March 20, 2023

With Overlake Sears demolished, 443 Redmond units to follow?

Photo by Brian Miller [enlarge]

Today, moving a lot of dirt ...

There's no declared schedule for the roughly 15-acre mixed-use development planned by Seritage Growth Properties in the Overlake area of Redmond. Many permits are in place, and there's ground work being done at 2200 148th Ave. N.E. (a legacy address to disappear).

PCL Construction and subcontractor McCann Construction are fairly well advanced on the utilities and earth moving. The future new driveways weren't immediately apparent during a recent site visit, but much of the job site is fenced.

And the huge old Sears is gone; that store had closed in 2018, along with dozens of others in recent years, well before the pandemic. (A few smaller commercial buildings have also been scraped.) Seritage is the Sears spinoff REIT that's developing some of the old real estate — or selling the less well located parcels. Its Overlake site is a short walk north to the future Overlake Village Station, where the opening date is uncertain.

City records indicate the ground work began last fall. Demolition began last summer, under PCL and Ascendant Demolition.

First in line for development, on the northeast corner, is a seven-story, 443-unit apartment project at 15001 N.E. 24th St. The Sears property was subdivided into three main new parcels last fall, with Bush, Roed & Hitchings as the surveyor.

Working with Seritage on the apartments are investment partner Mack Real Estate Group, owner's rep Schwartz Co. and architect GGLO. The team also includes Terrane, surveyor; Traffic Engineering Northwest; Pangeo, geotechnical engineer; and Ocean Park, mechanical and/or plumbing.

Rendering by GGLO [enlarge]

And some future day, an urban village near the light rail station?

The northeast corner apartments will also have about 29,000 square feet of retail/commercial space. Nearly 600 parking stalls are planned on one underground and two structured levels.

Pre-pandemic, the city had approved the Seritage master development plan, which includes a hotel, offices, retail, restaurants and public space. That MDP came from Jerde Partners of California, working with Hewitt as the landscape architect and CPL as civil engineer.

In late 2019, Seritage signed a loan agreement with Berkshire Hathaway Life Insurance worth up to $2 billion. That was to be deployed for various projects and purposes, Overlake possibly among them. Then came COVID-19, and Seritage has continued to sell off real estate to pay down debt. That figure now stands at around $1.4 billion, the company says.

As of last month, the company said it had 97 properties with over 13 million square feet. Slated for future development are some 213 acres. The Overlake project isn't listed on its website. Nor are its main three parcels known to be for sale.

When the pandemic hit, the Seritage share price plummeted from $38 to about $8. It's now around $8.50, with a market cap of some $473 million.

And here's a footnote regarding the old Sears Auto building. That changed hands in a 2019 deal between Seritage and Regency Centers, the buyer. Regency still owns and operates Overlake Fashion Plaza, the south neighbor to Seritage, with its Marshalls, Panda Express, BevMo!, etc.

The old Sears Auto building, at 2010 148th Ave N.E., has been completely transformed into a line retail complex. That's on the corner of Northeast 20th Street, and is now home to Mayuri Foods (which replaced Amazon Go), Sichuan Cuisine, a nail salon, medical clinic and Five Guys, which relocated from a razed Seritage building.

Working with Seritage on the apartments are investment partner Mack Real Estate Group, owner’s rep Schwartz Co. and architect GGLO. The team also includes Terrane, surveyor; Traffic Engineering Northwest; Coughlin Porter Lundeen, civil and structural engineer; Pangeo, geotechnical engineer; and Ocean Park, mechanical and/or plumbing.