July 20, 2000

Real Estate Buzz

Yet another Bellevue high-rise planned

A group organized by a Hawaiian developer paid a hefty $5.8 million for one acre on the north edge of downtown Bellevue, on the line between the high-rise office district and the emerging high-rise housing district.

A 21-story assisted-living complex may rise on the north edge of downtown Bellevue. A development group recently paid $5.8 million for the site of the proposed high-rise.

The group plans to create a 21-story senior assisted-living facility on the site at 108th Avenue Northeast and Northeast Ninth street. The non-profit facility, to be named Lake View Commons, would total between 400 and 420 affordable-rate apartments.

Hawaiian developer Franco Mola and his Bellevue-based financial partner, Base Capital, formed a non-profit corporation called the Foundation for Social Resources to create and operate the project, according to Base Capital principal Thomas Wick.

The King County Housing Authority recently authorized issuing almost $60 million in tax-free bonds to finance construction, which is probably still about six months away, Wick said.

Curtis Beattie and Associates is the architect.

The tower would join a rapidly growing list of high-rises either under construction or on the drawing table for sites throughout downtown Bellevue. The new buildings are expected to dramatically remake the skyline.

On the same block as the Lake View Commons proposal, developer Eugene Horbach has a multi-tower "superblock" proposal working its way across his planning tables. Horbach, who owns most of the large block, would build a combination of housing, offices and retail.

Horbach owned the Lake View Commons site, too, up until the early 1990s. The site previously has been called the "833 site," named for the now-vacant, 14,000-square-foot 833 Building that occupies it. During the early-1990s real estate recession, Stewart Title took the site, and another downtown Bellevue parcel occupied by the Tally Building, from Horbach through foreclosure.

Bellevue developer Bob Wallace bought the 833 property from Stewart Title for about $30 per square foot. Wallace said he planned to build a small apartment building there, but when the downtown Bellevue housing market took off he sold the site to housing developer John Su for a substantially higher price.

Su spent substantial amounts of money planning a 26-story apartment tower on the site. Su said he started receiving offers from others who would pay even more than he paid for the property. He had plenty of other projects occupying him, Su said, so he commissioned Wallace to market the 833 site to see how much it would sell for.

Horbach repeatedly tried to buy back the site but was outbid, Wallace said.

Mola has developed high-rise senior housing in Hawaii and Southern California. He hasn’t built any in the Puget Sound area but had grown interested in doing so, Wick said. Mola’s Coastal Rim Properties formed a joint venture with Base Capital to buy the site.

Wick said the joint venture, called Lake View Commons LLC, has been planning the project for about two years and has received most of its required development permits. The joint venture closed last month on buying the site from Su.

The $5.8 million price equals a $132 per square foot. That’s very high, Su said, because intense development throughout downtown Bellevue has sent land values soaring. But it’s below the $161 per square foot the truck maker Paccar Inc. recently paid Benaroya Capital for a prime downtown Bellevue office tower development site, Su said. The Paccar site has high zoning and thus could be expected to sell for more.

Lake View Commons, named because the site provides views of Lake Washington, would have one floor dedicated to Alzheimer's patients. The building would have ground-floor retail, but Wick said no decision has been made about the type of retail. Lake View’s apartments should rent for $750 to $800 per month, compared to market rates of $1,400 a month and more in that area, Wick said.

Base Capital is owned by nine wealthy principals, including two of the first five Microsoft employees, Bob O’Rear and Jim Brown. Wick described Base as a merchant banking firm with a wide array of investments, both in and out of real estate. For example, Base is part owner with Seattle’s Ackerley Group of Horizon Broadcasting Group in Boise, Idaho. Horizon owns radio stations and the Boise professional baseball team and is aggressively buying more radio stations.

Broker Herb Waddell of Waddell Properties in Kirkland represented Lake View Commons in buying the site from Su. The general contractor is Mortenson Construction.

Tech Tower signs a tenant

Horbach, meanwhile, has landed the first signed tenant for the 22-story Bellevue Technology Tower he plans to build in downtown Bellevue.

Loc8.net (pronounced locate.net), a Kirkland-based computer software and hardware firm, signed for 41,500 square feet, confirmed Loc8.net’s broker, Bill Neil of Kidder Mathews & Segner.

A lease that size is too small to make a planned building a go, but Bellevue real estate observers said they have no doubt more tenants will sign.

Horbach has cleared buildings from the Tech Tower site at Northeast Fourth Street and 108th Avenue Northeast but has yet to dig into the ground to start the big spending that marks the start of construction. His broker, Brian Hatcher, said Horbach’s policy is to let tenants talk about their leases and avoid public predictions of when construction might begin.

Loc8.net plans to move to expand from about 7,000 square feet it occupies in Carillon Point in Kirkland. A Loc8.net executive couldn’t be reached to comment.

It’s just another warehouse

Paul Allen’s purchase for this week doesn’t involve South Lake Union, where the Microsoft co-founder has been steadily accumulating properties.

Allen’s Vulcan Northwest bought a small, 70-year-old warehouse south of the Kingdome on First Avenue that Vulcan has been leasing for storage. Vulcan spokeswoman Susan Pierson Brown said Vulcan plans to keep using it as a warehouse.

Vulcan paid Kenneth Cederstand $4.1 million for the property, called the Cederstand Building, King County property records show.

The building stands three stories for a total of 45,496 square feet. It occupies 0.6 acres at 2245 First Ave. South. The price equals $90 per square foot for the building.

Bonney Lake center sells

A Rosen-Harbottle partnership paid Hill-Raaum Investment Co. $8.7 million for the Bonney Lake Village Shopping Center in Pierce County, Rosen-Harbottle confirmed.

The deal covered 90,784 square feet of retail space. A recently remodeled Safeway Superstore anchors the center, but Safeway owns that portion, which wasn’t part of the sale, said Erin Conger, a Colliers International broker who represented Hill-Raaum along with fellow Colliers broker Paul Sleeth.

The $8.7 million price thus comes to $96 per square foot.

Mercer Island-based Hill-Raaum, now known as Hill-Raaum-Pietromonaco and managed by developer John Pietromonaco, built the center in 1982. Bellevue-based Rosen-Harbottle Real Estate assembles and manages real estate investment partnerships.

Previous columns:

• Real Estate Buzz, 07-13-2000
• Real Estate Buzz, 07-06-2000
• Real Estate Buzz, 06-29-2000
• Real Estate Buzz, 06-22-2000
• Real Estate Buzz, 06-15-2000
• Real Estate Buzz, 06-08-2000
• Real Estate Buzz, 06-01-2000
• Real Estate Buzz, 05-25-2000