Seattle Office Towers Trade in Record-Breaking $740M Deal

USAA Real Estate and Touchstone’s sale of the Troy Block marks the largest single-asset real estate transaction in the city’s history.

Ponte Gadea, a real estate investment firm led by Spanish billionaire Amancio Ortega, has acquired two Amazon-occupied Seattle Class A + office towers known as the Troy Block for a record-breaking $740 million from a partnership of USAA Real Estate and Touchstone.

The transaction represents the largest single-asset trade by volume in Seattle history. The last commercial real estate transaction of this size in Seattle closed in 2015, when the 76-story Columbia Center, the city’s tallest building and one of the tallest on the West Coast, sold for $711 million.

While several media outlets have confirmed the buyer and sales price, the Puget Sound Business Journal was the first to break the news of the record-breaking purchase and identify the new owner.

HFF marketed the property on behalf of USAA Real Estate and Touchstone, which developed the office towers on Fairview Avenue North in the South Lake Union submarket starting in 2013. Touchstone, a local developer that is now a subsidiary of Urban Renaissance Group, had purchased the 2.5-acre former Troy Laundry building from The Seattle Times Co. in 2011 for $18.4 million. The South tower, a 12-story, 397,500-square-foot building, was completed in June 2016 and the North tower, a 13-story, 382,389-square-foot building, was delivered in March 2017. The development area is bounded by Fairview and Boren avenues and Thomas and Harrison streets. Because the Troy Laundry and Boren Investment warehouse buildings are landmarks, the developers had to retain the facades of the buildings. Perkins + Will was the architect of the project, which also included installing a pedestrian court between the two L-shaped office buildings. Both buildings are LEED Gold certified.

Amazon, which has its headquarters nearby and owns or leases about 12 million square feet of office space in the city, is the sole tenant for the office space. Both buildings have about 2,500 square feet of ground-floor retail occupied by tenants including a Farestart restaurant, Amazon Go store and coffee shop.

The HFF investment advisory group representing the seller included Executive Managing Directors Mark Gibson, Stephen Conley and Manny De Zarraga; Senior Managing Directors Michael Leggett, Gerry Rohm and Coleman Benedict; and Directors Kevin Freels and Logan Greer.

Pontea Gadea has been making investments in real estate in the U.S. for the past several years. In January, the Spain-based firm purchased The Investment Building, a trophy office property at 1501 K St. NW, in Washington, D.C., from a joint venture of JP Morgan Asset Management and JBG Smith for $385.4 million. Constructed in 1922, it was redeveloped in 2001. Law firm Sidley Austin LLP is the anchor tenant at the building, which is 92 percent leased.

The company paid approximately $470 million in 2017 for the mixed-use Pacific Place complex in San Francisco. In 2015, the firm acquired 490 Broadway, a five-story landmark building in Manhattan’s SoHo neighborhood constructed in 1857, for $140 million. Known as the Haughwout Building, it is at the corner of Broadway and Broome Street.

Image courtesy of HFF

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Eric Richards