Photo by Benjamin Minnick Lincoln Square’s parking garage under construction last year.

Lend Lease became better known in the Seattle area last year after taking over as the developer of Lincoln Square in downtown Bellevue. But the Atlanta-based global firm is also one of the largest owners of industrial space in the Kent Valley.

As a pension fund advisor, Lend Lease controls 7.5 million square feet of warehouses and other industrial property, ranking it with California-based Rreef Funds as the valley’s largest industrial landlords.

Lend Lease, representing the California State Teachers Retirement System, plans to sell a little more than 1 million square feet of those properties this year, which may slip it behind Rreef.

Leider

Lend Lease just as likely could buy other properties in the valley, too, said Bill Williams III, the firm’s Seattle-based vice president who oversees CalSTRS’s West Coast investments.

Meanwhile, when construction finishes a year and a half from now, Lincoln Square will consist of:

• a 530,000-square-foot office tower;
• a second tower containing 148 luxury condos and a 303-room Westin Hotel;
• a 330,000-square-foot retail podium beneath the two towers;
• A four-acre underground parking area.

The site is the southeast corner of Bellevue Way and Northeast 108th Street, across Bellevue Way from Bellevue Square.

“I stood over by the (adjacent) Bellevue Art Museum today, and you can finally see the first floor of the hotel (and condos) tower above grade,” said Richard Leider, who works as manager of the project on a consulting contract between Lend Lease and Leider’s new firm, Trinity Real Estate. “Imagine the condo-hotel tower going 450 feet in the air in that location. It will be spectacular.”

For scale, consider that the retail podium will equal the size of the Pacific Place retail center in downtown Seattle.

The 450-foot tower will be the tallest in downtown Bellevue.

Vancouver, B.C.-based developer Ian Gillespie conceived Lincoln Square in the mid-1990s and brought it all the way to its construction start in mid-2000.

In late 2000, a fresh round of changes in the project resulted in Lend Lease becoming the major equity investor and taking over as lead developer. Then last May, the project finally received its construction loan, $255 million from a consortium of lenders led by Fleet National Bank and Dresdner Bank AG.

Gillespie remains as a partner in charge of the condo portion.

The biggest question facing Lincoln Square is what will the market be like when the $360 million project’s construction finishes in the middle of 2003? For now, the recession has both the hotel and office markets tattered.

Lincoln Square’s office tower has not a single signed tenant and only two signed retail tenants: An ArcLight theater and a US Bank branch.

Leider said buyers have signed purchase agreements for two-thirds of the condos. Five of those deals came in December, he said.

Back in the Kent Valley, the Lend Lease and Rreef portfolios are followed in size by California pension advisor Lowe Enterprises, then by Seattle-based Benaroya Co. and ProLogis, by Williams’ tabulation.

In 2000, Rreef replaced Lend Lease as the California Public Employees Retirement System’s advisor. At the time, CalPERS shared ownership of the huge Kent Valley portfolio of properties that totaled 8 million square feet when Seattle developer Jack Benaroya built them and was then at 6 million square feet.

At the end of 2000, CalPERS sold all but 1 percent of its portion of the portfolio to CalSTRS. Then for 2001, “we were very quiet in the Northwest (in industrial properties),” Williams said. “After the first quarter of last year, leasing just went dead. ...We went after several properties that were on the market, like Kent East,” but didn’t win the bidding on any of them.

At the start of this year, Williams said CalSTRS planned to put about 1.1 million square feet of those properties up for sale in the coming months as part of shaping the portfolio to keep up with market changes.