If the deal closes as expected this summer, Kemper will assume total control of the 1.4 million-sf, mixed use project considered one of the largest mixed-use projects in the nation. The estimated $360-million project includes a 40-story hotel and condo tower, 333,000 sf of retail, a 27-story office building and an underground parking garage for 2,142 vehicles that is largely complete. The project got underway in 2000 and was halted in mid-2002 because of the economic downturn, leaving a hole in the heart of the city.
"Our company is uniquely qualified to develop this mixed-use site because of our extensive retail, office and hotel experience in this market, and our ability to coordinate the activities at Lincoln Square with those at our other properties," says Kemper Freeman Jr., Chairman and CEO of Kemper Development. "We understand what a project of this magnitude requires and are prepared to take on the challenge."
Financial terms were not disclosed. Shortly after the project was halted last summer, Lend Lease began searching for an equity partner to put up as much as $52 million to recapitalize the project. To assist in the process, Lend Lease hired Greenwich Group International LLC of New York City.
Richard Leider of Trinity Real Estate, the company Lend Lease brought on in mid-2001 to manage the project, tells GlobeSt.com that there was a "very wide and deep level of interest in participating in the project," but declined to name names. In April, GlobeSt.com reported that a source with Bellevue-based Opus Northwest said it was trying to acquire the project, but wanted to acquire the entire project. Leider says Lend Lease wanted to maintain an interest the project.
Building permits for the project expired in February due to 180 days of inactivity but were promptly reissued by city planners, this time with approval to develop the project in phases rather than all at once. The permits were immediately reissued because Lend Lease, knowing it wouldn't likely restart construction in time, has Leider re-apply for them in October. With the new permits, Kemper Development has until next February to restart construction and three years to complete it, a city planning official tells GlobeSt.com.
In announcing the news, Freeman says he expects to complete the project in two phases. Work to complete the parking garage and develop the retail podium and the residential/hotel tower is anticipated to start in early 2004, with completion slated in fall 2005. Interest in the condominiums remains high, Leider says, with approximately 90 of the 148 units pre-sold. Kemper Development's Jim Melby tells GlobeSt.com a pad for the office building will be prepared during one of the phases, with the office building itself being delivered into a market "more receptive than current conditions."
In January, ArcLight Cinema Company and Lend Lease terminated a lease agreement for an 86,000-sf movie theater that was to anchor the retail portion of the project, leaving a bank branch as the lone signed tenant for the project. If anybody knows how to thrive in the Downtown Bellevue market, however, it's Kemper Development.
Kemper Development's two premier Bellevue developments, Bellevue Place and Bellevue Square, face the Lincoln Square site. Bellevue Square is a 1.3-million-sf shopping center that draws more than 16 million visitors annually. Bellevue Place is a mixed-use project that includes two office buildings, retail space and the Hyatt Regency Bellevue.
"We've had opportunities to go to other markets, to Southern California or the Mid-West or parts of the South," says Melby, "but it makes more sense to us to stay in a market we feel we know better than just about anybody else and create synergies between our properties."
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