Company to lease 25 of 26 floors in City Center Plaza
If Microsoft is the engine that drives the Eastside then Bellevue’s commercial real-estate market just got a turbo boost. The Redmond-based company put the pedal to the floor, leasing 561,000 square feet at the City Center Plaza office building.
The tech-giant will occupy 25 of the 26 floors that make up the office building at Northeast Sixth Street and 110th Avenue Northeast. Beacon Capital Partners and Wright Runstad & Company are the developers behind the office tower currently in the construction phase.
Once completed, City Center Plaza will house 2,000 Microsoft employees in addition to the 1,100 company employees that currently reside at Lincoln Square. Microsoft also leased 740,000 square feet in both towers of The Bravern, an office project that will cater to 2,300 employees. An additional 2,100 are expected to move into the Advanta office complex in Factoria, set to open a year from now bringing the head count to more than 7,500 Microsoft employees in Bellevue.
As reported by the city, employment in Bellevue’s downtown core is expected to grow by about 40 percent, from 33,000 to 48,000, between 2006 and 2010. Microsoft will account for about half of that growth.
“Microsoft, although not headquartered in Bellevue – they are, of course, a major international and industry leader,” explained Thomas Boydell, the Bellevue Office of Economic Development manager. “Their growth, acquisitions, and spin-off businesses are significant beyond our current ability to measure them.”
Another major employer making waves in Bellevue is Expedia. The company will occupy 16 floors, approximately 348,000 square feet of office space at Tower 333. Between now and the end of next year, employment in Bellevue, based on what has been publicly-announced by large employers, will rise to about 6,000 jobs. Ninety percent of those jobs will be accounted for by Microsoft and Expedia.
“Microsoft’s decision is significant as a signal of confidence in the downtown office market,” stated Boydell. “Microsoft is playing a key role in making the city’s plan come to fruition.”
That plan is for a livelier urban core of restaurants, shopping, residences, and high quality jobs. Boydell pointed to the growing menu of amenities and dwelling options in downtown Bellevue that round out an increasingly attractive suite of advantages — including transit options, easy access to freeways, highly skilled workers and proximity to major business customers and suppliers — that are prompting prominent companies to locate headquarters and other major operations to Bellevue office buildings.
Real estate analysts are projecting that, even in the face of a larger national economic stall, the Bellevue office real estate market will remain strong and potentially even tighten, as stated by the city’s Planning Department in a recently updated Bellevue Economic Trends report. The presence of a greater number of well-established companies such as Microsoft, Expedia, and Symetra enhance the stability of the maturing Downtown Bellevue office market.
Microsoft’s lease announcement is good news for downtown Bellevue retailers, condo developers and office landlords, but not good for office tenants hoping to negotiate new leases in an increasingly tight market, according to Kemper Freeman Jr., chairman and chief executive of Kemper Development. The fear of having a massive oversupply of new construction is no longer a major concern. Bellevue has a total of 17 major projects under construction, most of which are apartments and condos with retail on the ground floors.
Currently under construction, Bentall Capital’s 340,000-square-foot Summit III project will offer 300,000-square-feet of office space but won’t be ready for tenants until 2010. On the horizon, there are 14 major projects in the review process including Beacon Capital’s 800,000-square-foot office highrise on Northeast Eighth. With the City Center Plaza off the market, other proposed office projects may get a jolt in the right direction including The Bellevue, a Kemper Development project at 523 Bellevue Way N.E. that will incorporate a 200-room hotel, 1,700 parking stalls and 192,000 square feet of additional retail.
With the big chunk of space gobbled up by Microsoft, tenants can expect to see a continued pattern of rental rates rising and vacancy remaining on the low side.
“The office market will continue to stay tight over the next 12 to 18 months because there won’t be any new space delivered to tenants during that time,” explained Thomas Bohman, a commercial real-estate broker for Cushman & Wakefield in Bellevue. According to Bohman, the current vacancy rate for Class A office space in downtown is 5.7 percent compared to 8.8 percent outside of the downtown core. “Overall, the announcement is pretty good news for the market and for Bellevue.”
Lindsay Larin can be reached at email@example.com or 425-453-4602.