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Nat Levy
Real Estate Reporter

October 30, 2014

Real Estate Buzz -- For sale: Prime spot on Bellevue Way

Real Estate Reporter

Investors from around the world are battling to get their hands on a piece of downtown Bellevue, and here's another property that's sure to set off a rumble.

Two contiguous parcels at Bellevue Way and Northeast Second Street just hit the market, with a total of more than 50,500 square feet. Mark Anderson and Mark McFadyen of Colliers International are marketing the properties, and they say this is an “extremely rare opportunity” to plant a flag on Bellevue Way — one of the country's top retail streets.

What's so great about this site? It's close to two different kinds of retail hubs: Old Bellevue and The Bellevue Collection.

Old Bellevue has shorter buildings and specialty shops in a neighborhood setting. The Bellevue Collection already has Lincoln Square and Bellevue Square, and Kemper Development is embarking on a $1.2 billion expansion that will add 2 million square feet of hotel, office, housing and retail space.

The Bellevue Collection brings more than 23 million people to Bellevue Way every year. Anderson and McFadyen say that's 7 million more than go to Disneyland — and this is before the expansion.

Image courtesy of Baylis Architects [enlarge]
A feasibility study for this site at Bellevue Way and Northeast Second Street suggests building two skinny residential towers.

The land for sale on Bellevue Way is kitty corner to Downtown Park and has been owned by the Bates family for 73 years. Two fully-leased retail buildings are there now.

Anderson said the Bates family is one of the last families with extensive holdings in downtown Bellevue. They donated 5 acres to the city for Downtown Park, and want to see Bellevue Way continue to prosper.

“The Bates family is very enthusiastic with what Kemper is doing with The Bellevue Collection expansion and wants to leave a legacy by selling to a developer who will do the right thing — develop a nice project — for Bellevue Way to complement The Bellevue Collection,” Anderson said.

The site is listed online at http://www.batespropertybellevue.com. The asking price is $24.85 million, or $491.96 per square foot.

Anderson said a couple of nearby sites sold for between $475 and $482 per square foot, but the Bates' land is zoned for tall buildings and has better views.

Baylis Architects did a feasibility study for the site that suggests the best plan could be two skinny 20-story residential towers with ground-floor retail. Residential towers and hotels could have a maximum height of 200 feet; office buildings would be limited to 100 feet. A site plan shows two buildings with terraces on the second and 13th floors. The towers would be separated by a landscaped, north-south pedestrian alley.

Though a number of projects are planned or under construction in downtown Bellevue, Anderson and McFadyen say it's not too late for more. Expansion of The Bellevue Collection is a major economic driver that will make for a long development cycle.

“Much upside remains both in property value and rent appreciation for quite some time,” they wrote in the offering memorandum. “The full effect of The Bellevue Collection expansion will not be felt until late 2017 when it opens for business.”

Techies move in, law firms adjust

For decades law firms were among the biggest tenants in downtown buildings, with many laying claim to the top spots.

Tech firms are coming to dominate the office markets in many U.S. cities, including Seattle, and law firms are adjusting.

A new report from Jones Lang LaSalle says law firms are moving closer to their clients and looking at new locations to attract talent and reduce expenses.

Cost is not the main reason law firms are leaving their trophy spaces, JLL says, it's lack of supply. With few high rise office towers being built around the country, and more companies competing for premium space, law firms are forced to look elsewhere.

In the Seattle area, law firms make up about 12 percent of the tenant base. Seven firms each occupy more than 50,000 square feet of office space, and three firms are in the market for more than 25,000 square feet of space.

“Law firms are experiencing the same demographic shift in their workforces as any other business in America and real estate decisions made today have a direct, long term impact on both recruitment and retention,” said Steve Schwartz of JLL's Bellevue office. “The good news is there are going to be increased opportunities in the Puget Sound market for firms to creatively rethink the way they utilize space while staying close to their clients and providing their junior partners and future ‘Top Guns' with the type of work environment they crave.”

Many of those young lawyers want to be in cool neighborhoods rather than just another high rise.

The report says law firms make up 20 percent of the office market in Silicon Valley, up from just eight percent in 2011. Getting closer to clients helps law firms attract and retain talent, but forces them to compete with booming tech companies for space in hot neighborhoods in places like Seattle, San Francisco, Austin and others.

We rank 10th in this game of thrones

Seattle has made many a top 10 real estate list in recent years, but this one might throw you for a loop, or maybe a loo.

Redfin ranked Seattle No. 10 in the number of residential toilets per person. There are 91 toilets for every 100 people in the Seattle area. That's 2,485,000 total residential toilets.

Tacoma was 16th on the list with 86 toilets per 100 people and 688,900 total toilets.

Boulder, Colorado, is number one in toilets per person, with 102 residential toilets for 100 people.

The top cities share some common characteristics, like most are in areas with a lot of new construction and decades of population growth.

“It's definitely a consumer-driven trend,” Redfin Washington, D.C., agent Leslie White said of the throng of thrones in these cities. “I don't know when it took place, but having a master bathroom off the main bedroom is now seen as a requirement, whereas years ago, it was considered a luxury. I've toured lovely 100-year-old row houses, but if there's only one bathroom for the three bedrooms on the top floor, my clients' faces fall. They need that extra bathroom.”

Got some news for the Buzz? You can reach Nat at nat.levy@djc.com.

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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