to do further investments in the Spring District.”
The 36-acre business district just north of Lake Bellevue is planned to consist of 24 buildings. So far, 16 have been built.