GlobeSt.com UPDATE: Microsoft Expansion Agreement Could Stymie Other Development

REDMOND, WA-The City of Redmond plans to sign a development agreement with Microsoft that could severely limit the ability of other property owners to develop property they own in the area. Microsoft is seeking approval for a 2.2 million-sf headquarters expansion plan, but its expected approval will soak much of the wiggle room the city has under its development cap agreement with the neighboring city of Redmond, which limits total development to 2.6 million sf and doesn’t expire until 2012Add in Nintendo, which because of the situation is now seeking a similar agreement with the city for a 550,000-sf expansion of its campus, and the city is 150,000-sf over its cap. And while Microsoft is offering to defer 250,000 sf of its expansion in order mitigate the situation, both agreements would leave city officials with a relative pittance to spread among every other property owner in the area.”That cap is scaring people,” Redmond planning director Roberta Lewandowski tells GlobeSt.com. Indeed, she says that as a result of the two agreements the city could be forced to tell property owners they must wait to expand their properties until the development cap expires and the area is re-planned.Moreover, under current rules the development agreements would require denials to other developers even though Nintendo has no near-term plans to execute its expansion and Microsoft’s build out will occur over the course of 10-to-20 years, long after the development cap is scheduled to expire. It’s possible it won’t become an issue. Lewandowski says if existing commercial buildings in the cap area are torn down for residential, which is expected in the coming years, that space can be rebuilt elsewhere in the district without consequence as far as the development cap is concerned.”We have a couple of districts in the area covered with one-story commercial and warehouse space, underutilized land that could go to housing and thereby soften the cap,” she says. “We have no knowledge of owners who are planning that at this time; we’re looking out to 2012.”With eight million sf built already, the Microsoft campus is one of the largest in the world. Design and construction of the first of more than a dozen new buildings is slated to begin this year, with occupancy of the building scheduled for 2007. It will be located near our six original buildings on the Redmond campus.Microsoft executives say the additional development is expected to ultimately house between 10,000 and 12,000 additional workers. All told, Microsoft employs about 28,000 people in the Puget Sound and 57,000 worldwide. As part of the would-be development agreement, Microsoft will pay $30 million for transportation improvements in the area.