By Jon Peterson
San Francisco-based Legacy Partners has teamed up with a Chinese investment firm based in Beijing for the first time on a major development in downtown Redmond located at 16425 Cleveland Street.
This development will not be started for some time. “I would expect that it would take us 12 months to go through the entitlement process and then another six months to get the building permits done,” says Kerry Nicholson, a senior managing director with Legacy. A potential start date would be in the summer of 2018 and then another 24 months to complete the development.
The actual development cost of the project has not been determined at this time. “There are a lot of moving parts on what the project will end up being, so it’s hard to know right now what the cost will be. The idea for now is to build 600 apartment units. We also could be considering some for-sale or condo units as part of that, maybe some senior housing, and there is a hotel operator that has told us they would be interested in having a hotel at the project,” said Nicholson.
Legacy did acquire the site from a private individual in the Seattle area for $31 million, according to public documents. The seller was represented by Frank Bosl, a senior vice president in the Seattle office of CBRE. The seller had owned the asset since 2006. The property as it stands now has a roughly 70,000 square foot strip shopping center. It has short-term leases in place at the moment, which will give the new owner some income while the property goes through the entitlement and permitting process.
The performance of the Redmond apartment market in the broader Seattle market make it very attractive for Legacy to grow its portfolio in that region. “The current vacancy for apartments in that market are 3.5 to 4 percent. On a year-to-year basis over the past 12 months, rental rate growth for apartments has been 5 to 6 percent. We are starting to see this level off a little bit,” said Nicholson.
The expectation is that the property will attract a diverse group of renters for the apartment complex. “We would think that around 50 percent to 60 percent of the renters would be technology workers. This would include people employed at places like Microsoft and Amazon. Our site is located a few miles from the Microsoft campus. We also should attract some baby boomers who have sold their house and are looking to rent on a short-term basis to see what the next housing experience should be,” said Nicholson.