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February 4, 2000

Real Estate Buzz

Here's a hot tip for purveyors of office space in Seattle's Pioneer Square neighborhood: The Daily Journal of Commerce is jumping into the market by renting out the third floor of the Journal Building at 83 Columbia St.

Hey, wait a minute! That's where my desk and the desks of my newsroom colleagues are. Does this mean we're being pushed out of the neighborhood? Is the boss trying to save money by relocating us to, say, Maltby?

Publisher Phil Brown assures us that the good ol' DJC (he paid me extra to insert the good ol' part) merely is consolidating all of its operations on the second floor of the Journal Building. The third floor space totals 10,000 square feet. Half of it will be available by late summer and the other half will be ready for occupancy in the late spring of 2001. He'll lease out the entire 10,000 square feet space to a single tenant only.

Mr. Brown didn't miss a chance to hype the space, which is exactly the type of address that stock-rich tech companies want. "The historic brick-and-timber building at Western and Columbia is conveniently located near the ferry terminal, Pioneer Square and the downtown business district," he said without missing a beat.

As for a leasing agent, Brown says no one has been hired yet, although the honorable thing to do would be to allow the real estate editor in on the action -- and the commission.

Now let's talk about some sizeable space: E&H Properties' Bellevue Technology Tower, a 20-story project in downtown Bellevue that totals nearly 420,000 square feet.

Brian Hatcher and Jeff Chaney, the Kidder Mathews & Segner brokers who are marketing the space, are a bit bewildered by all the recent ink devoted to the City Center II, Three and Four Bellevue Centers and Summit Ridge proposals. Developers of those projects were in the news because they said they are proceeding with the office buildings. We media types also got all slobbery over the 180,000-square-foot lease by drugstore.com at another high-profile development, Lincoln Square.

The fact of the matter is that of all these projects, Tech Tower is the only one that's permit-ready, Hatcher and Chaney point out. They say that of all the Eastside's proposed projects, E&H's is the best because it's a straight shot off of the interstate and it can be ready in 20 months. The tower, Hatcher says, "will break ground in the next three or four months, I'm convinced of it."

Spec financing for the $100 million Tech Tower is available, but E&H wants to avoid that more expensive option by preleasing some of the office. In downtown Bellevue, where space is extremely tight, there's interest in any sizeable space. According to Hatcher and Chaney, they gave more presentations in January than in the final three months of 1999 combined.

Meanwhile, Westbank Projects, the developer of Lincoln Square, the huge mixed-use development, is in for its shoring permit but still has yet to apply for any building permits despite the drugstore.com lease. This is according to officials at Bellevue City Hall.

"We have anticipated the application for several months now and I have not seen anything," said Magen Michaud, manager of Bellevue's permit center. As with all large projects, the various building permits will be staggered. She couldn't say exactly how long each will take to wind its way through City Hall but added that, each permit will take several months to process.

The fine folks at Foster Community News, a neighborhood paper down Tukwila way, report that redevelopment plans for the corner of South 144th Street and Highway 99 have changed over the past few months.

Eastside developer Fred McConkey originally was to have redeveloped the site with a $50 million mixed-use development called Tukwila Village. McConkey says he still is involved in the project, which if it goes would significantly alter the character of the once-forlorn neighborhood. Thanks to a burst of community activism in recent years, the area has been going through a renaissance.

McConkey was on the verge of buying the land in question when the city decided to snap it up instead. "The holding costs on it were too great," McConkey explained. Last month Tukwila closed on about three acres where the South City Motel and three houses on the west side of 41st Avenue South now stand, according to the News.

The paper added that the motel and houses will be demolished as soon as the city completes the bid process. The city also bought two abodes on the east side of 41st and plans to move them. Tukwila is mulling what to build on the site. Among the possibilities are city offices, such as police administration, and human services facilities.

To aid the redevelopment, the city has established an urban renewal district roughly between 37th and 42nd avenues and between 140th and 146th streets.

McConkey said he still plans to build a three-story, 45,000-square-foot office as part of Tukwila Village's second phase. It would go up at 14406 Tukwila International Blvd. He's not sure of the schedule but said he wants to be out of the ground during the fourth quarter of this year.

Providing the incentive is Seattle developer Dave Sabey, who is developing the 1-million-square-foot Intergate project just up the boulevard. He recently said that demand for space at the high-tech campus has been so strong that he plans to eventually -- and in phases -- double the size of Intergate.

Back on the Eastside, the rumored VoiceStream lease for the 10-story, 283,000-square-foot Five Newport at Newport Corporate Center in the Factoria neighborhood of Bellevue is done. Officials at Bentall, the project developer, declined to name the tenant, but ask anyone involved in commercial real estate on the Eastside, and they'll bet you a lot of money that the tenant is VoiceStream.

Representatives of Hines took slight exception to a recent Daily Journal of Commerce story that said Hines' 38-story Madison Financial Center project is "crawling forward." Seattle land-use planners said the tower is taking its sweet time rising from the ground.

Hines' Rob Hollister says the project isn't exactly crawling toward a start date. He notes the tower has financing from National Office Partners Limited Partnership, which is a joint venture between Houston-based Hines and the California Public Employees Retirement System. Furthermore, he said, preleases are pending -- none of them with dot coms.

Koehler McFadyen & Co., and the rest of the 401 Elliott West development team will celebrate progress on the office project along the Seattle waterfront with a private party. They're calling it a Top to Bottom Party; it will mark the topping out of the first building, the framing of the second and the emergence from the ground of the third. It should be a sweetheart of a wingding. It is, after all, scheduled for Valentine's Day.



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