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January 28, 2022

Bellevue office project sold for over $95 million, with spring start planned under Mortenson

Real Estate Editor

Rendering by Patrinely Group [enlarge]
Looking northeast across 106th, the Four106 tower will replace two small buildings from the 1970s.

Confirming rumors that have swirled for months in downtown Bellevue, Fana Group has sold its office plan and land at 350 106th Ave. N.E. King County recorded the $95.5 million deal on Thursday. The gossip was correct, and buyers Patrinely Group and Dune Real Estate Partners confirmed the sale with a press release.

The Four106 plan is now described as a 21-story, 480,000-square-foot tower on the corner of Northeast Fourth Street. Fana previously gained city approval for a two-phase project designed by CollinsWoerman; but only the larger west portion has sold. Fana acquired that property in 2015 for about $11.2 million

The corner measures just under an acre. For the land, the deal was worth about $2,368 per square foot. Fana's brokers were Kevin Shannon, Ken White and Tim O'Keefe of Newmark.

Public records indicate a $270.5 million loan from Blackstone to the buyers, who said that JLL's Bill Fishel, Tom Wilson and Rachael Lewis secured the financing. That money appears to cover both the land cost and construction.

The new owners plan to break ground in the coming months, with Mortenson as the general contractor. It appears that most if not all permits are in place. The goal is completion during the fourth quarter of 2024, with the target of meeting LEED Gold certification.

Patrinely's Robert Fields said in a statement, “We are confident this state-of-the-art building will be a welcome addition to the growing Bellevue skyline, and provide prospective tenants an office space that will meet their needs not only today, but well into the future.”

That company, based in Houston, has had a small presence in Seattle. Dune is a New York investor with about $4 billion under management. It invests on behalf of pension funds, sovereign wealth funds, endowments and other large entities.

Dune's Dan Neidich said, “Four106 represents a unique opportunity to develop outstanding product in a differentiated location within a market that has very attractive fundamentals.” Those fundamentals include Amazon's massive surge into downtown, and a location that's about an eight-minute walk northeast to Bellevue Downtown Station, where light-rail service begins next year.

Broderick Group's Paul Sweeney, Jason Furr and Colin Tanigawa are brokering the Four106 offices. Floor plates will average around 24,000 square feet. Broderick had said in its most recent Eastside office report that, “Expect this to be the first project under construction in a long list of potential CBD development sites racing to break ground.”

About 6,500 square feet of retail is planned, along with 707 parking stalls on eight levels below grade. Some stalls will have EV charging. The new owners also cite a “dedicated ride-share pavilion, and an extensive bicycle parking facility.”

The team also includes Gensler, interiors; DCI, structural engineer; Navix Engineering, civil; and Weisman Design Group, landscape architect.

Now, what happened to Phase II? Project numbers at Four106 have varied over the past seven-odd years of planning and design review. The west tower was going to have 18 stories; then it rose to 21. The city issued an MDP and, last summer, a SEPA determination of non-significance allowing nearly 500,000 square feet of development.

Phase II was to be a new five-story building that would replace the existing nine-story KeyBank building, at 10655 N.E. Fourth St. That's directly east across the alley from Four106. Fana acquired the KeyBank building in 2012 for over $36 million.

There's been no demolition plan filed for that tower, which dates to 1972. Nor has CollinsWoerman's proposal entered design review. Fana still owns it, and with the same architect has gained city approval for a small new retail or restaurant pavilion to replace a parking lot in front (on Fourth).

That small plan may or may not proceed, and Fana may or may not opt to sell that east Phase II property (with about 1.2 acres). But Patrinely and Dune have no connection to that, other than easements and crane-swing agreements. (Update: the city of Bellevue said after deadline that Fana’s master development agreement requires that the pavilion and other public amenities be constructed along with Phase I.)

Fana, led by entrepreneur Firoz Lalji, has its roots in the old Kits Cameras chain and current IT services firm Zones. Fana last year sold a nearby site to the east, for over $32 million, to Capstone Partners, which is now planning a new office tower there.


Brian Miller can be reached by email at brian.miller@djc.com or by phone at (206) 219-6517.

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