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November 26, 1998

Real Estate Buzz

By MARC STILES
Journal real estate editor

Tenants shop Meydenbauer space . . . On this, the busiest of retail shopping day of the year, we present the tidbit of the week: About two-thirds of the retail space in the proposed Meydenbauer Place has been preleased, according to a source close to the deal mak-ing.

That the mixed-use development is filling up so quickly should surprise no one given its association with Ken Himmel's Palladium Co., and Jeff Rhodes' The Rhodes Co. The pair have been developing mixed-use projects for years and have succeeded, in part, by cultivating sound relationships with national retailers that have piggybacked -- and piggy banked -- on the pair's successes.

Retailers apparently are anxious to do so in Bellevue. Expect an announcement of the tenants next week.

Can you say tenants' market?... It would be an ugly situation for landlords if the downtown Bellevue building binge really takes off. This according to a projection by Broderick Group.

Broderick brokers believe that if three of the six projects now on the boards are constructed, vacancy rates in the CBD would rise from the current 1 percent to "a higher but still healthy" 7 to 9 percent range. But if a fourth project should come together, vacancy rates will hit the 15 percent range by 2000.

No wonder everyone seems so antsy these days.

Adding three buildings is plenty and adding one more "would set the market off," said Paul Sweeney, a Broderick principal who added the projection was based on "pretty good" absorption and demand.

The dark horse... One building that may come out of the ground sooner than expected, according to the buzz, is Eugene Hohrbach's 20-story Bellevue Technology Tower.

One industry watcher notes that the E&H Properties president, who has constructed more buildings for Boeing than anyone else, has a reputation for surprising people. As of Wednesday, the $482,055 building permit ($391,000 of that is the transportation impact fee) was still awaiting pickup at City Hall, but there is evidence of movement.

Says one broker: "I've got it on real good source that he's paid his architect, engineer and public relations people."

Another tower begins... Lost in the hubbub of this week's groundbreakings for Wright Runstad's Three Bellevue Center and Martin Smith's Millennium Tower was the start of work at Continental-Bentall's 31-story, 350-unit Westlake Tower at Seventh and Westlake avenues. Crews are demolishing the old Trailways bus depot to make way for the residential tower that will start going up in December and open in the summer of 2000.

Vice President Claudio Guincher said Continental-Bentall is looking at two more building sites downtown -- one in the Regrade and another near Westlake Tower.

Hey, let's play charades... A large Eastside software developer is scheduled to occupy the 144,000-square-foot Building E at Opus Willows Commerce Park. Opus officials can't say anything because the large Eastside software company doesn't want them to.

It's reminiscent of not so long ago when the head of a large Eastside software company was building a palatial home on the waterfront in Medina. Some of those involved in building the project wanted to tout their capabilities and sent out press releases about their work on what they referred to as a large Eastside residential project. No sense in ticking off the boss.

Mike Ruhl, Opus real estate manager, said that of the five new structures at Willows only Building B remains unleased. He expects to have a couple of tenants signed up by the end of the year.

More space for RealNetworks... It's still full speed ahead at RealNetworks -- despite the divorce from Microsoft, which sold its 10 percent stake in the software company. RealNetworks isn't shedding any tears and is taking the stay-busy approach.

Not only is it releasing RealSystem G2, which improves sound and video delivery over the Internet, the company is taking more space at the Seattle Trade and Technology Center, according to sources near the deal.

Already, RealNetworks has 180,000 square feet, and now sources say the company's taking another 90,000 square feet in the building that's under renovation. No word from the tenant.

Halcyon days at Pinnacle... It's been a banner year at Seattle-based Pinnacle Realty Management, according to President and CEO Stan Harrelson. When the firm closes out the books this year, it will have doubled its 1997 brokerage sales of $425 million.

Several weeks ago, the tally stood at $740 million. Boosting the sum were $365 million in hotel and office deals in Los Angeles and Texas. Of the 1998 sales, 60 percent are residential and 40 percent are commercial, according to Vice President Jeff Gilson.

Given the numbers, it's not surprising Pinnacle is exploring two avenues of expansion: Asia and Germany. Harrelson said Pinnacle is eyeing opportunities in Japan and Singapore and plans to begin working in Germany as a springboard into Europe. The company already manages properties in Canada and Puerto Rico.



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