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Nat Levy
Real Estate Reporter

May 28, 2015

Real Estate Buzz -- Spring District: Wright Runstad wants to let neighborhood evolve, and not 'mess it up'

Real Estate Reporter

The Spring District is starting to sprout.

Wright Runstad & Co. has built several new streets and utilities for the first phase of the $2.3 billion project, and Security Properties is getting ready to start the first of its five apartment buildings.

Wright Runstad's Greg Johnson gave the Buzz a tour last week. Much of the concrete slab from the old Safeway distribution center remains, but new roads are in place and construction has started on a central park.

Crews were cutting into the slab on the site where Security Properties will build its first Spring District apartments. Once the slab is removed, crews could start excavation for an underground parking garage.

The narrow roads and short blocks are more Seattle style than downtown Bellevue. Johnson said he wants to retain some of the site's industrial character, and make the Spring District look more like Pioneer Square or Portland's Pearl District than South Lake Union.

Photo by Nat Levy [enlarge]
Greg Johnson stands near the central park site, which will be done in June.

Roads have been built on the south end of the site for first phase of the Spring District, while warehouse operations continue on the north end.

Wright Runstad will salvage as much of the concrete slab as possible.

It's been more than eight years since Wright Runstad began its quest to turn the Safeway site into a new 36-acre neighborhood with up to 5.3 million square feet of office and commercial space, housing and parks. Parts of that vision are starting to take shape now.

The first phase includes Security Properties' five apartment buildings, two office buildings that Wright Runstad will develop, a three-story building with a brewery and “creative” office space, and a park.

After that gets done, Wright Runstad and its partner Shorenstein Properties have options. Johnson said there could be more apartments and office space, high-rise condos, hotels, maybe an indoor farmers market. The light rail station on the north end of the Spring District is set to open in 2023.

“It's really going to evolve over time, not just within the Spring District but around it,” Johnson said.

The first park will be done in June, but it won't likely open to the public until next year when the first apartments are opening.

Security Properties' five apartment buildings will range from three to nine stories and have a total of 305 units. They will be built in phases and open one at a time, over about two years.

GGLO is the architect for all five buildings, and Walsh Construction Co. is the general contractor.

Security Properties has an option to buy an adjacent parcel and build another 250 units there, Johnson said.

In the next six to eight weeks, Johnson said Wright Runstad plans to put another site for apartments on the market. Johnson said Wright Runstad will be very picky about the buyer and the design.

“We are really trying to craft an environment here, so we will want to see what someone would design there,” Johnson said. “It's not only about will they pay the most for it, but what are they going to do.”

The smallest building in the district will help create that environment. Earlier this month, Johnson showed plans for a brewery building called BrewHub near the park. Construction will begin early next year and it will open in July 2016, a few months before the first apartments. GGLO is designing BrewHub, which will have two floors of creative office space above the brewery. Wright Runstad is also looking at putting a co-working space in the building. Clear garage doors will open onto the park.

Another way to give the neighborhood character is retail. Wright Runstad doesn't want a lot of chain stores. Johnson said he is willing take chances on smaller retailers who can bring some excitement and originality but may need time to succeed. Having small retail spaces — 1,000 to 1,500 square feet — is one way to attract local retailers.

The office buildings could have larger spaces for restaurants on the ground floor, and Johnson said Wright Runstad could devote one site to a retail space like Melrose Market or an indoor farmers market.

“Everyone is doing them now,” he said, “but if you look back in history, what was the thing that activated a small town or a neighborhood? It was the market.”

The Spring District's first two office buildings will sit along one of the main arterials: 124th Avenue Northeast. The buildings are planned and permitted, with a total of 491,120 square feet.

NBBJ did the master plan for the Spring District and is designing the office buildings. Howard S. Wright Cos. is the general contractor.

A nearby site in the Spring District could accommodate more than 600,000 square feet of office. So even if a big tenant wants one million square feet, Johnson said, “we could do it right now.”

The first phase is on the south end of the site. Later phases will move north, closer to the light rail station.

Johnson expects density will increase on land closer to the station. The types of housing also could change, and Johnson said Wright Runstad would consider high rise condos next to the station.

Johnson said one thing that makes the Spring District different is the long schedule. This is the biggest project Wright Runstad has ever done, but the rail station isn't opening for another eight years so Wright Runstad doesn't have to rush.

Johnson said he knew from the beginning it would take at least two real estate cycles — more than 15 years — to get the whole thing done.

“While this is a great opportunity for us to create a lot of value over time, we don't want to mess it up,” Johnson said. “When you have opportunity to work on this scale, you're just trying to be really thoughtful about how each component will contribute to the vitality of neighborhood.”

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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