KKR paid $161.8 million this summer for a never-occupied life sciences building in Seattle — and now will sink millions more to attract tenants as prices plunge for premium labs.
The New York-based investor has applied for $7.2 million in upgrades for the empty, three-year-old building at 330 Yale Avenue N, in South Lake Union, the Puget Sound Business Journal reported.
The company even renamed it 330 Yale, from Cascadian, hoping to add fresh luster.
An affiliate of KKR bought the nine-story, 211,000-square-foot building in July through a deed-in-lieu of foreclosure for $767 per square foot. “We plan to invest fresh capital to deliver new amenities and attract a roster of high-quality tenants,” a spokesman said after the sale.
Its new owner has applied to build more than 35,000 square feet of speculative lab suites on the fifth floor, adding to two 32,000-square-foot spec lab suites on the second and third floors.
KKR also is upgrading the ninth-floor common areas, including an 80-seat conference room next to the rooftop deck, while planning an event area for flexible work.
The total cost of upgrades, designed by Perkins&Will, was not disclosed. The $7.2 million in requested upgrades only applies to work on the new suites.
Brokers Marcus Yamamoto, Paul Carr and Katie Smith of CBRE are marketing the suites for an undisclosed price.
“After a period of below-average demand activity, the Seattle life science market is showing increasing signs of new activity, both from existing life science companies and new startups,” Yamamoto told the Business Times in an email.
CBRE has recorded 400,000 square feet of demand for local life science labs, up from 250,000 square feet a year ago but below the 1.3 million square feet during the 2020-2021 market peak.
The vacancy of investor-owned labs in Seattle is 37 percent, a market as severe as the hollowed out offices of San Francisco. Add labs up for sublease — and 43 percent of space is available, according to CBRE.
The asking price for Class A labs fell $7.65 per square foot to $73.73 in the third quarter, from the low- to mid-$80s since 2021, according to CBRE.
At the same time, venture capital investment in the life sciences has shown new signs of life, in addition to the “strategic transactions” from such investors as KKR, CBRE reports.
While KKR’s bought 330 Yale from Invesco Real Estate for $767 per square foot, Fred Hutch Cancer Center purchased the three-year-old Eleven65 from Alexandria Real Estate Equities for nearly $150 million, or $1,498 per square foot.
Washington’s biotechnology sector had $241 million in venture capital investments last quarter, a 91 percent jump from the previous period. But VC funding for life sciences in Seattle was $650 million, when annualized as of the third quarter — down from $1.15 billion in 2021, according to Pitchbook.
KKR, run by co-chairmen Henry Kravis and George Roberts, has a real estate portfolio worth $80 billion, according to the company’s website.
— Dana Bartholomew
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