Spear Street Buys Blackstone-Owned Offices in Seattle

Blackstone is offloading a 44-story office tower in Seattle for less than half what it paid prior to the pandemic.

The New York-based asset manager agreed to sell the U.S. Bank Center building at 1450 Fifth Avenue to Spear Street Capital for roughly $280 million, Bloomberg reported, citing sources familiar with the pending deal. Blackstone acquired the skyscraper in 2019 for $612 million, representing a 54 percent drop in value. The price pencils out to $297 per square foot.

At the time Blackstone purchased the building, the debt tied to the tower was about $427.8 million. With the latest disposition, traditional offices in the U.S. now make up less than 1.5 percent of the investment giant’s overall holdings.

The U.S. Bank Center spans 943,600 square feet and was developed in the late 1980s, according to Commercial Property Executive. The property changed hands several times before Blackstone acquired it in 2019 in a deal that also included the Docusign Tower at 999 Third Avenue in Seattle.

The Seattle office market, like in many other cities, was devastated during the pandemic as demand plummeted with employees increasingly working from home. Investors are still wary of the local market. Sales totaled $255 million in the first four months of this year, per Yardi Matrix data cited by Bloomberg. By contrast, the Manhattan office market saw $2.8 billion in sales over the same period, while San Francisco notched $1.5 billion in transactions and Dallas had $1 billion.

Blackstone remains a player in the wider Seattle office market despite the dampened fundamentals. In March, the firm partnered with New York Life to provide Kemper Development with $238 million in refinancing for its Lincoln Square North building in Bellevue, rising 25 stories and 561,500 square feet.

Another Blackstone-owned office building in Seattle made headlines earlier this year when lender Dekabank claimed in a lawsuit that Blackstone failed to repair and maintain the 23-story Exchange Building at 821 Second Avenue in downtown Seattle. The company was accused of allowing “persistent water intrusions” through the windows, requiring a full repair of the building facade. Blackstone denied the allegations.

— Chris Malone Méndez