Chicago real estate mogul Sam Zell's company has updated its plans to build two high-rises in downtown Bellevue.
The Bellevue 600 project will occupy the half-block on the north side of the Bellevue Transit Center. Bellevue 600 will have a 450-foot-tall office building and a 435-foot-tall business hotel on top of a 40-foot-tall podium with retail and parking, according to new public records.
Zell is chairman of the board at Chicago-based Equity Commonwealth (NYSE: EQC). The buildings will join the 10-story Bellevue Corporate Plaza on Equity Commonwealth's property.
The existing parking garage will be demolished and replaced by 1,960 parking stalls in the development, according to the latest plans.
A huge amount of development is planned for the full block between Northeast Sixth and Eighth streets and 108th and 110th avenues. In addition to Bellevue 600 on the south half of the block, Plus Investment USA is planning the four-tower Elev8 development on the north side. Elev8 will have condominiums, apartments, a hotel and office space.
The timing of Equity Commonwealth's project is unclear. The city has approved the master development plan but must sign off on the design, which can take a year or longer.
While new downtown Bellevue office buildings are filling up, there is some uncertainty surrounding the submarket. Expedia plans to move its headquarters from Bellevue to Seattle in 2019, and Microsoft is consolidating operations on its Redmond campus. Microsoft is Bellevue's largest office tenant.
With a big tenant, Expedia, and questions about Microsoft, there likely will be an oversupply of downtown office space during the next fews years, holding down rent growth and keeping the vacancy rate in double digits, according to a recent report by real estate company Kidder Mathews. The vacancy rate is now 16.6 percent, according to Kidder's first quarter report.
Equity Commonwealth is working with Seattle development company Touchstone on Bellevue 600. Touchstone President and Chief Development Officer A-P Hurd was unavailable to comment Monday.
Zell and Touchstone CEO Pat Callahan go back a long way. Callahan led the Puget Sound office for Zell's Equity Office Properties Trust when the company was the region's largest office landlord. Equity Office was sold 10 years ago to the Blackstone Group (NYSE: BX) for $39 billion.
In an interesting twist, Equity Commonwealth owns the downtown Bellevue building that Expedia will vacate in when it moves to Seattle.
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