$32.5 million deal to bring offices, residents to Overlake area

The former Group Health Hospital and clinic site in the Overlake area of Redmond has been sold for $32.5 million. Capstone Partners and its investment partner Lionstone U.S. Land Two, L.P. announced the purchase of the 28-acre site on March 15.

The Group Health Cooperative Redmond campus provides for the creation of one of the few in‐fill urban center developments on the West Coast.

Capstone Partners purchases 28-acre Group Health Redmond campus for $32.5 million

The former Group Health Hospital and clinic site in the Overlake area of Redmond has been sold for $32.5 million. Capstone Partners and its investment partner Lionstone U.S. Land Two, L.P. announced the purchase of the 28-acre site on March 15.

“It is hard to imagine a better urban in‐fill site in the Puget Sound — significant density adjacent to a highway, across the street from Microsoft and within a few blocks of every major retailer a household could need,” said Mike Hubbard of Capstone.

When completed, the site will include more than 3 million square feet of space including 1.1 million square feet of office and retail space, more than 1,400 residential units and nearly 300 hotel rooms.

“Our vision for Overlake to be an urban center that’s tech friendly has been in the city’s plans for at least 14 years, if not more,” said Redmond Mayor John Marchione. “It’s going to have a light-rail station in 2023. It’s exciting to see this new neighborhood start to poke out of the ground, and over the next five to 10 years, we’re going to see it bloom.”

Marchione said he also envisions Overlake as a pedestrian-friendly village with residents walking to work at nearby companies like Microsoft, Nintendo and Honeywell.

Bill Biggs, Group Health vice president of Administrative Services, said the sale is a “significant milestone in bringing this urban neighborhood a step closer to reality.”

And there will be trees on site. Plenty of them, note Hubbard and Marchione, who have been in contact with each other regarding the 1,000 or so trees that will need to be removed in order for Capstone to build on the site.

“We’re going to plant a forest when all is said and done,” Hubbard said.

Marchione explained that according to the sale agreement, Capstone will have to plant 3,000 trees throughout the Redmond community to replace the trees coming down. He’d like to see all 3,000 trees planted before Capstone removes one of the Group Health site trees. No final agreement has been reached, and Hubbard said he’ll discuss the situation with city officials when the permitting process begins.

Last June, the City of Redmond and Sustainable Redmond reached a settlement agreement regarding the trees on the Group Health site. The terms of agreement ended the legal action Sustainable Redmond, a grassroots organization, had taken against the city earlier in 2012 by filing a land-use petition in King County Superior Court to block Group Health’s plans to cut down the “significant” trees.

The settlement stipulates that Group Health pay the city $20,000 “upon the first closing of a sale of all or any portion of the Group Health property,” according to the settlement document. This money will be used to transplant onsite trees to another location or to buy new trees to plant in Overlake Village. Redmond received the payment on March 18.

Hubbard said Capstone plans to start site demolition of the old Group Health hospital, road grading and utility construction next month.


Andy Nystrom



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