August 19, 2016

Is Apple looking to grow in Seattle? Rumors fly about where, how much

Image courtesy of NBBJ [enlarge]

Urban Visions hasn’t broken ground yet on S. Over 1 million square feet are planned, and that’s the high end of speculation about how much space Apple wants.

You've heard of Google, Facebook and Amazon, of course.

The latter currently occupies about 8.5 million square feet of office space, and could grow to 12 million over the next half-dozen years. Facebook recently put 1,000 employees into 275,000 square feet on Dexter. And Vulcan next year will begin a 600,000 square-foot project in South Lake Union for Google, expected to finish in 2019. (Google currently has about 2,000 employees in Kirkland and Fremont.)

So what about Apple?

It's the second letter in GAFA, the acronym for four tech companies with combined market capitalization of about $1.75 trillion. And while Apple has gotten much press for its planned $5 billion circular campus in Cupertino, California, it's more quietly been acquiring promising Seattle tech companies. First was the cloud networking startup Union Bay Networks in 2014. (GeekWire estimates its headcount at 30-plus.)

As reported by Bloomberg last summer, the notoriously secretive Apple then leased a floor and a half in Two Union Square, giving the company about 30,000 square feet and room for around 150-200 employees.

This month Apple acquired the small predictive-intelligence startup Turi (previously known as Dato and GraphLab). Turi's LinkedIn page puts its headcount somewhere between 11 and 50. Like Union Bay Networks, Turi has a Fremont address, though in another building.

So, how many employees does Apple currently have in Seattle? A conservative guess would be 200-250, which — at a reasonably generous 185 square feet per head — yields no more than 40,000 square feet. Put differently: If Apple were to move the Turi and Union Bay workers into its downtown space, it'd be bulging at the seams.

Several sources say, off the record, that Apple is shopping for around 200,000 square feet in Seattle. By the same metric, that's enough room for about 1,000 employees.

Last week GeekWire went even further with the Apple rumors, speculating that it could potentially place up to 2,300 employees in large new buildings going up in Bellevue. Puget Sound Business Journal goes further still, speculating that Apple wants 1 million square feet on both sides of the lake — enough for perhaps 5,000 workers. (And in a random, completely unrelated press release received Thursday by the DJC, the 1 million number was casually cited as if it is common knowledge in national real estate circles.)

An Eastside location for Apple would place it closer to frenemy Microsoft, which employs about 40,000 in Washington state. And this raises questions about traffic. Millennial programmers prefer access to transit — though light rail will come to Bellevue in 2023.

GeekWire nominates three towers now under construction in Bellevue as being Apple-friendly: Kemper Freeman's new tower at Lincoln Square, Schnitzer West's Centre 425 and Trammell Crow's 929 Office Tower.

In Seattle, Starwood's conversion of the upper floors in the old Macy's building, 300 Pine, offers the most contiguous space — about 300,000 square feet, with very large floor plates, a roof deck and light wells that would be attractive to a tech company. And there is the transit tunnel below.

Farther south, Greg Smith's Urban Visions hasn't broken ground on its large phased campus, now called S, which is centered around 1001 Sixth Ave. S. Two towers with over 600,000 square feet are now in early design review. Over 1 million square feet are planned at the site, which is about four blocks south of the International District transit hub.

Smith previously said he wouldn't proceed without a major tenant.

Touchstone and Principal's Tilt49 offers less space (about 300,000 square feet), but a very central location in the Denny Triangle area — and therefore more coveted by Amazon.

What's the hurry for Apple? It can afford to wait. There's no evidence it has outgrown its three separate offices, but it could begin hiring or importing existing employees to Seattle, where the cost of housing is generally lower than in the Bay Area.

A standard five-year lease at Two Union Square would expire in 2020, by which time light rail — to Northgate in 2021, and the Eastside in 2023 — starts to look a lot more real.

Apple is a rich tenant that every broker and developer would like to have. If the rumors are true, the next question is how much time is ticking down on its Apple Watch.

You can reach DJC real estate reporter Brian Miller at brian.miller@djc.com or call him at (206) 219-6517.