The city of Bellevue is expediting development via two planning schemes—a comprehensive plan update and a Downtown Livability Initiative that guides downtown development and land use. These plans have cut average pre-building project processing/approval time through project completion to two years, all the while taking advantage of a current region-wide economic upturn that is spurring unprecedented residential and commercial expansion.
Taking a lead in that expansion is a much-anticipated Microsoft Corp.-funded technology innovation institute campus development being partnered along with the University of Washington and Tsinghua University of Beijing, which, in turn, will kick-start three phases of mixed-use development within the 900-acre Bel-Red (Bellevue-Redmond) Corridor just east of downtown Bellevue.
Like the Puget Sound region and the rest of the country, the recession hit Bellevue hard, but Mike Brennan, the city’s development services director, said looking ahead he does not anticipate another rapid decline if the economy shifts, because investment and development interests are at a high level with no signs of a fall off.
Downtown Bellevue is expected to accommodate about half of the city’s projected housing growth over the next 20 years
In fact, from 2015 to 2018, Bellevue is planning to release 4,755 new residential units to meet demand, according to Mike Scott of Dupre + Scott Apartment Advisors, which conducts apartment market and investment research for the Puget Sound region. This year’s release of 1,402 units is a 9.12 percent increase of new stock over 2014.
Downtown Bellevue was the city’s fastest growing neighborhood between 2000 and 2010, adding 4,900 residences, said Liz Stead, the city’s urban design planning manager.
“Today, downtown Bellevue has more than 7,500 residential units housing an estimated 11,000 in population, about a thousand of whom are children,” she said. “Downtown is expected to accommodate about half of the city’s projected housing growth over the next 20 years, adding another 7,900 units to reach over 15,400 units by 2035.”
Major downtown projects currently under construction include Alamo Manhattan Main Street, a 260-unit complex at 10505 Main St. with 7,000 square feet of ground-level retail developed by Dallas-based Alamo Manhattan Bellevue LLC and scheduled for completion during the third quarter of this year; and Alley 111, a 259-unit complex with 76,000 square feet of restaurant/retail space developed by New York-based Skanska USA and scheduled for completion during the third quarter of this year.
The Bel-Red Corridor, which stretches between State Route 520 and Bel-Red Road, and from Interstate 405 to 148th Avenue Northeast, will be the home of the Spring District project, a 36-acre, 16-block parcel that will eventually include 3,000 residents, 200 retail workers and 18,000 office workers.
Anchoring the district will be Microsoft’s Global Innovation Exchange campus, which will offer a master’s degree in technology innovation. The campus will open next year in a temporary location in Bel-Red, then will move to a new 100,000-square-foot, three-story building in fall 2017.
The developer of the Spring District project is Wright Runstad & Co. of Seattle and the institutional equity partner is Shorenstein Properties LLC of San Francisco. The residential developer is Security Properties Inc. of Seattle.
The mixed-use residential developments in the Spring District will be built in three phases. The first phase is the 309-unit Sparc Apartments, which began construction in June and comprises five three- to nine-story buildings surrounding a large central courtyard. Two buildings are scheduled to be complete in early 2017 and another will open in summer 2017. The architect on the first phase project is GGLO of Seattle.
Phase two, with 230 units, is in the design stage and a completion date has not yet been established.
The Puget Sound regional apartment vacancy rate was 3.4 percent during the first quarter of 2015, according to Kidder Mathews. This is well below the long-term average of 5 percent over the past 20 years. The strong market performance is due in part to a change in the “rent” vs. “own” psychology with more transitory lifestyles and residual lack of confidence in the housing market, along with the low inventory of affordable condominiums in the most desirable neighborhoods, according to the commercial real estate firm. These factors likely will contribute to continued demand for apartment units over the next few years, “especially better-quality apartments, as a significant number of the new jobs being created are transient, but also high wage,” the report said.
Dupre + Scott said the average rent in Bellevue is $1,642 ($1.83 per square foot) for all units. Studios are renting for $1,174; one-bedroom/one bath for $1,432; two-bedroom/one bath for $1,517; and two-bedroom/two bath for $1,999. Five years ago, the average rent for all units was $1,152, the firm reported.
Meanwhile, the Bellevue City Council in June adopted an affordable housing ordinance that allows a 12-year exemption from property taxes on the value of new housing in five designated mixed-use target areas: Bel-Red, downtown, an Eastgate planning area, Crossroads Village and the Wilburton commercial district. Authorized by the state legislature, the exemption is voluntary. To qualify, developers must agree to make 20 percent of the units in their projects affordable, with 10 percent of them affordable for households making 70 percent or less of the King County median household income (which, in the county’s most recent data release in 2009, was $67,805) and 10 percent affordable for households at 60 percent or less of the median.