Schnitzer Northwest, one of a half-dozen developers vying to build downtown Bellevue's next office tower, says it will start construction...
Schnitzer Northwest, one of a half-dozen developers vying to build downtown Bellevue’s next office tower, says it will start construction next summer on an 875,000-square-foot complex, even though it doesn’t have leasing commitments from tenants yet.
The Bellevue-based company kicked off marketing last night for its new project, the Bravern, with a presentation to real-estate brokers.
Earlier this year, Schnitzer sold its last project, the Civica Office Commons, for a record price for the region of $462 a square foot.
The Bravern’s design contains the same kind of elegant common space that attracted tenants to the Civica, outdoor plazas and 130,000 square feet for shops and restaurants. Each of two proposed office towers would have its own Civica-style “great room” with fireplace and cozy meeting areas.
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Normally, Puget Sound area developers try to get pre-leasing commitments for one-third to one-half of the space in an office project before they start construction.
Building office space on spec has rarely been done here, but now might be the time. Bellevue’s downtown office-vacancy rate has plummeted from 30 percent in 2002 to under 10 percent, and real-estate brokers say the growing economy could support two or three more office projects in the current construction cycle.
One of those is the office portion of Kemper Freeman’s Lincoln Square. Kemper Development said the project was a go after signing retailer Eddie Bauer as lead tenant.
Four developers are considered the contenders to build the next project after Lincoln Square: Schnitzer; Chicago-based Equity Office; Bentall Capital USA; and a partnership of Houston-based Hines and Washington Capital Management.
Utah-based Wasatch Development plans an office tower as part of its Washington Square project, but not until it gets its first phase of condos and townhouses under way.
Schnitzer has enough financial strength to commit to building now, said Dan Ivanoff, managing investment partner.
“The guys that are less capitalized have to wait for the demand to get really frothy,” he said. “We don’t have to wait for the demand to get really frothy.”
The marketing kickoff is aimed at drumming up tenant interest as well as scaring off competing projects.
Oscar Oliveira, a vice president with Colliers International, said the Bravern’s anticipated completion date, fall 2008, could be an obstacle to signing tenants now because companies tend to worry about new space 18 to 24 months before leases expire.
The other downtown Bellevue office proposals haven’t begun intensive marketing yet, but they are smaller and can probably be completed more quickly, Oliveira said.
Tom Bohman, Eastside director for Cushman & Wakefield, said he is interested in whether Schnitzer is really ready to go without preleasing a chunk of the space.
“I don’t have any doubt in my mind that they are going to build — it’s really just a question of timing,” he said. “Of all the developers out there, they have been the most aggressive about pulling the trigger.”
Tom Boyer: 206-464-2923 or firstname.lastname@example.org