Alexandria strikes $450M life science deal with Clarion

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Alexandria Real Estate Equities has formed a Joint Venture
with Clarion Partners on a 322,858 s/f life science campus in Seattle.

Clarion has acquired a 70 percent interest in the property in
a $450 million deal arranged by Newmark.

The transaction is the largest sale completed in the state
of Washington year-to-date.

“This transaction marks the first core life science offering
in the Seattle market in several years,” said Kevin Shannon, co-head of Newmark’s
U.S. Capital Markets team which represented Alexandria. The team included  executive managing directors Ken White and Rob
Hannan along with vice chairman, Nick Kucha, executive managing directors Tim
O’Keefe and Jesse Ottele and senior managing director Cavan O’Keef.

“Life science fundamentals are faring better than the
overall office fundamentals with rents that are now ranging from $65 to $70 NNN
annually, which allowed us to achieve record setting pricing for the Puget
Sound marketplace,” Shannon added.

According to Ottele, “The Puget Sound ranks third nationally
for life science growth over the past five years with venture capital having
increased 120 percent during that time frame.”

The portfolio, located at 1201 Eastlake Avenue E, 1208
Eastlake Avenue E, and 199 East Blaine Street, encompasses 322,858 s/f of
first-class office and laboratory space and is 100 percent leased to life
science tenants.

The portfolio features premier facilities designed and
constructed to represent the highest technical specifications and capable of
accommodating a broad range of occupancy requirements. Many of the tenants
recently completed significant improvements consisting of lab/office
renovations, upgraded lab compressed air systems and expanded collaboration
spaces.

One driving force behind Seattle’s recent success has been
its emergence as a national life science hub, which can be attributed to the
combination of research, NIH funding, strong employment growth, educational
opportunities and depth of skilled labor pool.

The life science market in Seattle, which is concentrated in
the Lake Union submarket and measures roughly six million square feet of
inventory, has exceeded the performance of the overall market by a wide margin.

 Overall vacancy among
Seattle life science buildings was less than 4 percent in the third quarter,
and new inventory is virtually impossible to find, putting strong upward
pressure on asking rents, according to Newmark Research.

Seattle has ranked among the strongest real estate markets
in the country in recent years and is on track to become the top office market
in the nation for sales velocity in the fourth-quarter 2020.

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