Unico wagers on Renton's future
Puget Sound Business Journal (Seattle) - by Joe Nabbefeld Staff Writer
Quentin Kuhrau sees Renton as the next Bothell, a suburb bursting at the seams with office tenants.
The executive at Seattle-based Unico Properties Inc. just placed another $28.5 million bet on Renton, bringing Unico's stake on the hunch to almost $100 million.
Unico last week bought a 15-building office complex in Renton called Washington Technology Center, paying three separate sellers a total of $28.5 million.
"I love Renton because I think there's basically an arbitrage opportunity there," said Kuhrau, a Unico vice president responsible for buying office buildings outside of Seattle. "Right now, of the tenants that get squeezed out of the downtowns, 65 percent are going to the Eastside and 35 percent to the South End. But North Creek and Canyon Park (in Bothell) are almost filled up, so I think you'll see a flip-flop of that ratio."
If that happens, Unico would reap a windfall as South End rents and property values rise.
Rents in Renton are $10 lower than for comparable space on the Eastside, Kuhrau said. "You can save a third on rent," he said. "That's got to have some appeal."
Washington Technology Center totals 270,000 square feet in 15 low-rise office buildings. The property brings Unico's total in Renton to almost 1 million square feet for which it paid a total of $93.5 million in the past two years.
Unico executive vice president Dale Sperling said Unico's price for its Renton properties, around $100 per square foot, makes the investments look like winners even if a large migration into Renton doesn't ignite.
"It works a whole lot better when stuff starts to shift from the Eastside, but it works fine now, too," Sperling said.
Unico's main lot in life is the lucrative job of managing the University of Washington's Metropolitan Tract of properties in downtown Seattle. The tract consists of 1.5 million square feet of offices, the 5th Avenue Theatre and 200,000 square feet of retail.
In recent years, preparing for the possibility of losing its UW contract in 2014, Unico has become one of the region's most aggressive buyers of buildings outside of downtown Seattle. Its purchases include one of Bellevue's six office skyscrapers (Skyline Tower), two downtown Tacoma high-rises, two other Bellevue buildings and its growing Renton collection.
Its Renton holdings are One, Two and Three Renton Place, Valley Office Park and Black River 800.
"They are the major landlord in Renton now," said Ric Anderson, an executive with the pension adviser Lowe Enterprises, which sold Unico the largest of the three portions of the Washington Technology Center.
The other sellers were Northwestern Mutual Life and an individual investor based in California.
"I think he (Kuhrau) is right that Renton looks like a bargain," Anderson said.
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