Alexandria Adds to “Mega” Life Science Project in Seattle

How much more “mega” can Alexandria Real Estate Equities add to its “mega campus” for life sciences in Seattle? Mucho mega, apparently.

The Pasadena-based real estate investment trust will buy and redevelop a historic utilities building at 802 Roy Street to expand its proposed Alexandria Center for Life Science in South Lake Union, the Puget Sound Business Journal reported.

Alexandria has applied for master-use and construction permits to build a “new life sciences addition to (the) landmark Seattle City Light Building with below grade parking.”

The value of the project is estimated to be around $280 million, which includes the purchase of the 98-year-old Puget Sound Power & Light Utilities Building, according to the applications. The seller was Seattle City Light, the city-owned utility authorized in 2017 to sell the surplus property.

The sale price of the vacant 50,300-square-foot industrial and retail building, built in 1926 on 1.5 acres at an address better known as 800 Aloha Street N, was undisclosed. It’s not clear how the life sciences developer plans to redevelop the half-block property.

The project, if approved, would add to Alexandria’s decade-long plans to build two “mega campuses” on city-owned properties in South Lake Union and Eastlake.

Alexandria agreed to pay $143.5 million — $138.5 million for the land plus a $5 million contribution to address homelessness — for the so-called Mercer Blocks that will form the core of the life science development.

The South Lake Union campus will spread across Roy Street, where the developer plans to build two towers containing 865,000 square feet of offices and research labs at 800 Mercer Street, according to the Business Journal.

Across the street, the REIT plans to build a 10-story, 340,000-square-foot lab building at 601 Dexter. This spring, it resumed construction of an 11-story, 227,000-square-foot life sciences building at 701 Dexter.

And Alexandria project partner Sustainable Living Innovations, based in Seattle, plans to build an 18-story apartment building at 615 Dexter Avenue N, including affordable units, a city recreation center and a child care facility.

Life sciences may be on the upswing across Seattle, despite widespread vacancies and falling rents.

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. This month, the New York-based investor applied for $7.2 million in upgrades for the empty, three-year-old building at 330 Yale Avenue N, in South Lake Union

“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,” broker Marcus Yamamoto of CBRE, who is marketing the suites, told the Business Times in an email.

CBRE 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 at 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.

— Dana Bartholomew

UPDATE: This article has been updated to clarify that the estimated value of the project, not the sale price of the property, is $280 million.