Historic Seattle Tower Has New Local Owners
The Smith Tower, built more than a century ago as the first skyscraper in Seattle, has changed hands. A group of local investors led by GT Capital bought it from Goldman Sachs, according to CommercialEdge information. The property rises 42 stories above the Pioneer Square district and was acquired together with the nearby Butler Garage.
The new ownership includes “prominent Seattle families,” according to Freestone Capital Management, which is also a part of the joint venture along with Evergreen Ventures, the alternative investment arm of Evergreen Gavekal.
GT Capital Founding Principal Joe Razore said, in prepared remarks, that the investors’ new cost basis will mean the building will be in a strong position to compete for tenants.
The 268,700-square-foot tower at 506 Second Ave. dates from the 1910s, when industrialist L.C. Smith tasked New York architects Gaggin & Gaggin to design the tallest building west of the Mississippi. Completed in 1914, the high-rise has been predominantly office since then, but also includes ground-floor retail and an observation deck that is a popular tourist destination.
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A previous owner, Unico Properties, renovated the property in the 2010s, including changes to the observation deck. Unico had acquired it in 2015 for $74 million, then sold it to Goldman Sachs in 2019 as part of a portfolio of 27 buildings in Seattle and Denver for $710 million. Smith Tower was also renovated in the late 1990s.
The LEED Gold-certified high-rise has floorplates averaging 11,351 square feet, as well as such amenities as a 22nd floor tenant lounge and roof deck, fitness center and cardio studio. Butler Garage is across the street.
Current tenants include tech companies, law firms and a publisher, among others. Damon McCartney and Lauren Hallgrimson with Broderick Group handle the office leasing activity at Smith Tower.
Seattle office market, sluggish
The greater Seattle office sector is showing the same kinds of weak fundamentals as the ones of other U.S. markets, with vacancy increasing for the 10th quarter in a row, according to a Kidder Mathews second-quarter 2024 report.
The Puget Sound vacancy rate at the end of June was 15 percent, marking a 280-basis-point jump over the year and a 900-basis-point climb since the onset of the pandemic in 2020. The value also indicated the highest rate since 13.4 percent in 2010, the report showed. Seattle’s index clocked in at 18.7 percent, up 30 basis points over the quarter.
Meanwhile, office sales totaled more than $215 million year-to-date as of June, with the majority of transactions involving small-size assets averaging 30,000 square feet. The largest property that changed hands in the first 6 months of 2024 was the Boeing Longacres 25-01 Building, a 617,262-square-foot asset acquired by Alaska Airlines for $85.8 million.
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