Seattle office building is set for apartment conversion

As scores of white-collar workers continue to work from home, an empty Uptown office building could soon become dozens of apartments. 

Developer Stream Real Estate has filed plans with the city of Seattle to convert the aging office building near Climate Pledge Arena into apartments, in what appears to be the first proposed conversion of a full office building into housing in Seattle since the pandemic. 

Residential conversion is a popular — but logistically tricky — idea that has gained traction as office buildings sit empty and cities look to revitalize their downtowns and address housing shortages. 

Across the Seattle area, employers continue to pare back their office space or search for high-end amenities in hopes of drawing workers back to the office.

In Queen Anne and Magnolia, where much of the office space is in midtier buildings, nearly 30% of total office space was either vacant or available for sublease in late 2023, according to the commercial real estate firm Colliers. Compare that with about 16% at the same time in 2019.

High vacancy rates can drive down the value of office buildings, making them potentially attractive for developers. That is evident in the sale of the Uptown building. In December, an LLC affiliated with Stream Real Estate and Marymoor Storage Partners together paid $7 million for the building, which last sold for $7.9 million in 2005.

The building at 201 Queen Anne Ave. N. has been vacant since mid-2022. Recent tenants included the contractors working on Climate Pledge Arena and, before that, Zenith American Solutions, according to Cushman & Wakefield, the firm that represented the buyer and seller in the recent sale.

Preliminary planning documents filed with the city show plans for 68 one- and two-bedroom apartments at the Uptown site and a small “urban farm” planned for the outdoor amenities area. Developers plan to add a fifth floor to the building, which features views of Elliott Bay.

While the idea of converting office buildings is compelling, many aren’t suitable for apartments or condos because much of the interior space is far from windows, making for awkward apartment layouts. And development costs can be high. Researchers say hundreds of older office buildings across the Seattle region, including this site in Uptown, could be good candidates for conversion, though many of the sites may not be profitable enough to attract redevelopment.

The floor plan of the Uptown building is “more efficient than a lot of buildings,” making it a viable candidate for developer Stream Real Estate’s first office conversion, said Marc Angelillo, a managing member at the company. The building will need some seismic upgrades, and crews will gut the structure to transform it into apartments, Angelillo said.  

Interest in office conversions comes as renters grapple with high housing costs and tightening supply. Seattle-area apartment rents that were mostly flat over the last year are expected to rise in the coming years as fewer new projects hit the market. About 6% of apartments in Uptown were vacant in late 2023, according to CoStar.

The Uptown apartments will be market-rate, though about 20% could be more affordable if developers seek a multifamily tax exemption.

It’s not yet clear when the Uptown redevelopment may be finished. The plans were previously reported by the Daily Journal of Commerce and Puget Sound Business Journal.

Given the challenges of converting office space, “it is difficult to figure out how to make it work, and a lot of things have to come together,” Angelillo said, and that makes it “difficult to tell” whether more conversion projects could emerge across Seattle.