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BELLEVUE, WA- Equity Office Properties Trust says it will break ground here next summer for City Center East, a speculative 26-story Downtown office tower that will be complete in early 2008. The company’s board of trustees signed off on the 559,000-sf development earlier this week without requiring pre-leasing or construction financing.

City Center East will be located on a portion of three acres on the Southwest corner of 110th Avenue and NE 6th Street, above a 1,500-slip subterranean parking garage. Equity Office purchased the development site, which is currently operating as a surface parking lot, in conjunction with the 1999 acquisition of City Center Bellevue I, a 27-story, 468,000-square-foot class A office building that will be integrated into the project and renamed City Center West. Along with the new building, EOP is developing a 2.5 acre urban park between the two buildings and the overall development will be called City Center Plaza.

Pat Callahan, EOP’s senior vice president of the Seattle region, tells GlobeSt.com the decision to move forward is a direct response to Bellevue’s tight vacancy rate and healthy job growth. The Bellevue CBD has made a strong recovery since the tech downturn in 2001, with vacancy rates at 6.7% in class A space, and 8.2% overall. There are few to no large blocks of space available, according to local brokers.

“Bellevue is one of the best performing submarkets in the country,” he says. “Strong leasing activity and the recent in-migration of corporate users (Drugstore.com, Symetra Financial and Eddie Bauer) has led to positive net absorption of vacant space, tightening the options available for other large users.”

The news comes two months after Schnitzer Northwestdetailed its $400-million vision for its half of the nearby Meydenbauer Convention Center superblock and four months after a 200,000-sf commitment by Eddie Bauer kick-started the 500,000-sf, 28-story office portion of Kemper Development’s 1.4 million-sf Lincoln Square mixed-use development across from his Bellevue Square Mall. In addition, there are two other Downtown Bellevue office developments in the works. Local brokers tell GlobeSt.com that Bentall is going in for permits for the last phase of its Summit development and Hines and Washington Capital are working on restarting Tech Tower, which they acquired in a 2002 foreclosure sale. The underground garage portion of the project is largely complete, which may give it a head start if it decides to move forward with the project.

Regardless, Kemper’s 28-story Lincoln Square office tower will be complete first, in mid 2007, in part due to the fact that the base of the tower had to be built as part of the already completed retail podium it will rise above. Schnitzer’s 875,000-sf Bravern development, slated to break ground in mid-2006 along with EOP’s project and open in late 2008, 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.

Schnitzer has not said whether it will move forward with the office portion of its project on a speculative basis. Information on the timing and requirements of the other two planned office projects was not immediately available Friday morning.

EOP’s City Center Plaza will be directly adjacent to the Bellevue Transit Center and near Interstates 405 and 90. Plans for the building include efficient floor plates averaging 22,000 sf, 18,000 sf of ground floor retail space, a conference center and a parking ratio of up to 3.3:1,000 sf.

City Center East will have a large atrium-style lobby offering curbside valet parking. The translucent, neutral-toned glass curtain wall will offer views of Lake Washington, Mt. Rainier and the Cascade Mountains. The design also includes a roof-top deck on the 26th floor, and two exterior plazas on the third and fourth floors.

Wright Runstad & Company will serve as the development manager for City Center West. NBBJ is the architect and Turner Construction as the project’s general contractor. In addition, John Black and Jason Furr of the Broderick Group will serve as leasing agents for the building, working closely with Equity Office’s in-house leasing team headed by Susan Murphy, vice president of leasing and Roger Wright, managing director of leasing.

Lease rate for City Center East and all of the planned new buildings will have to be in the mid-to-high $30s per sf per year make the projects pencil. That’s $5- to $10 per sf above the going rate for existing class A space Downtown.

Equity Office’s investment strategy includes developing Class A office projects in the company’s targeted growth markets, where it owns a large concentration of properties, and where the company can leverage its size and scale. Equity Office owns eight office buildings in the Bellevue CBD totaling 2.6 million sf, or 37% of the market.

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