Bad timing and bad fortune stalled an ambitious downtown project. Now a new developer with deep pockets plans to make it happen.
Downtown Bellevue’s most ambitious project since Lincoln Square has sprung from the dreams — and heartbreak — of late developer Eugene Horbach.
Horbach spent 17 years of his life acquiring the pieces of a 10-acre superblock along busy Northeast Eighth Street to build a shopping mall, entertainment complex and luxury hotel.
But he got into deep trouble trying to build an office tower for software and Internet companies when the tech recession hit. Horbach had mortgaged his superblock to pay for the Technology Tower, and he was about to lose both.
Days before foreclosure in 2002, he called Dell Loy Hansen, an old acquaintance and a real-estate entrepreneur in Utah, and said: “I’ve got a little problem.”
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Hansen’s company, Wasatch Development, agreed to buy the superblock if Horbach would buy into a partnership to develop the land. Horbach was unable to find the money before he died in January 2004 at 77.
So, for a recession-year price Hansen calls “30 cents on the dollar” — reportedly more than $30 million — Wasatch ended up with a rare opportunity to develop on a grand scale in the middle of a prosperous city.
“How often do you get to build a community within a community?” Wasatch Executive Vice President Paul Willie said. “You know, 10 acres right in the center of a great community.”
Wasatch has begun — and, unlike Horbach, appears to have the financial clout to carry out — a $1.2 billion development plan called Washington Square that includes 900 condominiums and town houses, a hotel, office tower and restaurants in five high-rise towers and low-rise buildings clustered around them.
The company’s holdings include 11,000 apartments from California to Utah, many of them bought at fire-sale prices in the commercial-property meltdown of the late 1980s.
Wasatch also bought a distressed office tower in downtown Salt Lake City after the tower lost its lead tenant to a merger. Shortly afterward, Utah won the bid to host the 2002 Winter Olympics, and Wasatch made a bundle leasing to Olympic organizations.
Wasatch wants to build five towers in Bellevue — a plan just as ambitious as Horbach’s — but Hansen plans to build it and sell it in stages, instead of trying to develop it all at once, as Horbach tried to do.
“I haven’t found the financing vehicles that accomplish his vision at one time, other than straight cash,” Hansen said. “The vision was unfinanceable.”
The first stage will be two condo towers, totaling 361 units, which will start to sell in January for 2007 move-in. Prices are expected to start around $220,000 for a one-bedroom, 580-square-foot unit.
Other stages will follow on a close timetable. Assuming tenants are found for a planned office tower, Hansen expects the whole project to take about five years to build.
The excavation along Northeast 10th Street, at the superblock’s northwest corner, speaks to the size. After just two weeks, the hole is six stories deep. A steady line of dump trucks hauls away 8,000 cubic yards of soil a day.
In one sense, the development is in tune with automobile-happy Bellevue. Under the buildings will be garages with 4,500 parking spaces (nearly four times the size of Seattle’s biggest parking garage, underneath Pacific Place). Each of the luxury town houses will have its own double garage.
Fully built out, with five high-rise towers, Washington Square will be packed with people, but the developers want to project a greener look than one usually associates with downtown Bellevue.
And with the full 10.5-acre superblock as its canvas, Wasatch can create its own mini-neighborhood the way a suburban developer has control over a subdivision.
“Our goal is to build, ultimately, 900 units of housing in the block and make that feel as if it isn’t that dense,” Hansen said. “It’s not just walking by a storefront. It’s a bench, and it’s a waterfall, and it’s a tree. It’s an experience of where you cuddle into your community. So the landscaping is critical, the fountains are critical.”
In a manner similar to some of the big condo developments in Vancouver, B.C., the towers are set back from the street and from pedestrian walkways, with lower-rise structures — town houses and stores — projecting a less-imposing edge.
Wasatch has chosen colors to reinforce this — bright, warm colors for the buildings at the ground floor, neutral blues for the towers above.
Within walking distance from Bellevue Square, downtown high-rises and most Bellevue cultural institutions, the condos will be marketed as a place where your car can be left in the garage for days at a time.
But the city didn’t plan for walking around Bellevue. In the 1950s, its leaders decided to lay out downtown in 600-foot-long “superblocks” that are three times as long as Portland’s city blocks.
The idea was to design a city for cars because everybody would drive where they needed to go. The result was intimidating concrete streetscapes.
Now, trying to attract more people to live downtown, Bellevue is encouraging landowners to break up the superblocks with plazas and paths.
With good design, some think the superblocks could turn from a weakness into a strength by creating a haven from cars in the middle of the blocks, like in Europe, where some downtown streets are closed to create public spaces.
Kemper Freeman’s Lincoln Square — which, like the Wasatch superblock, was taken over from a financially distressed developer — has sold its high-end condominiums briskly, proving there’s demand for downtown Bellevue living.
Dean Jones, a condo-marketing expert who has worked on projects for Vulcan and other developers, says many Seattle condo buyers work in Bellevue and tolerate the reverse commute to live the downtown Seattle lifestyle.
“As Bellevue invests in and defines its own ‘east village’ of attractions, cultural enrichment, nightlife, the residences will soon follow suit,” Jones said. “Bellevue’s growing out from being a great place to [work] and shop.”
Leslie Williams, who has overseen marketing for many of Seattle’s biggest condo projects, says downtown Bellevue could develop as a residential neighborhood faster than people think. As recently as 1992, she said, Seattle had never seen a condo project sell out; now it’s happening regularly.
Cheryl Lotz, a veteran property appraiser who has looked at Wasatch’s plans, says the huge scale — bigger than anything that’s been tried in the Puget Sound area — can work to the project’s advantage.
“If you have a well-financed marketing campaign and an attractive product that has a wide variety of unit sizes and pricing, these buildings can almost create a market unto themselves,” said Lotz, a senior analyst and manager at PGP Valuation in Seattle.
In Vancouver, B.C., where clusters of condo skyscrapers with thousands of units have become the norm, developers have perfected the art of building new towers with their own distinct character, encouraging existing customers to move up into more luxurious digs.
Wasatch, planning five towers, can do the same in Bellevue, Lotz said.
Hansen has been paying attention to the U.S. urban condo boom. He’s confident the revival of city living is a lasting trend. He and his bankers are betting a billion dollars on it.
“It’s a change from the ’50s when the freeways developed, and we could go out into our cars and afford to each own a castle out there,” Hansen said.
“What we’ve seen, long before gas became $3 a gallon, is there’s a return to a nurtured, well-thought-out, unified urban-living experience,” he said. “And America is turning there more quickly than most people realize.”
Tom Boyer: 206-464-2923 or email@example.com