Northwestern Mutual Life Insurance Co. hired a broker to sell the Seattle headquarters of its Russell Investment Group unit, the building it bought in 2009 after the collapse of previous owner Washington Mutual Inc. (WAMUQ)
The 42-story Russell Investments Center is about 95 percent occupied, up from less than 40 percent when Northwestern Mutual paid $115 million for the property, said Mark Lucius, a spokesman for the Milwaukee-based insurer. The building was completed in 2006 at a cost of about $370 million.
“The Seattle real estate market has rebounded and we believe we have an opportunity to realize significant gains for our policy owners by selling the building,” said Lucius. CBRE Group Inc. (CBG), based in Los Angeles, is the broker, he said.
Northwestern Mutual is taking advantage of demand by institutional investors for high-quality, income-producing real estate. Office rents have been rising and vacancies declining in coastal cities such as Seattle, where job growth is relatively strong. Seattle’s average office vacancy rate was 15.2 percent in the third quarter, ranking it 15th best out of 79 U.S. metropolitan markets surveyed by Reis Inc., a New York-based research company.
“It’s not unusual for buyers who bought in 2009 to harvest sometimes spectacular profits, given the current appetite for core product,” said Kevin Shannon, a CBRE vice chairman who is handling the sale. “You have seen this occur up and down the West Coast this year.”
The Seattle Times reported yesterday that the building had been put up for sale.
A sale of the 870,000-square-foot (80,800-square meter) Russell Investments Center may top the biggest office transaction on the West Coast this year, Shannon said. In August, developer Schnitzer West LLC sold the 36-story 1918 Eighth Ave. and the smaller 818 Stewart St. for $480 million to a unit of JPMorgan Chase & Co. in the region’s biggest deal of 2011. The properties sold for $525 per square foot and $558 per square foot, respectively.
“The internal rate of return that core buyers will accept for trophies like this has been in the 6.5 to 7.5 percent range,” Shannon said. “Seattle is, in my opinion, one of the top three or four coastal gateway markets in the country right now so we’re expecting a strong competition.”
The property -- at 1301 Second Ave., next to the Seattle Art Museum -- is noted for its environmentally friendly design and garden terrace on the 17th floor.
Northwestern Mutual bought the building from JPMorgan Chase and filled it by moving Russell’s head office from Tacoma, south of Seattle, and adding other corporate tenants. Besides Russell, occupants include Nordstrom Inc., JPMorgan Chase and Zillow Inc. JPMorgan had acquired the assets of Washington Mutual after the government seized the mortgage lender in 2008.
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