EOP Finalizes Lease Deal With Drugstore.com

BELLEVUE, WA-Drugstore.com Inc. signed an eight-year lease for 53,256 sf at One Bellevue Center, a 353,552-sf office building Downtown that is owned by Equity Office Properties. The online provider of health, beauty, vision and pharmaceutical products signed an eight-year lease for the 13th, 14th and 15th floors of the 21-story building.Drugstore.com will be occupying the space in the first quarter of 2005, shortly before its lease runs out at the Sunset Corporate Campus in the Factoria area of Bellevue, where it occupies a similar amount of square footage. Without going into detail, the company’s acting chief executive Robert Barton tells GlobeSt.com that the rental rate will be lower than its current lease, which was signed in 1999. The full-service asking rate at One Bellevue is $24.50 per sf per year.The lease takes occupancy at One Bellevue Center to 79%. Just a couple of months ago, the building was well under 50% occupied, but the engineering firm Parametrix has since moved from Kirkland into about 35,000 sf in the building, and the online chemical sales firm ChemPoint in July committed to leasing 27,000 sf in the building. All told, EOP owns about 2.5 million sf of office in the Bellevue CBD with an overall occupancy of 95%. Total class A space in the Bellevue CBD is about 4.5 million sf, for which the average vacancy is in the mid-teens. The class A vacancy rate there dropped several percentage points at the start of the month when the new owner of Safeco’s life and investments business finalized two 10-year leases for a total of 289,882 sf in Rainier Plaza and Key Center, two class A buildings Downtown also owned by EOP. The leases, which commence next summer, drop direct vacancy in the buildings to 2.5% and 1.4%, respectively. EOP declined to reveal the negotiated lease rate for any of the deals. Local office brokers familiar with the transaction told GlobeSt.com the negotiated start rate for the Key Tower and Rainier Plaza leases is in the “high teens” per sf. Current annualized full-service asking rates in the buildings range from $24-$26 per sf at the 430,000-sf Rainier Plaza and $27-$29 per sf at the 473,000-sf Key Center. Geoff Boguch of Colliers International represented Drugstore.com in its lease negotiations. Representing EOP were John Black and Jason Furr of the Broderick Group and Don Matt of Equity Office. None of the brokers involved were available for comment.