Lincoln Square One Tops Out

BELLEVUE, WA-Skanska USA Building this week topped out the first tower for Lincoln Square, an eventual two-tower 1.4-million-sf mixed-use project being developed by locally headquartered Kemper Development Co. The hotel and retail components are on schedule to open for business this November and be connected to Kemper’s Bellevue Square Mall via a sky bridge.Located at the corner of Northeast 8th Street and Bellevue Way, Lincoln Square includes a 2,000-slip underground parking garage topped by a three-story, 300,000-sf retail podium that, in turn, is being topped by two opposing towers: the 27-story office building and a 42-story building with a 337-room Westin on the lower floors and 148 luxury condominiums on the upper floors. The first tower–the tallest building in the city–will contain the Westin hotel on the lower 19 floors and condominium units on the upper 22 floors. Interior work on the hotel began in February. Interior work for the condominium component will begin in September. The condominiums have been sold for some time at prices ranging from $400- to $1,000 per sf. As for the retail, leases are signed for 75% of the space and under negotiation for the remainder. A syndicate of banks led by Bank of America and US Bank have provided $220 million in construction financing for the first four phases (parking, retail hotel and residential) and the New York State Teachers Retirement System have made a $128-million forward commitment for a 10-year permanent financing that will pay off the portion not covered by the sale of the condominiums. Connecticut General Life Insurance Co., a subsidiary of Hartford-based Cigna Corp., has bought a $33-million equity stake in the project. In March, Kemper Freeman told GlobeSt.com his goal was also to have the office tower topped out and clad by November, but that was assuming he could be under construction on the second 27-story tower by late May or early June, which did not happen. Through a spokesperson, he tells GlobeSt.com this week that lease negotiations are under way and a groundbreaking for the 500,000-sf office component is “imminent.” The triple-net asking rental rate is $24-to-$28 per sf per year, which is about equal to the full-service rate for the rest of the class A office market in Downtown Bellevue.In explaining his want to get under way with the office component, Freeman says most of the cost risk for the office tower has already been incurred–the parking is built and the columns and footings are in place because they had to come up through the underground parking garage and three-level retail podium on which the office tower will sit. “With the necessary permits in hand, the steel already purchased and contractor still on site, we can save millions of dollars by moving right ahead with the final phase,” he told GlobeSt.com in March. The project got under way in 2000 and was halted in mid-2002 after the dot-com meltdown and the ensuing recession shook the project–and the Downtown office market–to its core. The developer at that time was a group of investors led by Lend Lease Real Estate Investments’ Value Enhancement Fund IV. When Kemper Development purchased the stalled development in August 2003, he acquired not only the land, about 1,700 below-grade parking spaces and a half-completed hotel-condominium tower, but also the steel for the office building, which had been pre-purchased. “We bought at old steel prices, not the new ones,” Kemper told GlobeSt.com in March. “It’d be millions more now.”Lincoln Square is part of a four-block area owned almost entirely by Kemper Development. Across Bellevue Way from Lincoln Square is Kemper’s one-million-sf Bellevue Square mall. Across Northeast 8th Avenue from Lincoln Square is Bellevue Place, Kemper’s 500,000-sf office and retail development that wraps around the Hyatt Regency Bellevue. “We’ve got about four million square feet along about one-half mile of Bellevue Way where we’re looking back and forth at each other,” Freeman told GlobeSt.com in March. “We’re getting a really super street scene that has made sales at our shopping center increase dramatically.”