American Realty Advisors is betting big on South Lake Union's rising star as a tech hub in Seattle including, but hardly limited to, life sciences. Recently the LA-based investor acquired 2201 Westlake from Vulcan Properties in a $251M deal. American Realty senior director Drew Hess, in the company's Investment Group, tells us the timing of the acquisition coincides with the continued growth of the South Lake Union submarket. "The market’s highly educated and strong workforce makes it desirable to tech, biotech, global health and other growing industries," he says. Funny thing about those kinds of businesses: they flock together. "The market dynamic creates a strong opportunity for us to secure additional high-quality tenants.”
The building is currently leased to various marquee tenants, such as Amazon and the global health company PATH. In addition, SLU as a neighborhood has seen a lot of improvement. In the last decade, more than $6B in public infrastructure and private development has been invested into the neighborhood. Thus the property still offers strong rental growth opportunities beyond an attractive risk-adjusted return, Drew says.
JLL's 2015 List of Top US Life Sciences Clusters, published this week, says that even more companies will rent in markets like SLU. The cost to build facilities nationwide, but especially in markets like Seattle, is rising fast due to limited availability of land and intense competition for that land from other industries, as well as a dearth of skilled labor for construction. This cost escalation is likely to prompt more life science interests to rent rather than build over the next few years, the report says. Seattle is No. 10 on JLL's list this year.
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