Expedia will be moving its corporate headquarters to the Amgen campus in Seattle, a shift that could be a sharp blow to downtown Bellevue’s office market, according to sources close to the matter.
Expedia announced Thursday that it is moving its corporate headquarters to the 40-acre Amgen campus in Seattle, in a coup for the city’s already burgeoning tech sector and a blow to downtown Bellevue.
Seattle Mayor Ed Murray and Dara Khosrowshahi, Expedia’s CEO, made the official announcement at a morning news conference on the move, in which Expedia is purchasing the waterfront property for $228.9 million.
”We think it will be a magnet for top talent,” Khosrowshahi said, adding that the move will also give Expedia room to grow. He said the company plans to increase its corporate headquarters headcount over the next few years to 4,500 from 3,000. Globally, Expedia has more than 10,000 employees.
Facts and figures
History: Originally a unit of Microsoft when website launched in 1996; spun off as public company in 1999
Employees: More than 18,000 full-time and part-time worldwide
Office space: 503,000 square feet for Bellevue headquarters as of Dec. 31; 420,000 square feet elsewhere in U.S.; 1.2 million square feet internationally, from Argentina to Vietnam
Financial results: 2014 revenues of $5.8 billion, net income of $398 million
Source: SEC filings, Seattle Times archives
At the same time, the move to the new location already is raising concerns about traffic congestion and commuting options.
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Currently, the Bellevue-based online travel company leases more than half a million square feet in downtown Bellevue, representing about 6 percent ofthe Eastside city’s office space. For months Expedia has explored its options, with its Bellevue leases in two buildings set to expire in October 2018.
Amgen, based in Thousand Oaks, Calif., said last year it would close its Seattle “Helix” campus, which it completed after acquiring Seattle-based Immunex. The campus has 750,000 square feet of buildings and plenty of still vacant land. Expedia expects to complete its move to the site by the end of 2018, constructing 200,000 square feet of additional space, according to Chief Financial Officer Mark Okerstrom.
Paul Sweeney, an Eastside real-estate broker at the Broderick Group, said he knew Amgen had its campus under contract and suspected the buyer was Expedia.
Striking but isolated, the Amgen campus sits on the Seattle waterfront and is connected to Elliott Avenue West by a bridge resembling a double-helix, a visual reference to DNA that Amgen spent $10 million to build.
Unlike Amazon.com’s buildings in Seattle’s South Lake Union neighborhood, the Amgen campus lacks many nearby amenities like restaurants and entertainment. And for many Expedia employees who live on the Eastside, commuting there could be a nightmare.
“I think they’re going to lose employees,” Sweeney said.
Another big concern is transportation. The area is not served by a direct bus route from the Eastside, where the company said 75 percent of its headquarters employees now live.
Murray said that as a result of a November ballot issue in Seattle, bus transit should improve in that area.
Expedia said by its calculations the average employee commute time will increase 5 to 6 minutes. It added that employees were talking about the commute but were also excited about the new headquarters.
The decision to buy the Amgen campus gives Expedia control over its destiny, allowing it to develop the campus as it expands. In that sense, the technology company is following in the footsteps of Google in Kirkland.
“We couldn’t find that kind of campus environment (in Bellevue),” Khosrowshahi said, adding that the move gives the company ample room for expansion. “We’re able to make our mark. We’re able to own it, not just lease it. We’re going to create an environment that’s about Expedia. That’s our culture.”
Sweeney, the real-estate broker, said the move may look like a good decision in the long run. “They’ll be able to build a neat, iconic waterfront campus,” he said.
Bill Pollard, co-founder of Talon Private Capital in Seattle, said the move is good for Seattle. “It adds one more strong, growing business to the mix in Seattle and gives further diversity to the employment base,” he said.
Expedia would be the latest corporate headquarters in the region to pull up roots and head to the center city. Weyerhaeuser announced plans last year to leave Federal Way for a new office in Seattle’s Pioneer Square neighborhood in 2016. MulvannyG2 Architecture said last year it was leaving Bellevue for 1101 Second Ave. in downtown Seattle.
“Expedia, Weyerhaeuser and other companies who have recently moved to Seattle reflect just how attractive our market is right now,” said James Sido, spokesman for the Downtown Seattle Association.
News of Expedia’s deal surprised some brokers like Sweeney because there are imminent lease options in Bellevue.
Across the street from Expedia’s headquarters, Houston-based Hines bought The Summit property last month and said it could deliver a 330,000-square-foot office tower above an existing parking garage within 24 months.
A few blocks north on 108th Avenue Northeast, Dallas-based developer Trammell Crow is building a 462,000-square-foot tower that’s slated for occupancy by December.
Not far away, Kemper Development has broken ground on an office tower it expects to deliver late next year.
And Schnitzer West expects to open Centre 425, a tower with about 360,000 square feet of office space, in the fall of next year.
Altogether, the three towers under construction will expand the Bellevue office market’s supply by close to 20 percent. Expedia’s vacating of so much space could force Hines to rethink its plans, Sweeney said.
“It’s just like adding a whole other building which really might not be needed. It may be too much space, but that remains to be seen.”
Officials with Schnitzer West and Kemper said they weren’t worried about their projects.
“While it would be unfortunate for a large employer like Expedia to leave the submarket, this does not change our outlook or our plans for our Centre 425 project,” said Pam Hirsch, the regional managing partner with Schnitzer West, in a statement.
Kemper, which owns The Bellevue Collection, said in a statement that it was “sorry to see them (Expedia) leave downtown Bellevue,” but the developer remains confident that interest in its new office space remains high.
Murray said the city has been in conversations with the city of Bellevue. “I’m committed and the city’s committed to a regional metropolitan economy,” he said. “If one part benefits, the other part benefits.”
Still, one broker who declined to be identified said Expedia’s move shows how strong the appetite is from big companies for a Seattle address.
“You don’t read headlines about Bellevue. You read headlines about Seattle,” the broker said.
Pollard said he didn’t believe the impact to Bellevue should last too long.
“The reality is that Bellevue is continuing to be the epicenter for emerging technology companies,” he said.