Security Properties unloads Bellevue apartments for $175M despite rising rents. Here's why.
Disposition of the 3-year-old, 279-unit Arras comes after Bellevue saw rents for one-bedrooms rise nearly 20% over the last year to a median of $2,300, according to Apartment List. The city saw growth of 0.7% over the past month, the fastest in the metro.
Rents are expected to increase further as Amazon.com Inc. and Meta Platforms Inc. bring thousand of jobs to the city, where the vacancy rate already is a low 2.7%, according to Commercial Analytics of Seattle. Meta told the Business Journal last month that it will be hiring "a few thousand over the next couple of years," in the Puget Sound region, where it also has offices in Seattle and Redmond. It has over 7,000 employees here already.
"Selling Arras was as difficult of a decision as it gets for us," said Michael Nanney, senior director of development at Security Properties.
Arras was the Seattle-based company's second Spring District property after the 309-unit Sparc, which it sold three years ago for $150 million. The five-building Sparc was the first vertical construction in Wright Runstad and Shorenstein $2.3 billion Spring District. When built out, the development will have 5.3 million square feet of office, residential and retail space as well as a light rail station.
The Spring District is "a huge success and it’s just hitting its stride," Nanney said. "Ultimately, for us and our partner, this felt like an inflection point where we could realize the prospect of that future value now in an aggressive market."
In addition to the homes, Arras has parking for 246 vehicles and around 3,750 square feet of retail in two spaces. Wells Fargo operates in one of the units. The other is vacant.
"We had a ton of interest in that space, as you would imagine, and the buyer decided to take the final lease up of that space on post-closing," Nanney said.
One-bedrooms measuring 743 square feet rent for $2,735 to $3,225, according to the property's website, and a two-bedroom, two-bath goes for $3,160. The larger units measure between about 1,050 and 1,100 square feet. The
property is reducing rents, the website says.
Corey Marx and David Young of JLL marketed the property for sale.