KIRKLAND, WA—The local economy continues to run hot mainly due to technology jobs, with year-over-year nonfarm payroll increasing at 3.9%, the fastest growth rate since the turn of the century. The Seattle-Tacoma-Bellevue metro statistical area had an unemployment rate of 3.9% in July, in line with the all-time high of the national rate.

In keeping with this hot trajectory, office buildings are flying off the shelves in key areas of the metro. A recent example are the four multi-tenant office buildings at Plaza Yarrow Bay totaling 284,313 square feet which sold for $134.5 million. The buyer was undisclosed and the seller was Kilroy Realty.

The institutional-quality asset is located at 10220 NE Points Dr., 10230 NE Points Dr., 10210 NE Points Dr. and 3933 Lake Washington Blvd. Plaza Yarrow Bay features a campus setting with walking trails and decks, positioned at the gateway to Seattle's Eastside with access to four major hubs.

The campus is near SR 520 and Interstate 405, providing connectivity to Bellevue, Kirkland, Redmond and Seattle. Tenants at Plaza Yarrow Bay include two Microsoft business partners, INRIX and Allyis, which benefit from the campus' close proximity to Microsoft's Redmond headquarters.

Newmark Knight Frank co-head of US capital markets Kevin Shannon, vice chairman Nick Kucha, executive managing director Ken White, senior managing director Michael Moll and director Bill DeLacy represented the seller in the transaction. Executive managing directors Tim O'Keefe and Mike Schreck led the market leasing efforts.

This sale is due in part to the Kirkland submarket's strong office leasing fundamentals, says Kucha.

“Historically, the market has experienced very little sales volume, making Plaza Yarrow Bay a compelling opportunity to acquire scale,” he points out.

In general, the Eastside of Seattle has experienced a healthy increase in suburban sales volume that can largely be attributed to the market's leasing performance and attractive relative returns compared to downtown Seattle investment opportunities, notes Moll.

“Kirkland has incredibly strong leasing fundamentals and this deal represents the 'urban suburban' strategy many buyers have shifted to get better yield,” Shannon tells GlobeSt.com. “In my opinion, the fundamentals in several Seattle suburban markets including Kirkland may be the best in the country right now and we expect that to continue into 2019.”

According to NKF's third quarter 2018 Puget Sound office market report, the office market continued to roll in the third quarter, with asking rents edging upward 0.6% to a new record high of $36.91 per square feet and positive absorption of 1.498 million square feet. Average asking rent on the Eastside increased slightly to $41.10 per square foot, up 0.7% from the prior quarter. The Eastside also experienced another quarter of positive absorption, totaling 223,654 square feet.

Instant Insights /

Office Buyers Respond to Hot Tech Market

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