By Jack Stubbs
On Wednesday, September 5th, the City of Redmond closed on the $10 sale of a vacant 1.32-acre property (slated for the redevelopment of a 260-unit multifamily project) as part of the city’s Esterra Park master-planned development, according to public records filed with King County. The seller was Capstone Partners, a company that implements and manages commercial real estate investments for organizations throughout the Pacific Northwest. The sale of the property was approved on August 28th and officially closed on September 5th.
The sale was for a 1.32-acre parcel of vacant land comprising 57,371 square feet, according to King County records. The recent sale of the property, called Block 6B Esterra Park, marks the latest chapter of plans that were put into action in mid-June, according to Jane Christenson, deputy city administrator with the City of Redmond. “Per the Redmond City Council’s June 19th action approving the purchase of an Esterra Park lot, the sale successfully closed this past week,” she said.
Following its purchase of the property from Capstone Partners, the city of Redmond intends to hold and then sell Block 6B in March of 2019 for $10 million to affordable housing provider Imagine Housing, according to the city’s purchase-and-sale agreement. While the city holds the property, Imagine Housing is planning to submit a plan entitlement application for a 260-unit multi-family project for the site, where fifty percent of the units are to be reserved for affordable housing. After purchasing Block 6B, Imagine Housing plans to begin construction on the project in April 2019. If the affordable housing development does not take place for any reason, the city will sell the land at market value to a qualified buyer, according to the purchase-and-sale agreement.
The recently-sold 1.32-acre parcel is part of the Esterra Park Development, which is a multi-year master-planned community located at 2464 152nd Ave. NE in Redmond. The Master Plan for Esterra Park was completed in 2011 and the multi-stage project is expected to be constructed in phases over several years, according to the city of Redmond’s web site.
Esterra Park is the first major urban mixed-use redevelopment project in the Overlake Village area of Redmond, and is the first phase of Redmond’s 170-acre Overtake Village master plan. When complete, the 3 million square foot Esterra Park project will be comprised of 1.2 million square feet of commercial space, over 1,400 residential units, 25,000 square feet of retail a 275-room hotel and conference center and a 2.7-acre park, according to the city’s web site. It is estimated that between 7,000 and 8,000 people will live and work at Esterra Park. Capstone—who is the master developer for the site—is currently building basic site infrastructure prior to building construction, according to the project description on the city’s web site.
Capstone Partners purchased the land for the Esterra Park development from Group Health Cooperative for just over $32.5 million in March 2013 and demolished a 550,000 square foot hospital to make way for the project.
Founded in 2002, Capstone Partners has offices in Seattle and Portland and executes multifamily, office, industrial and retail developments, according to the company’s web site. Since its founding, the company has completed over $1.5 billion of new projects and investments representing more than 6 million square feet and over 2,500 multifamily units.
Capstone has worked on a number of other high-profile commercial projects in the Puget Sound region. Capstone developed Dexter Station, a 10-story,345,992 square foot property that has been home to Facebook since the tech giant signed a long-term 275,000 square foot lease—with an option for the remaining space—in early 2015. Capstone also developed a 240,000 square foot manufacturing facility for B/E Aerospace further north in Everett, where Capstone and B/E worked collaboratively to structure a lease to best match the objectives of the company with the needs of the marketplace, according to Capstone’s web site.
Along with the in-the-works Esterra Park development, there have been a number of large-scale office transactions in Redmond in recent months. On June 20th, Microsoft made moves to expand its already significant presence in Redmond, spending $250 million on a nine-building office complex that sits one mile from its headquarters across from Washington State Route 520. Microsoft acquired the 724,950 square foot Daytona Laguna Office Campus (located at 15002 NE 31st St.) for $250 million, or approximately $345 per square foot, from New York-based Blackstone Group.
Also on June 20th, Atlanta-based Invesco spent $268.4 million, or roughly $453 per square foot, to acquire a Microsoft-occupied, six-building office campus in the Redmond Town Center—located at 7332 166th Ave. NE—from Shorenstein Properties based in San Francisco. The Class A office campus comprises approximately 592,000 square feet and is part of the 1.3 million square foot Redmond Town Center, a mixed-use lifestyle center.
In mid-July, San Francisco-based TPG Real Estate closed on the acquisition of the six-building, 536,958 square foot Millennium Corporate Park office complex in Redmond for $153.5 million, or almost $286 per square foot, from New York-based TH Real Estate.
And on August 2nd, Preylock Real Estate Holdings based in Los Angeles purchased the seven-building Willow Creek Corporate Center—located at 10525 Willows Road NE—for $136 million, or approximately $322 per square foot, from BRE WA Office Owner LLC, an entity affiliated with Blackstone Group.