LYNNWOOD – A San Francisco-based commercial property firm has purchased a six-story office building overlooking I-5 for more than $39 million, the second Lynnwood structure to attract that amount in recent months.
The sizable price paid for the building at 20700 44th Ave. W. – once known as the Quadrant I-5 Center – is surprising, given that it failed to attract much interest when offered in a bankruptcy auction three years ago. A year later, it sold to locally owned CRS Financial for $13 million.
But the new owner of the building, now called Northview Corporate Center, said its well-kept condition and its location at the edge of a hot commercial property market made it attractive.
“You can’t talk about Lynnwood these days without talking about the great Seattle market, which is very strong,” said John Grassi, president of Spear Street Capital. The San Francisco real estate investment company has owned buildings in Seattle and Redmond, but this was its first deal in Snohomish County.
Grassi added that about half of the building’s nearly 177,000 square feet is leased, mostly by MILA Inc., a wholesale mortgage firm with headquarters in nearby Mountlake Terrace. Layne Sapp, founder and chief executive of MILA, also is a managing member of CRS Financial.
Sapp said MILA will continue to occupy the Northview building under its new ownership. The decision to sell, he said, was purely financial. Even after accounting for the $6 million to $7 million CRS spent to renovate the building, Sapp and his firm realized a healthy profit from the sale.
Built in 1991, Northview and two nearby buildings were all formerly occupied by the Boeing Co. When Boeing moved out, however, the Northview building and one other stayed empty for a considerable time. The owner of those structures, Rosche One Interests LP of Texas, eventually defaulted on its loan and filed for Chapter 11 bankruptcy.
After brokers failed to find a buyer, Life Investors Insurance Co. of America, which had been the main lender to Rosche One, took the two buildings over for $17.5 million in a bankruptcy auction in March 2003.
Ric Brandt, a senior associate with CB Richard Ellis who handled leasing at the Northview building until its sale, said he’s not surprised by the price Spear Street paid, which amounts to $223 per square foot. Investor interest in the Lynnwood area has grown, he said, noting that a Chicago firm paid more than $39.5 million for the six-story Cosmos Lynnwood Center on 33rd Avenue W. earlier this year.
“People are planning that the leasing, now that Seattle and Bellevue are filling up, is going to move north,” Brandt said.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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