Office space vacancy rates are reaching historic lows on both sides of Lake Washington, 3.2 percent in Seattle and 3.8 percent for Bellevue last quarter, according to real estate reports. And while the push on either side of the lake has been to provide more space, the approach has come from opposite ends of the spectrum.
In Seattle, it seems that everything old is new again. Developers are snatching up old warehouses to convert them into office space in the downtown, waterfront and SoDo neighborhoods.
“A lot of buildings that are currently being used in one fashion are being converted to another,” says Jim Bowles, Northwest senior managing director for Cushman & Wakefield, a commercial real estate services company. “There are buildings out there that are getting warehouse rates that are being converted.”
Rather than gutting the buildings for total renovation or demolishing the structures to build anew, developers are using the quirky, unique features of these older buildings to attract equally unique, quirky tech companies.
“People are looking for something that has a human touch,” says Jane Blair of CB Richard Ellis, another real-estate services company. The companies driving the real estate craze are the younger, high-tech companies that began in someone’s garage and haven’t forgotten that part of their culture.
“They don’t want to look like a bank or insurance company,” Blair says. “I think the Internet companies could care less about having standard, professional, ‘vanilla’ office space.”
Businesses that encourage employees to dress casually and bring pets to work are the same ones that love the exposed timbers, old bricks and bare floors.
Revamping already built facilities makes economic sense, Bowles says. “You don’t have to go through the zoning and permitting process. It’s a much shorter turnaround time”.
Especially, as Blair says, when some high-tech companies need the space right away. “They have a hard time forecasting and planning ahead,” Blair says. “When they need (space), they need it yesterday.”
Cobalt.com, a provider of online services to auto dealers, has agreed to lease 75,000 square feet in what was once home to Olympic Cold Storage. Real estate developer David Zarett has worked to maintain the character of The 2200 Building, 2200 First Ave. S., in SoDo. With the help of Broderick Architects and general contractor The Sterling Group, the design incorporates the defunct cold-storage features into the office space.
The old Star Machinery Building, at 1741 First Ave. S., is also seeking tenants to snatch up the old-fashioned space. Developer Joe Manning Jr. plans to offer 44,500 square feet with accommodations for high-tech companies.
Triad Development is at the forefront of the trend to turn old space into new. The Seattle-based company plans to remake the former Skyway Luggage warehouse at 30 Wall St., and Pier 70 into office space. Go2Net has already agreed to lease Pier 70’s 80,000 square feet.
Even Triad’s new construction project, the Colman Tower at 800 Western Ave., follows along with the “older” trend. Through starting from nothing but a bare parking lot, Triad is designing the building to look like the older structures surrounding the Pioneer Square site.
“There’s a whole new type of interior design and architecture for the high-tech companies,” Bowles says.
On the other side of the lake, Bellevue is looking to create new space for the same clientele. Internet companies looking for more room have sparked more than 3 million square feet of new building construction. Cranes are sprouting in the central downtown core, building new centers for office space.
“There isn’t much available over there that wasn’t built after 1980,” Bowles says. “There really isn’t a stock of rehab-able, funky locations.”
One Twelth@Twelfth, the Civica Office Commons, Three Bellevue Center and others will come up quickly, and in the next few years will provide homes for fledging dot-com companies.
Drugstore.com is a prime example, with an agreement to lease about 180,000-square-feet of space in the soon-coming Lincoln Square, a huge mixed-use project with 500,000 square feet of office. The 420,000-square-foot Bellevue Technology Tower spells out the trend in its name. Developer Eugene Horbach has planned the 20-story structure to include the cutting edge of tech features.
Eastside economic prognosticators say the trend will continue. According to a study conducted by Puget Sound-area Hebert Research Inc., employment should increase by at least 5 percent on the Eastside in the coming year. By 2005, most e-commerce businesses predict they’ll increase their own employee numbers by 80 percent.
By LISA LANNIGAN