By Jack Stubbs
There has been a significant amount of development activity occurring in Bellevue’s central business district in recent months, and another large-scale development is in the works.
Vulcan Real Estate is planning a three-phase office project that could total up to 1 million square feet in three 16- to 17-story towers. The project site is currently home to the 60,000 square foot Bellevue Plaza, a 1960s-era retail complex located at 117 106th Ave. NE. Vulcan acquired the property, which sits on a 3.4-acre site, for $45.35 million in May 2016, which was the developer’s first property purchase outside of South Lake Union.
At the time of the purchase, Vulcan had been planning both residential and retail uses, but the current plans call for office space and between 25,000 and 30,00 square feet of retail space. Vulcan is working on the project with Graphite Design Group, Compton Design Office and GLY Construction.
The acquisition of Bellevue Plaza in 2016 marked the first chapter in a longer development proposition for Vulcan, according to Lori Mason Curran, director of real estate investment strategy. “A couple years ago, we decided to take a pretty significant position in Bellevue and bought what are essentially three development sites there. [Bellevue Plaza] was the first one we bought. We’ve always seen it as a development site with some interim income characteristics.”
The capture of the Bellevue Plaza represented the first of several acquisitions in Bellevue for the developer. On July 7th, 2017, Vulcan acquired two adjacent lots in Bellevue totaling approximately 43,000 square feet and located at 435-437 108th Avenue NE for $24.25 million. Just days after, on July 11th, the company purchased another parcel on the same block for $26 million. In mid-August, the company acquired four parcels located at 201 106th Ave. NE. for $13.8 million.
As part of the project plans, the existing Bellevue Plaza would be demolished to make way for the three towers, according to Curran. “The tenant is aware of that, they’re on a short-term lease, and they’ve known that since we bought the project.”
Although the three-building office project is still in its conceptual stages, Vulcan thinks that, with all of the commercial and residential development occurring there, the time is right for a renewed vision of the Bellevue Plaza. “This seems like a good time to start teeing the project up. Bellevue seems to be getting a lot of attention lately, I think part of that is due to the light rail opening in a few years, and there’s been a lot of residential development there and retail activity there over the last several years,” she said.
In the wider economic context, Vulcan sees downtown Bellevue as an appealing development prospect, especially given the events that have been occurring in Seattle in recent weeks. “With the recent head tax announcement in Seattle, we think there might be some businesses that, if they were thinking about where to locate or expand, might be looking at Bellevue as a more business-friendly environment,” she said. “So, that has all factored into our decision to get this property ready, should we ever find ourselves successful in finding a tenant.”
As of now, the developer has not identified a tenant for the space, and the company is exploring options given that the three-tower endeavor is still in its early stages, according to Curran. “We are always talking to brokers and potential tenants to market our development sites, whether it’s realistic or informational; we’re still in the early stages of seeing what we can do here.”
The project team will not break ground on the development until at least third quarter 2020, and while the developer has not yet submitted full project plans to the city of Bellevue, it has applied for a Master Development Permit and has submitted for administrative design review for the first phase of the project. The three office towers would be between 16 and 17 stories and would range from 312,000 and 357,000 square feet.
As for Vulcan’s long term perspective on the city’s viability as a commercial real estate market, the company is forging ahead on other fronts in Bellevue, too. Independently of the Bellevue Plaza project, Vulcan continues to move ahead with its plans for around 800,000 square feet of office space across one or two 20-story towers at a nearby location. The site for this project is across from the Bellevue Transit Center at 555 108th Ave. NE. In addition, the company is also considering potential options for the third property located at 201 106th Ave. NE.
Given the three-tower project in the works and the various acquisitions that the developer has made in Bellevue over the last year, Curran thinks that Vulcan is well-poised to continue its presence in the Eastside city, with Bellevue Plaza in particular representing an appealing prospect. “I think our development there is an expansion of our strategy in Seattle, which has been to develop in transitional neighborhoods,” she said. “Bellevue Plaza is of course very significantly-sized, and it’s right at the intersection between Old and New Bellevue and speaks to our core competency in terms of phased developments.”
And Vulcan is not the only developer looking to transform downtown Bellevue. Developer Kemper Freeman has plans in the works to revamp the Bellevue Collection, a retail complex that consists of Bellevue Square, Bellevue Place and Lincoln Square, which will expand its footprint by 41 acres.
The project, which will ultimately add another two million square feet to the Bellevue Collection, includes expansions to both Lincoln Square and Bellevue Square. The $1 billion Lincoln Square expansion, which was completed in summer 2017, added 1.5 million square feet of leasable space (including 710,000 square feet of Class A office space) to the existing plaza, doubling its original size. The project also includes 180,000 square feet of retail, dining and entertainment space, and a 245-room hotel with 231 luxury residential units above.
According to a statement from the Puget Sound Business Journal, the developer expects to break ground on the Bellevue Square expansion within the next 12 months.
The expansion, which will consist of two towers, will add a total of 500,000 square feet, including 200,000 square feet of luxury retail space, a 140-room luxury boutique hotel, 250 luxury residential units, a rooftop garden and a sky bridge connection to Lincoln Square’s expansion.