Bellevue's Growth Has Staying Power. Here's Why.
Bellevue isn't any ordinary booming real estate market—it's a market with a potential for vast long-term growth, according to the speakers at Bisnow's Future of Bellevue event yesterday. High-caliber businesses want to be there—including longtime Downtown anchor Microsoft—and they want high-caliber employees who prefer interesting urban areas to live and work.
One bit of good news came up early in the event: Microsoft, which leases about 2.3M SF in Bellevue, has dropped the idea of subleasing nearly 167k SF of space in the Bravern complex, where it leases 750k SF. Even so, everyone concerned with Bellevue's future is watching the tech giant as closely as they ever have, especially since Microsoft's lease at Bravern, as well as in Lincoln Square, ends in '18. About 300 real estate pros came to the event at the Meydenbauer Center.
In any case, tenants are willing to pay more to be Downtown Bellevue than most Seattle markets. But why? They see more value in the location for their business, according to our speakers. They're trying to attract and kept talent with walkability and other amenities that Downtown Bellevue offers. Snapped: Wallace Properties president Kevin Wallace, who's also the deputy mayor of Bellevue.
An important component in the future of Bellevue is the massive mixed-use Spring District, well underway and poised to be a nexus of growth between Redmond and Downtown. Wright Runstad & Co president Greg Johnson said one of the goals of the Spring District's new developments is to help create an urban fabric that's walkable and interesting, the better to attract companies and workers, and integrate the area with the rest of the city.
Downtown Bellevue offices are flexible enough to accommodate current ideas about office space, the panelists also noted. Tenants want creative space—fewer offices and more collaborative areas—and all sorts of amenities. Five people now take up the space the CEO used to occupy, and they're spending their incomes locally, doing more to support Bellevue than a corner-office millionaire who drove home nights to a house some miles from the city. Here's Kilroy Realty SVP Mike Shields.
As new office product comes on line in Downtown Bellevue, there will be a flight to quality, and the bottom edge of the market will be pushed down somewhat in terms of rental growth, our speakers explained. Even so, Bellevue's a relatively disciplined market, and it's unlikely that the new supply will have a crushing effect on the market as a whole. Pictured: Talon Private Capital senior investment director Gabe Levin.
That's because demand is driving absorption, and barring some serious economic downtown, that momentum isn't likely to change, our speakers said. Bellevue isn't just any midsized urban market, it's an extremely attractive place, especially for the tech industry. So much so that there's a steady influx of firms from the Bay Area. They're fishing where the talent is, and they can find talent in Bellevue for less than S.F. Since the cost of living is relatively less here, the talent doesn't mind.
Pictured: Seattle Pacific Realty partner Jeffrey Rosen, who moderated.
Next edition, we'll report on the event's lifestyle speakers, who shared their insights about residential and hospitality in Bellevue.