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ISSAQUAH, WA-Microsoft is finally exercising a portion of its option on 150 acres in the Issaquah Highlands, according to company spokeswoman, Stacy Drake. She was, however, unable to confirm or deny reports that the sales price lies between $20 million and $25 million, which would translate to between $12 and $15/sf.

For the past few years, the Eastside city of Issaquah and the Highlands’ developer, Port Blakely Communities, have been waiting for Microsoft to green-flag construction of an office complex here that could eventually grow to 2.95 million sf. Unfortunately, the project has been bogged down by Issaquah’s infrastructure problems. Last January, Microsoft pulled the reins on its plans, citing a lack of resolution to those issues.

Drake says that while Microsoft hopes to begin clearing and grading the land by next spring, it will not close on the 37.5 acres for its “Phase I” until a few issues have been fully resolved. “Permits and some infrastructure obligations need to be met by the city to ensure we will have the correct infrastructure,” she says.

The sticking points are a master-plan permit and completion of the Sunset interchange of Interstate 90. As to the permit, the city’s Urban Village Design Commission is currently scheduled to be briefed on Dec. 11, with public hearings to be held on Jan. 8 and 15.

The interchange, however, ran into a major snag when underground boulders were discovered that have pushed the project back an estimated ten months-putting completion closer to the end of 2002.

Some have speculated the square footage of the first phase of Microsoft’s Highlands campus will build out in the vicinity of 600,000 sf. Drake, however, says the scope “has still not been determined.”

She says, “What there’s room for and what we’re planning for are two different things. We want to have the certainty of having the property when we’re ready to go, but there’s nothing definite. What we need will be a function of growth and head count.”

In October, Microsoft made the decision to hold onto 250,000 sf of space in Bellevue that it had previously placed on the sublease market. Drake said then that with a new employee head count, “we realized that we will need those Bellevue offices.”

The Redmond-based giant already has a significant presence in Issaquah, where it employs approximately 3,500 people in leased space at the Sammamish Park Place and ParkPlace complexes. As of now, it is not anticipated that those employees would be relocated.

At last estimate, Microsoft fills roughly 8.4 million sf throughout the Eastside. Of that, 4.9 million sf are company-owned, including its main Redmond campus with 3.84-million sf on 265 acres.

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