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Nat Levy
Real Estate Reporter

January 3, 2013

Real Estate Buzz: Big projects may start soon in Bothell

Real Estate Reporter

Construction could start this year in downtown Bothell on a hotel and movie theater, and as many as 700 apartments.

City officials are working to turn downtown into a destination for thousands of people who work at tech and biomedical jobs in the area, and this will be a big year in that effort.

The overall plan is to leverage more than $170 million in city funds to spur $650 million in private investment over the next 20 years, adding new apartments, a hotel and brewery, a waterfront park, and new roads, including moving part of state Route 522 to the south.

The plan is ambitious, but the city is determined to make it happen, said Terrie Battuello, Bothell's assistant city manager and economic development manager. To kickstart the process, the city is selling 25 acres to developers.

Battuello said in the next few months the city will finish negotiating with Main Street Property Group on Block O, a 5.5-acre site south of the Pop Keeney football stadium, and Block L, a 67,885-square-foot site east of Block O.

The Weidner Apartments site is just north of the Park at Bothell Landing property.

Main Street is a joint venture of Eric Campbell and Kelly Price. They work for CamWest, a Toll Brothers company, though the new venture in Bothell is separate from CamWest/Toll.

“We're changing this market,” Battuello said. “Right now it is a single-story, strip- and auto-oriented retail use, and what we envision is a mixed-use center with four or five stories.”

Several projects are seeking permits and could start construction this year:

• McMenamins will build a 70-room hotel, restaurant, spa, cinema, pool and music venue east of the football stadium off Bothell Way Northeast

• Main Street Property Group is building 184 apartments south of McMenamins with retail and underground parking

• Pacific Northern Construction and Senior Housing Assistance Group will build 285 senior housing units with 10,500 square feet of retail one block south of the Main Street Property Group's complex

One key decision remains: What to do about a new City Hall.

Bothell selected Vulcan and GLY to build a new city center campus and City Hall, but that project is on hold. Bothell had expected to add more than 22,000 new citizens through annexation, but the vote failed so Bothell officials must decide if and when to go forward on the project.

The city is also extending Main Street, an east-west road two blocks north of SR 522, and building a two-way boulevard on what is now state Route 527.

Once the city decides what to do about City Hall, Battuello said Bothell will sell Block N, a 94,000-square-foot site south of Block O.

Another question mark involves a site near SR 522 where Weidner Apartment Homes wants to build 180 units. Additional land nearby will come available once SR 522 is shifted, and Battuello said it is likely Weidner will take the land, but there's no final agreement yet. If Weidner does opt for the additional land, it could build a total of 250 units.

Weidner has apartment complexes in five states, including Washington.

A number of parcels are still up for grabs in Bothell:

• Blocks D (93,789 square feet) and E (39,391) will be created in the next few years by shifting SR 522. Both are across the street from the new riverfront park that is being planned.

• Block A is 38,881 square feet at the northwest corner of the riverfront park site.

Downtown isn't the only hotspot in Bothell. West Ridge Land Corp. is developing Gateway Plaza with 442 apartments and 45,000 square feet of retail near Interstate 405 and Beardslee Boulevard; Main Street Property Group will build 115 apartments at 104th Avenue Northeast and Northeast 185th Street, east of downtown; and the University of Washington is spending $84 million at the Bothell campus on new projects to accommodate another 10,000 students.

New units push rents down

Apartment rents stopped climbing in the fourth quarter of 2012 as new units came on the market.

A report from Tom Cain of Apartment Insights Washington says overall rents dropped $2 to an average of $1,140 in King and Snohomish counties. The previous four quarters saw rents rise 6 percent.

In downtown Bellevue rents rose $236 per month in the second and third quarters. The average rent was virtually unchanged in the fourth quarter at $1,757, though Bellevue is still the area's most expensive submarket.

Cain said construction won't stop any time soon. According to his report, 31,790 units are either planned or under construction in King and Snohomish counties. Currently, there are 11,687 units under construction, and 78 percent of them are in Seattle. A total of 3,599 units opened in 2012, and another 7,973 units are expected to come on line in 2013.

“It is safe to speculate that this level of new inventory certainly impacted this quarter's performance,” Cain said in the report. “We can expect the same level of new units, about 2,000 on average, for each of the next four quarters.”

The vacancy rate is down this quarter, even for new units. The King and Snohomish county vacancy rate is 4.75 percent, down from 4.85 percent last quarter and 5.25 percent at this time last year. The lowest vacancy is in North Seattle between 85th and 145th, at 3 percent. First Hill/Capitol Hill and the area between the ship canal and 85th are also tight.

Cain speculated that tolls on the state Route 520 bridge are lowering rents in some Eastside markets. Only three subareas saw major rent reductions — about three percent — this quarter: Kirkland, Redmond and East Bellevue, all of which are served primarily by SR 520.

Got a tip? Contact DJC real estate editor Brian Miller at brian.miller@djc.com or call him at (206) 219-6517.

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