Downtown Bellevue has high appeal

Equity Office just dashed from the starting line in a race among developers to build office towers in downtown Bellevue.

The Chicago-based developer started construction Monday of its 26-story City Center Plaza, one of five towers that will add a total of about 2.5 million square feet of new space to a downtown smaller than a square mile.

Lincoln Square complex, already under construction, is completely preleased to Microsoft and Eddie Bauer and is due to be completed in mid-2007. None of the other four projects has signed tenants, but Equity Office isn't worried about an empty City Center Plaza.

"We have a very long prospect list," said Patrick Callahan, senior vice president of the company's Seattle branch. "We're very confident."

The Plaza is planned to open in March 2008.

Its roughly 572,000 square feet will be mostly office space, but the ground floor will include 21,000 square feet for shops, a day-care center and a restaurant. The 26th floor will feature a roof-top deck, while the third and fourth floors will have exterior plazas.

The race to build office towers in Bellevue has intensified as more companies have sought space outside but near Seattle. Bellevue fits that requirement and offers easy access to freeways, a grid system that makes getting around easier and lower lease rates.

"Seattle is larger and infinitely more expensive," said Matthew Gardner, a principal real-estate analyst with Gardner Johnson.

Bellevue has worked for decades to see its downtown succeed. "Our vision is finally coming to fruition," said Dan Stroh, city planning director.

Bellevue began to draw companies downtown after it was rezoned in 1981 to allow high-rise buildings. The area developed in fits and starts, mirroring the economy.

"The last big up cycle was in 2000 and 2001, corresponding with the dot-com era," said Tom Bohman, Eastside director for Cushman & Wakefield.

After the dot-com bust, however, a great deal of office space returned to the market. Vacancy rates climbed to 29 percent in 2003.

Gardner doesn't foresee that happening again.

"We're not set up like a dot-com crash," he said. "We're not reliant on finite growth industries."

The tide started to turn in downtown Bellevue in 2004, when Symetra Financial leased a chunk of office space. The Eastside market started to improve as more companies began to expand. And when Kemper Freeman bought the stalled Lincoln Square project, the boom began.

These developments helped jump-start the residential, retail and office markets all over Bellevue.

"All three came into play," Bohman said. "All of a sudden, Bellevue's really become the place to be."

Although demand is high, there is now little vacant space. Would-be tenants are stuck until more projects are completed.

While Seattle has lagged behind Bellevue in growth, the difference in size of the two downtowns makes honest comparisons difficult.

"What's going on in Seattle gets drowned out," Bohman said. "[In Bellevue], there are several small projects in a relatively small space."

Bohman said there's still land available in downtown Bellevue. Low-rise buildings are likely to be snapped up and torn down to make way for more towers.

"It's very much a work in progress," Stroh said. "We have a long way to go."

Bibeka Shrestha: 206-464-2436 or bshrestha@seattletimes.com

Information in this article, originally published July 11, was corrected July 11. In a previous version of this story, Bellevue's planning director was spelled incorrectly. The director's name is Dan Stroh, not Dan Stohr.