(Read more on the industrial market.)

SAN FRANCISCO-Shorenstein Properties LLC has acquired a 36-acre former Safeway distribution complex in Bellevue, WA for an eventual mixed-use development. The locally based fund manager paid Safeway Inc. $68 million for the property in conjunction with its local development partner Wright Runstad & Co.

Located along 124th Avenue Northeast near Bel-Red Road, the property currently holds 700,000 sf of warehouse and cold storage facilities. The partnership has retained GVA Kidder Mathews to lease out the industrial space for the next several years while seeking entitlements to redevelop the site. Safeway vacated the site in 2005 for a new facility in Auburn, WA.

The redevelopment plan calls for an urban village concept consisting primarily of office and residential buildings, neighborhood retail shops and restaurants and public spaces. The site is projected to hold approximately 2.5 million sf of office space and 600 housing units.

The property sits within what is known as the Bel-Red corridor, a 900-acre between State Route 520 and Bel-Red Road extending east from Interstate 405 to the Bellevue-Redmond border. The city of Bellevue is in the midst of a comprehensive public process to determine the future land use and development direction of the 900-acre corridor. In addition, Sound Transit plans to use the corridor to extend its light rail system to Redmond from Seattle, and is considering the former Safeway site for one of its stops.

The city’s timeline calls for the Steering Committee to recommend its preferred land-use vision to the City Council this summer for consideration. Adoption of a land-use plan and regulations for the corridor is expected by early 2008.

“The Puget Sound region is one of the most dynamic development markets in the country, and Bellevue and the rest of the Eastside show particular promise,” says Shorenstein chairman/chief executive Doug Shorenstein.

This is the third venture of Shorenstein and Wright Runstad as partners. In September 2006, they acquired the 340,000-sf Seattle Trade & Technology Center. Shorenstein also is part of an existing Wright-Runstad partnership that owns a 50% interest in the 1.1-million-sf 55-story WaMu Tower.

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