Vanbarton Group is venturing outside New York for its next office conversion project, scooping up a distressed Shorenstein asset.
The developer took over the distressed office building at 2601 Elliott Avenue in Seattle from Shorenstein Properties, a source familiar with the transaction told The Real Deal. Vanbarton had purchased a loan north of $120 million on the property from Wells Fargo, and Shorenstein transferred ownership through a deed-in-lieu of foreclosure.
The six-story, 345,000-square-foot property is vacant, and Vanbarton is considering plans to convert the building into residential apartments. The developer has also been in talks with office users potentially interested in acquiring the building.
Representatives for Vanbarton and Shorenstein declined to comment.
This would be Vanbarton’s first conversion outside of New York. The firm, headed by founders Richard Coles and Gary Tischler, is currently working on three projects in the city, including the 588-unit conversion at 160 Water Street in the Financial District.
Office conversions were once limited to a few areas where the gap between commercial and residential rents was most prominent. But as hybrid work leaves more offices vacant and, more recently, rising interest rates continue, developers are exploring new neighborhoods and cities for opportunities.
Don Peebles last month teamed up with former Carlyle Group partner Doug McNeely to form a new company, Donahue Douglas, which seeks to raise $1.5 billion to convert office buildings in 10 cities, including Boston, Washington, New York, Atlanta and San Francisco.
Earlier this year, TF Cornerstone created a $1 billion joint venture with Dune Real Estate Partners to convert offices, starting with the 1.4 million-square-foot Wanamaker building in Philadelphia.
Shorenstein purchased 2601 Elliott Avenue in 2021 for about $185 million. At the time, the building was 90 percent occupied by the online shopping site Zulily, described as a “one-time darling of Seattle’s tech scene” following its 2013 IPO that fetched the company a $4 billion valuation. But the company fell on hard times and its assets were liquidated (and, ultimately, resurrected by a buyer). During this process, in 2023, it exited the building, leaving Shorenstein with a vacant property.
The San Francisco-based family firm was one of the few big investors that kept buying office buildings at the start of the pandemic, and has recently had to sell a number of properties at hefty discounts.
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