September 10, 1999

Real Estate Buzz

Several weeks ago, Schnitzer Northwest landed Wells Fargo as its first tenant at Civica Office Commons. That was followed by news that Regus Business Centres will take space in another new downtown Bellevue office, Three Bellevue Center. And now there's talk that One Twelfth @ Twelfth, the Hines development, is close to signing a sizeable tenant.

Rob Hollister, who heads up Hines' operation in the Pacific Northwest, said a letter of intent does exist for space in one of the 480,000-square-foot development's three buildings. Neither Hollister nor Colliers International broker Bret Jordan, who is heading up the leasing of the project, would name the company. Other brokers, however, weren't so shy.

The rumor is its Mulvanny Architects, which now occupies 35,000 square feet in the Mountain Pacific Building in Bellevue. Mulvanny President Mitchell Smith said his company is looking for new space. But he declined to say whether an LOI has been signed with Hines. His reason: "If something does not happen, I still want to receive the calls I'm receiving."

This rumor makes sense because Mulvanny recently merged with Seattle-based G2 Architecture, and G2 designed One Twelfth @ Twelfth. Smith said this could play a part in the decision, but ultimately it will come down to which landlord gives Mulvanny the best deal.

For months there has been talk that Hines would scale back One Twelfth @ Twelfth to two buildings. Hollister said there is no plan to reduce the size of the project, however, the third building may be delayed -- but only by a few months. He explained that the garage, which will stretch under the entire site, will be built, and that the first two buildings will be ready for occupancy in December 2000. He added the South Building will be open as early as February 2001 and no later than August of the same year.

'We are not going to demobilize the [construction] site," Hollister said. "The contractor (PCL) will continue."

Various brokers say that other companies rumored to be looking at the development are The Most Important Company in the History of the World (that would be Microsoft) and e-commerce darling drugstore.com.

Microsoft and drugstore.com were rumored to be going after Infoseek's soon-to-be-vacated 67,000 square feet at Sunset Corporate Campus in Bellevue. The space will be available after Infoseek, the huge Web search and directory service, moves to Smith Tower in downtown Seattle later this year. Guess who won. Leo Backer of Leibsohn & Co., Infoseek's broker, would neither confirm nor deny that Microsoft got the space. But other brokers say The Mighty M won it in a walk.

Spieker Properties is rumored to have a buyer for its Northwest portfolio of industrial properties. It's REEF, the San Francisco pension fund adviser, which according to our source is buying the warehouses for the account of CalPers and CalSters, the public employee and state teachers funds of California.

Our source adds the deal is going for "a little north of $200 million," which is about what Spieker was asking for the package.

Spieker officials have said they want to dump their industrial holdings here to concentrate on office holdings. The big challenge, says our source, will be for the Puget Sound area office of Spieker to keep the money from the impending sale in the Northwest and not let it get siphoned off elsewhere.

On this subject we see mixed messages. As has been reported previously in the DJC, Spieker is the rumored buyer for Principal Capital Management Lincoln Executive Center in Bellevue. Principal owns that five-building complex in Bellevue with Legacy Partners of Foster City, Calif. That would keep the money in the Northwest.

On the other hand, Inman News reported Wednesday that Spieker has announced it is developing an office tower in Emeryville, Calif. The 16-story tower will be part of a four-building development called Watergate Office Towers Complex.

Can you stomach more news about Amazon.com taking Opus Center @ Union Station? No? Too bad.

The latest indication that the online retailer will move to the Opus Northwest development in South Downtown comes from CB Richard Ellis' Dan Dahl. He and fellow broker David Gurry have begun issuing a recent lease transactions sheet, and the Sept. 3 edition lists a pending deal by Amazon for 350,000 square feet, which would more than fill the Opus space that is under construction.

The source? "I got that from an appraiser," says Dahl, who lists the lease term at five to 10 years at $28 to $32 a foot, with tenant improvements of $30 a foot.

Dahl does report one solid deal that's sure to interest lazy folks of means. He and Gurry negotiated a lease for 4,000 square feet of space in an old building on Seattle's Capitol Hill for MyLackey.com, a service company that will handle your mundane errands.

The new company is your protypical Internet startup. It does not, for instance, use traditional titles, according to Chief Lackey Officer Brian McGarvey. He said the company is being launched this month and will begin with a core group of services, such as auto detailing and dry cleaning pickup and delivery, and expand from there. McGarvey added the company was attracted to the space at 1520 Bellevue Ave., because of its character. "It's a very, very creative and cool space."

And it's the kind of facility that "everybody wants right now," Dahl said. It was leased in two days, before anyone had time to even put up the For Lease sign. The cost is about $20 a square foot plus expenses.

"Five years ago that would have been hallucinatory," Dahl said.

Previous columns:

• Real Estate Buzz, 09-03-1999
• Real Estate Buzz, 08-20-1999
• Real Estate Buzz, 08-13-1999
• Real Estate Buzz, 08-06-1999
• Real Estate Buzz, 07-30-1999
• Real Estate Buzz, 07-23-1999
• Real Estate Buzz, 07-16-1999
• Real Estate Buzz, 07-09-1999