December 28, 2022

Big Bellevue office plan continues through city process

Rendering by Gensler [enlarge]

Though it’ll have nearly 900 parking stalls, Kanon isn’t likely to start until Sound Transit commits to a firm light-rail schedule for the Eastside.

The city of Bellevue recently announced a public meeting, to be held virtually, for the proposed two-tower Kanon office project, at 222 112th Ave. N.E. The presentation from architect Gensler will be on Jan. 25. The public comment period ends Jan. 5, and the city says that a SEPA determination of non-significance is expected.

Still pending for the 16-story towers are the final design approval and master development permit. The latter began under longtime landowner Wallace Properties, which will ground lease the 3-acre property to Beam Reach Partners of Dallas.

Broker Newmark announced that lease, with other project details, in August. OAC is the local owner's rep, and Sellen is reportedly the contractor. Environmental Associates is the SEPA consultant, and GeoEngineers is also on the team.

The corner site, at Northeast Fourth Street, is walkable to both East Main Station and Bellevue Downtown Station. Sound Transit might open those stations in 2024 for an Eastside-only route to Redmond. But there's no firm date for connecting the full 2 Line to the 1 Line (the existing north-south tracks, using the agency's new nomenclature). The parking could total some 891 stalls, directly west of Interstate 405.

Beam Reach isn't committing to any firm timeline for the two-part project. Phase I might begin in January 2024, or not, with possible completion in 2026. Phase II is anyone's guess. LEED Platinum certification will be sought for the entire project.

Apart from transit issues, the post-pandemic appetite for Kanon's roughly 740,000 square feet of offices is entirely unclear. Amazon has dialed back its demand for downtown Bellevue office space (including that which it's developing itself).

Broderick Group had previously estimated that Amazon was once on track to absorb some 3.5 million square feet. But the company has recently announced some layoffs; and, like other tech employers, it has found that some staff remain stubbornly attached to work-from-home. The prospect of driving across traffic-choked bridges, until rail service comes, will only strengthen that sentiment.

At the end of the third quarter, Broderick estimated a 2.6% vacancy rate for absolutely premium new Class A-plus buildings in the downtown Bellevue core. For the Eastside as a whole, for all types of office space, that rate rises to around 8.4%.