The Spring District represents a business and residential crown jewel under development in the Eastside market of Bellevue, Wash., with talent flocking to the region and bringing companies from all over the world to invest in everything the area currently has to offer. This trend is likely to continue in 2020, as certain parts of the Spring District first reach completion. Record-low vacancy rates, more cost-effective rents, better commuter resources and access to top-tier talent are factors that influence companies such as Alibaba, Microsoft, REI and Facebook to expand their footprint in Bellevue and the up-and-coming Spring District.
As 2019 progresses, experts like Grant Yerke, principal at the Bellevue-based real estate firm Broderick Group, expect vacancy rates to continue to drop while leasing space continues to remain highly competitive among companies either looking to break into the region for the first time or expand in the area.
“The Spring District is a truly unique market that is only now coming of age,” Yerke said. “Our first two phases of development (GIX, REI Campus, Block 16 & 24, 800 apartments, The Brewery Building) are the catalysts of what is to be imagined and created over the coming years and decades.”
Bellevue and the surrounding Eastside markets have long been an attractive area for business and tech companies in which to move and invest. Domestic companies such as Microsoft, which first established a footprint in the late 1970s, and Salesforce, which expanded from its San Francisco base to Bellevue in 2017, have taken advantage of the low rental rates, a plethora of fresh tech talent in the area and affordable living for the incoming workforce.
Foreign companies are also making the move, however, for many the same reasons. One notable example is the Chinese tech giant Alibaba, which moved its Seattle office to Bellevue in 2016, and app building and IT company Huawei, which moved from downtown Kirkland to Bellevue in the same year.
Why are companies making the move to the area? The answer is twofold: cheaper rates and a push for more space.
“Major companies will naturally be attracted to the area because the Spring District and surrounding area strike the right balance between a place to work and a place to live,” Yerke said. “As Bellevue grows and becomes even more congested, the greater Spring District area has the opportunity to provide employees and employers an ideal setting.”
Kidder Mathews, a real estate firm with locations in both Seattle and Bellevue, released its 4th Quarter 2018 Seattle Office Real Estate Market Review, which highlighted notable numbers for the East King County region, including Bellevue, the Spring District and surrounding areas.
Developers have taken note of the durability of the tech expansion in the region, stated the report. There are now 19 office projects over 20,000 square feet under construction in the region, according to Kidder Mathews, with a total of 7.88 million square feet. There are an additional eight planned projects with January 2019 start dates, which includes a total of 2.08 million square feet. Five of those buildings with a total of 1.15 million square feet are located in the Bellevue submarket, although, so far, no pre-leasing has been announced in any of these planned speculative projects.
Domestic and international companies like Amazon, T-Mobile, Baidu and Huawei all lease office space in Bellevue, with Amazon planning to occupy new office space of more than 400,000 square feet at at 333 108th Avenue Northeast in 2020, a space previously leased by travel conglomerate Expedia.
This is in addition to Amazon’s current presence in the Eastside market, which includes Centre 425, a 354,000-square-foot building, and a pre-lease of a 377,000-square-foot building called Summit III in the downtown Bellevue area. Companies are seeing rapid growth in the area, lending to the rapidly falling vacancy rate, which Yerke said could be the lowest the Bellevue area has seen in years.
T-Mobile, in addition, has re-signed its lease through 2030, further helping to revitalize the area and continue to make it rich for building and development.
The Spring District will bring nearly 3.3 million square feet of office, retail and residential space available for occupancy starting in early 2020, and reaches a milestone in the revitalization of the Eastside market. Developed by the Seattle-based Wright Runstad & Company with leasing assistance from the Broderick Group, the 16 city blocks of development will center around the East Link Extension, according to Yerke, which is a light rail line scheduled to open in 2023 that will not only make transportation to the area easier for residents, but commuters, as well.
“It is a transit-oriented area with access to the light rail, pedestrian-sized blocks, locally sourced retail amenities, and close proximity to parks and bike trails,” he said.
Already, retail and outdoor corporation REI has claimed a portion of the space for its new corporation campus, and Yerke promises more is in store.
“Block 24 will break ground on a 200,000 square foot office building, and The Brewery Building will break ground on 30,000 square feet, of which about 18,000 square feet will be office space unlike anything created on the Eastside,” he said. “In addition, Security Properties and AMLI are busy constructing two sets of apartment sites totalling around 550 units.”
Looking to the market for the remainder of the year, Yerke expects vacancy rates to continue to be low going into 2019, and for the completion of the Spring District to draw more business, tech and retail interest to the market continuing into 2020, both domestically and internationally.
“Looking ahead, we still have 1.5 million square feet of office space we can deliver surrounding the light rail station in 2022 and later, as well as a hotel and an additional set of apartments,” Yerke said. “The change to the area over the course of the next five years couldn’t be more transformative.”
