Thursday, May 05, 2011
|Seattle Times||Daily Journal of Commerce Headline|
|Unemployment applications hit 8-month high||Real Estate Buzz: Twin towers for site in Bellevue CBD?|
|Bellevue Towers developer plans apartment project near Seattle U.||There’s a good chance one of the next big projects in downtown Bellevue will be across the street from Downtown Park now that a long-held parcel there is on the market.
Mark C. Anderson of Colliers International landed the assignment after working for eight years with the Bates family, which has owned it for 71 years. He is listing the Bates site for $17.15 million, and says this is a rare opportunity to acquire property in an area that has “almost impenetrable barriers to entry.”
Most downtown real estate is owned either by institutions or held in trust by Bellevue families. This site at the southeast corner of Bellevue Way and Northeast Second Street is a good example.
Back in the day, the 50,500-square-foot site was home to a gas station. The fuel tanks were removed, and a McDonald’s opened on the property in the 1950s. Today, there is a Fatburger and an E.E. Robbins jewelry store on the site, which is near some of the region’s most valuable real estate.
The site’s zoning encourages mixed-use, with retail at the ground level and office space, hotel and housing above. Baylis Architects was hired to do a feasibility study and proposed twin apartment towers 200 feet tall. A building could go higher if it had an architectural flourish on top.
Baylis Architects rendering courtesy of Colliers International [enlarge]
The owners are asking $17 million for the site at Bellevue Way and Northeast Second Street, across from Downtown Park.
Colliers and Baylis suggest the optimal development would be residential towers over a single-story retail base.
The market also points to this, Anderson said, because downtown Bellevue “is on a rapidly accelerating growth curve.”
• Sales at Bellevue Square and other parts of the Bellevue Collection were up more than 18 percent last year and 9 percent this year, with non-mall street retail absorption up substantially.
• Microsoft, which occupies more than 1.7 million square feet in five downtown buildings, recently said it will add more than 3,000 jobs on the Eastside.
• Other tech and aerospace companies in Bellevue will benefit from Boeing’s Air Force fueling tanker contract. Boeing has been hiring more than 100 people a week.
• Two developers are proposing big projects to capitalize on expected job growth. Kemper Development continues working on Lincoln Square II on Bellevue Way and Touchstone has proposed a project at Washington Square on Northeast Eighth Street. They would each have 1.6 million square feet of hotel, retail and office space. More than 11,000 people will work on the campuses.
The vacancy rate for downtown apartments is less than 5 percent.
“Where are all these people going to live? I get pretty excited about this stuff,” said Anderson.
What’s next for TJ’s?
Now that Amazon.com has leased almost 500,000 square feet of warehouse space in Sumner for a fulfillment center, the focus shifts to Trader Joe’s. The grocer will have to do a build-to-suit, and that would result in the region’s first significant warehouse development in almost three years.
It’s common knowledge Trader Joe’s is looking for a large warehouse. TJ’s is working with broker Les Boudwin of Pacific Real Estate Partners, who confirms his client wants 500,000 square feet but declined to comment further until a deal is done.
The last available space of that size, however, went to Amazon, which leased all of the Summit building at Sumner Corporate Park.
So where will TJ’s go? A lot of developers would love to bag the grocer, and we hear one of them is Teutsch Partners. Talk is the Seattle company would build something for Trader Joe’s at its Hawks Prairie III Corporate Park in Lacey. John Teutsch was not available.
Online data show Wilma Warshak and Zane Shiras of Washington Real Estate Advisors are marketing the 107-acre park. That much land could accommodate more than 1.9 million square feet of warehouse space, including a parcel for a 500,000-square foot building.
Four other companies — Target, Home Depot, Spring Air and Harbor Wholesale Grocery — already have distribution centers in the area, which is about 30 minutes from the Port of Tacoma. Warshak also was not available.
The Amazon deal, which the DJC first reported, is the largest lease since last summer when Pepsico/Quaker took more than 444,000 square feet at Port Commerce Center in Tacoma. It supports the idea that the few remaining big spaces available will be snapped up in short order.
In addition to Trader Joe’s, there are a handful of other big users looking for a total of 1.9 million square feet. We hear the largest requirement is ConAgra, which is seeking up to 500,000 square feet.
Even if only some of these deals get done, “it’s really going to take up some slack in the market,” said PREP’s Scott Carter. This means the TJ’s won’t be the only build-to-suit opportunity. “I think it’s going to be mid next year when the rubber is really going to hit the road,” he said.
Moda shows small is still big
Moda, the Belltown condo project with the miniature units, was a big hit when the units first went on sale in 2006. Now it’s a big hit with apartment investors.
Expect a sale to close soon, says broker Jon Hallgrimson who is marketing the 251 apartments with CB Richard Ellis colleague Frank Bosl.
In 2006, lured by the promise of “New York-style living” and relative affordability, more than 1,300 people registered for tours of the condos, which were as small as 296 square feet. Moda’s 128 studios are between 300 and 500 square feet, and 46 of them were priced between $149,000 and $176,000.
All the condo were sold in less than a week. But two years later, as the project neared completion, the condo market collapsed. Most buyers bailed when they couldn’t get loans, so the developer, David Hoy of HMI Real Estate, converted the project to apartments.
Before the condos market soured, the hype was classic. Units were available on a first-come basis. One would-be buyer told HMI officials he would camp out so he could be first in line.
“It was at the height of the frenzy with the condo market,” said Hallgrimson. “Today as a rental we found the same thing.” An array of investor types looked at the project. And no wonder: it is fully leased and rents are expected to surge across the market due in large part to the lack of new units.
Hallgrimson said Moda is a good lesson for investors and developers: think small. Unlike the steel-and-concrete high-rises that don’t work as rentals, the mid-rise, mostly wood-frame Moda works both as condos or apartments. This provides an investor with a good exit strategy that’s not dependent on market whims.
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