As uncertainty lingers over the future of office work, a Canadian real estate investment company will convert a South Lake Union office building into labs for life science work.
Oxford Property Group bought the Boren Office Lofts, a 10-story building at Boren Avenue and Virginia Street, for $119 million earlier this month. The company on Monday announced its plans to convert the 136,000 square feet of space into “a fully dedicated life science facility” with lab space for “innovators, creators, scientists and more.”
The company did not announce expected tenants for the building, which is unfinished inside and sits between the Cascade and Denny Triangle neighborhoods, several blocks from Seattle Children’s Research Institute. South Lake Union has seen a resurgent life science sector in recent years. The Fred Hutchinson Cancer Research Center, NanoString Technologies and Bristol Myers Squibb have research facilities in South Lake Union, along with other biotech firms and UW Medicine.
South Lake Union is “one of the most desirable life science ecosystems in the country,” said Oxford Executive Vice President for North America Chad Remis in a statement. Oxford is owned by an Ontario pension plan.
As the pandemic drove thousands of white-collar workers home last year, demand fizzled for Seattle office towers but stayed strong among science and research companies.
Nearly 7 million square feet of office space was available for sublease across King, Snohomish and Pierce counties as of March 24, double the amount at the start of last year and more than quadruple the space available five years ago, according to CoStar.
Though major companies like Amazon are still seeking out office towers, a recent Kidder Mathews report described office building sales in the region as “sluggish,” with just three deals for more than $50 million in the first three months of this year.
South Lake Union has weathered the pandemic somewhat better than downtown Seattle. About 5% of office space in South Lake Union was vacant in the first quarter of this year, compared to 13% in Seattle’s central business district, according to Kidder Mathews.
Meanwhile, less than 1% of lab space in South Lake Union was vacant in mid-2020, according to the commercial real estate investment firm CBRE. The firm ranks Seattle ninth among major cities for the size and growth of life sciences.
Not all office space can be quickly converted. Labs may need specific airflow, tall ceilings for ductwork and backup power or water.
Vacancy rates in Seattle office buildings are likely to keep climbing into the third quarter of this year before leveling off, said Kidder Mathews office broker Jeffrey Huntington.
For buildings with the infrastructure needed, conversions to lab use could continue, but there are also signs large tech companies are “going to look to get back to the office to get that collaborative environment,” Huntington said.
Mike Nelson, principal at Trammell Crow Company in Seattle, which developed and sold the building, said in a statement the “open-plan spaces, generous clear heights and robust infrastructure at Boren Lofts are ideally suited for life science companies, providing the ultimate flexibility for planning their office and laboratory spaces.”
Trammell Crow Company once pitched a “modern loft style design” that would “cater to technology firms” and others, complete with a penthouse office suite and bike storage.
It’s easy to forget with Amazon’s dominance, but South Lake Union remains “a biotech hub,” said Chris Kagi, senior broker for Savills in Seattle.
“Life sciences is a very strong market right now and landlords are going to look to take advantage of the continued growth in that sector,” Kagi said.
This story has been updated to reflect that Bristol Myers Squibb acquired the parent company of Seattle’s Juno Therapeutics, Celgene.