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BELLEVUE, WA-One year after changing tracks on its half of the Meydenbauer Convention Center superblock–from a public-private hotel development to an office and retail project–Schnitzer Northwest on Monday detailed its $400-million vision to the brokerage community. The 875,000-sf project will include two office buildings totaling 745,000 sf–one with 248,000 sf on 13 floors and the other 497,000-sf on 23 floors–separated by a 130,000-sf retail building with upscale restaurants and retailers. The tentative plan is to break ground in mid-2006 and hold a grand opening in late 2008.

The buildings are designed around an open-air plaza and grand arrival court, and above a 1,860-space subterranean garage. Each of the office buildings will have a great room with fireplace and concierge service. Other project amenities include 14 meeting rooms and training facilities that can accommodate 300; a board room with the latest communications technology, a business center; a library; and a fitness facility. The Bravern is the name of the development.

The Meydenbauer Convention Center block is located at Northeast 8th Street and 112th Avenue Northeast, one block west of Interstate 405. The north half of the block is occupied by Meydenbauer Convention Center. Prior to last fall, Schnitzer had been negotiating a public-private partnership with the City of Bellevue. Last October, Schnitzer managing director Dan Ivanoff told GlobeSt.com that with the office market back in play, it was time to focus on that rather than continue to negotiate a public-private partnership for a major convention center headquarters hotel on the site.

The general contractor is Skanska. The architect is Seattle-based Callison. Bill Pollard and Jeff Durrell of locally based Pacific Real Estate Partners have the office leasing assignment. Retail leasing is being handled by Wendy Silverman of Chicago-based Creative Retail Leasing and Susan Zimmerman of Seattle-based GVA Kidder Mathews.

The Bravern is Schnitzer’s first Bellevue development project since Civica Office Commons, a two-tower 305,000-sf development completed in 2001 and sold in March for $141 million or $462 per sf, a record price per sf in the Pacific Northwest. As one of the newer properties, Civica was 100% leased (75% to public companies) at rental rates higher than most other existing buildings in Bellevue. In addition, Civica introduced amenities such as a lobby great room, advanced infrastructure and concierge services that will be replicated at the Bravern. Schnitzer Northwest retains the management assignment.

Schnitzer Northwest was formed in 1997 by managing investment partner Dan Ivanoff and Portland, OR-based Schnitzer Investment Corp. Ivanoff was not available Monday afternoon to discuss whether any of the Bravern space has been preleased. Regardless, there aren’t very many options available for tenants that want to be in the city.

Overall CBD office vacancy in Bellevue fell 150 basis points during the third quarter to 8.2%, according to Cushman & Wakefield. Direct CBD office vacancy fell 230 basis points to 6.7%. Weighted average class A asking lease rates in the Bellevue CBD rose $0.14 in the third quarter to $25.63, and is up $2.64 since this time last year.

The office tower likely will be the second high-rise to break ground in response to the dwindling supply. Already under way is the 27-story, 500,000-sf office portion of Lincoln Center, 1.4-million-sf Downtown development by locally based Kemper Development that includes a hotel-condominium tower, a 300,000-sf retail podium and a 3,000-slip underground garage. The office portion was on hold for an anchor tenant, but that came in August when Eddie Bauer agreed to a long-term lease for about 40% of the building. The rest of the development opens next month.

Tom Bohman, C&W’s director of Eastside leasing, tells GlobeSt.com that in addition to those two projects, Bentall is going in for permits for the last phase of its Summit development, EOP is in for permits for City Center II, and Hines and Washington Capital are working on restarting Tech Tower.

None of these are likely to break ground on a speculative basis, said Bohman earlier this month, explaining that rental rates aren’t quite there in terms of new construction. For example, although it’s not known what Eddie Bauer agreed to pay, the triple-net asking rental rate at Lincoln Center is $24 to $28 per sf per year, which is about equal to the full-service rate for the rest of the class A office market in Downtown Bellevue. Bohman says prospective construction lenders likely will require that an office developer have firm lease commitments from a tenant or tenants representing 30% to 50% of the available space.

Schnitzer Northwest was formed in 1997 by managing investment partner Dan Ivanoff and Portland, OR-based Schnitzer Investment Corp., Schnitzer Northwest has developed about two million sf of class A and suburban office, biotech and multifamily. It also acquired and, in most cases, repositioned an additional one million sf of commercial product, and now manages nine million sf in Oregon and Washington.

In 2004, Schnitzer Northwest sold Hearthstone at Merrill Creek, a 220-unit luxury apartment development in south Everett, WA; Schnitzer Northwest Meadows, a 198,126-sf class A office complex in Lake Oswego, OR; Sammamish Park Place, a 202,544-sf class A office investment in Issaquah, WA.

As for the convention center hotel, Bob Wallace, a developer and a board member of the Bellevue Convention Center Authority, which runs Meydenbauer, told GlobeSt.com last fall that there are three other sites that would be acceptable for a headquarters hotel. The would-be convention center hotel is a key piece of the proposed $62-million expansion of the convention center. The Port of Seattle, which derives 25% of its revenue from the Eastside, has proposed a $25 million investment in the expansion, but has said the investment wouldn‘t make sense without a convention center hotel to support it.

“Usually, when a deal wants to happen it ultimately happens, and when demand exceeds supply there is usually somebody who steps forward with a plan to meet that supply,” said Wallace. “I’m optimistic that ultimately will be the case.”

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