John ...here is an interesting article on your favorite company Microsoft and the general real estate/development climate in the Seattle area. Issaquah, is about 15 miles east of Seattle.
Microsoft starting to make noises like a builder
New office campus in Issaquah likely, city says
Friday, July 7, 2000
By DAN RICHMAN
SEATTLE POST-INTELLIGENCER REPORTER
Microsoft probably will exercise its option to build a 12,000-employee, 3 million-square-foot office
campus in the Issaquah Highlands development, an Issaquah city official says.
But speculation that the software company
definitely will take that action -- sparked by the
beginning of excavation there and a Wall Street
Journal story earlier this week -- is premature,
the official said.
Microsoft "has been proceeding as if they're
going to continue to proceed," said Lucy
Sloman, an Issaquah city-planning consultant.
"We are working with them on things that will
become permits."
Microsoft spokesman Dan Leach confirmed
that the company is "actively participating"
with Highlands developers on such matters as
water access, transportation and infrastructure.
He confirmed, however, that no Microsoft construction has begun. And he denied rumors, referred
to the story in Wednesday's Journal, that the new campus will house part of the company if a
court-ordered breakup occurs.
"We think our case (against a breakup) is strong," Leach said. Meanwhile, "Microsoft is a growing
company, with 3,000 job openings to fill," he said.
With or without Microsoft, the gigantic, ambitious Issaquah Highlands development is becoming a
reality. Bulldozers began doing "rough grading" earlier this summer, said Judd Kirk, president of
the site's developer, Port Blakely Communities. Rough grading will prepare the former mine site
for the permit-controlled final grading that precedes construction; final grading could start next
June, Kirk said.
Issaquah Highlands is a 2,223-acre planned community about 30 miles east of downtown Seattle
designed to incorporate 3,250 residences and 425,000 square feet of retail space, as well as the
commercial space Microsoft has optioned. The developers say more than two-thirds of the land is
permanently designated as open space for use as parks, ball fields and picnic areas. All the
residences will be connected to a high-speed network linking them to the Internet and each other.
Microsoft announced the purchase of its option at Issaquah Highlands, for an undisclosed sum, in
January 1998. Leach wouldn't say how long the option runs. But for its duration it helps ensure the
fast-growing company will have sufficient office space in a tight market.
The commercial real estate vacancy rate is less than 1 percent on the Eastside and just above 1
percent in Seattle, real estate services firm CB Richard Ellis reported last week. The rate ranges
between 7 and 12 percent elsewhere in the region.
Fully 90 percent of the 3.3 million square feet of commercial space now under construction on the
Eastside is already leased, said Jeanette Ferguson, a research analyst with real estate services
company Colliers International. About 82 percent of Seattle's 4 million square feet is already
spoken for, and brokers are already marketing space due to become available in 2003, Ferguson
said.
In the face of such constriction, Microsoft needs room to grow. Last month it introduced its .NET
initiative, a sweeping, bet-the-company strategy that will require full staffing to rewrite all software
products so they are more Internet-centric.
Closer to home, in Redmond, Microsoft is also expanding. In a project code-named St. Andrews,
the company is constructing two new office buildings and a connecting cafeteria, totaling 491,000
square feet, on its main campus. Microsoft also plans to erect a 230,000-square-foot building on the
8.7-acre site of the former James River cardboard plant in Redmond. This project is simply referred
to as Building 50.
All the structures will be software-development buildings, with high-speed Internet access and
small private offices for developers. But no decisions have been made yet about which product
teams or programmers may be housed in the new buildings, Leach said.
In addition, the company next year will lease all 610,000 square feet in the four buildings making
up the LakeRidge Square development in Redmond, managed by Seattle's Seneca Real Estate
Group, he said.
Before Microsoft could begin any commercial construction at Issaquah Highlands, a
site-development permit would have to be approved by Issaquah's Urban Village Development
Commission, said the city's Sloman. Then Microsoft or Port Blakely Communities would have to
file building plans. The requisite building and utility permits could be issued as late as one year after
those plans are filed, Sloman said.
If the company were to be split in two, Issaquah might be the only single property big enough to
house half the company. Speculation has been plentiful as to where a divided Microsoft might be
located, though the company refuses to comment.
The breakup order and stringent conduct controls -- both ordered by a federal judge in April -- are
stayed pending appeal, allowing Microsoft to launch its .NET initiative unimpeded. The Supreme
Court is to begin considering late this month whether to hear Microsoft's antitrust appeal.
One real estate agent said a breakup wouldn't spell a real estate disaster -- so long as both
companies stay in the area.
"Locally, people feel strongly the company has smart leadership, technologically they're at the top
of their game, and they have everything it takes be a survivor, whether as one, two or three
companies," said Roger Qualman, executive vice president of commercial real estate services firm
Norris Beggs & Simpson in Bellevue. "They have a huge impact on the Eastside real estate
market." |
