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By: Mike Ullmann
Washington CEO Magazine
Not that long ago, more than a quarter of offices in the city of Bellevue stood empty, and downtown was marked by the skeletons of halfcompleted buildings and yawning construction pits collecting rain. Just six years later, 18 tower cranes have returned to the city's skyline, the office vacancy rate is less than 4 percent and shrinking, and the companies clamoring to get into town aren't upstart dot-coms but upscale tenants, including the first Neiman Marcus in the Pacific Northwest.
Looking east and south from downtown's glass towers is even more telling. The central business district (CBD) is bustling with workers and residents, but what's about to happen in the city's neighborhoods will change the way Bellevue and other cities on the east side of Lake Washington work. Bellevue continues to inspire investment while building a sense of community.
Bellevue's bounce-back from the tech bust at the turn of the century is impressive in its own right, but it didn't happen in a vacuum. Businessmen and politicians, not always natural allies in Bellevue, say today's success is built on decades of planning that sometimes inspired name calling, but looks astonishingly prescient -- even fashionable -- in 2008. "Somehow, Bellevue got it right, from the beginning," says Greg Johnson, president of developer Wright Runstad, which has been doing business in Bellevue for more than 20 years.
Wright Runstad has developed 14 million square feet of office and mixed-use projects. Its high-rise buildings help define the skylines of both Bellevue and Seattle. But the largest project in the company's 35-year history is not in either downtown, and with associated development, it's going to take another two or three decades to finish. The $1.5 billion "Spring District" being built between Bellevue and Redmond, along the 900-acre Bel-Red Road corridor, could be thought of as a second downtown. It will be both urban and residential. "It will be self-contained, with everything you need to live and work there in your daily life," Johnson says. "One of the reasons we felt it was attractive to build there is, the city had already laid the groundwork. It laid the foundation for its success with rules it put in place more than 20 years ago."
Bellevue is a comparatively young city, having incorporated in 1953, but that's not the place to start. "I think we're proceeding along a journey that's been cast ever since the county did the planning for a place called Bellevue, a subregional city to Seattle but a regional center for everything on the eastside," says developer Kemper Freeman, whose father opened the first shopping mall in the area, Bellevue Square, in 1946 and whose "Bellevue Collection" now includes downtown's Lincoln Square and Bellevue Place in addition to the mall.
"People who live and work here have a propensity to spend an extraordinary amount of time on what I call community building," says Freeman. Bellevue's schools, nationally acknowledged as among the best public schools in the country, were planned to be that way. "Schools are a classic case of a group of people here on the eastside who took a long view and said we need to have the best schools possible, so that anybody moving to the Northwest would want to live here," says Freeman, whose father was also the first chairman of the school district. Another example: Overlake Golf & Country Club, which opened for play on June 27, 1953, when Bellevue had about a thousand residents. "It sounds like a minor point, but to create a significant golf course early on attracts more people." Volunteers also founded Overlake Hospital Medical Center to put a hospital in Bellevue. "Having to be hauled across the floating bridge was a real risk," Freeman says. "My grandfather died of a heart attack when they were unable to get to Seattle soon enough to save him. That happened to a lot of people."
Another place Bellevue got it right decades ago is an urban rarity -- establishing and protecting first-class neighborhoods right across the street from downtown. One is Vuecrest, once fields of strawberries and fruit trees that became 204 residential lots just northwest of the business district. "They made a planned housing community right next to downtown, and they did an extraordinary job, rather than quick-and-easy," Freeman says.
Last year Vuecrest celebrated its 60th anniversary, and its relationship with the city remains strong. "Absolutely. We have a voice in city government," says Matt LaPine of the Vuecrest Community Association. "I like to think a lot of what we do has been reflected in policies the city is now establishing." The neighborhoods are currently involved in a major city outreach to find ways to cope with modern urban issues, like mega-houses, construction, tree removal and greenscaping. The city surveys residents annually, and this year 95 percent of them said Bellevue is a good or excellent place to live, up from 93 percent in 2007, while 87 percent said they get good value for their taxes (up from 82 percent).
Bellevue is also serious about green spaces. After paying off its parks bond last year, the city is looking at a new bond issue of up to $50 million. If it agrees to move forward, the new bond will go before voters this fall. On the wish list are community centers, more athletic fields, trails -- and, finally, the long-elusive goal of parks planning in Bellevue for years -- a way to link downtown and its highly regarded Downtown Park to Lake Washington, which sits less than a half-mile away. "Over 10 years we've managed to purchase nearly a quarter-mile of waterfront, all the way from Meydenbauer Beach Park to the Bellevue Marina," says City Manager Steve Sarkozy. And the city has purchased a parcel, currently occupied by an apartment building, to physically bridge the gap between the Downtown Park and the waterfront.
Inside the actual 410-square-acre business district, the city is moving so fast, it can't stop to catch its breath. Those 18 tower cranes? Fourteen are downtown (the other four are in the Eastgate neighborhood). The list of companies moving to town seems to grow weekly. Major pre-leases for downtown office space include Expedia, Eddie Bauer and Microsoft, which will be adding to their already major presence in the city. Bellevue also currently boasts Symetra Financial, T-Mobile USA, Verizon, Paccar and Puget Sound Energy, together with Overlake Hospital and Bellevue Community College. Old Main Street is alive with new shops and restaurants, and hundreds of workers -- many of them young -- have moved into downtown condos. They're fueling downtown's new bar and restaurant scene and upscale diversions like Lucky Strike Lanes in Lincoln Square, where bowling prices top out around $65 an hour.
Part of the reason for the flurry is the business climate. Taxes are lower in Bellevue; in fact, its property tax rate is the lowest among major Washington cities and about a third of Seattle's. Last year Bellevue property owners paid $1.09 per $1,000 of assessed value, versus Seattle's $3.22. Utility and business taxes are lower, too. A study by the Washington Research Council shows that Seattle businesses paid about $449 per employee in taxes, licenses and permits in 2006, while in Bellevue that cost was just $245.
In addition, many feel Bellevue is simply a good place to do business. "My sense of the city and their willingness to support development has been good," says Lisa Rowe, vice president of leasing at Bentall Capital US Inc., which is working on its third office tower downtown. "They try to do the best thing; they try to do the right thing. They are doing a good job at meeting the demands of not only the development community, but the neighborhoods," says Rowe, a past president of Bellevue's downtown association who's been working in the market for nearly 20 years.
Bellevue has recieved national recognition for its attractive business climate -- in its April issue, Fortune Small Business magazine ranked Bellevue as the No. 1 city in the country in which to live and launch a business.
Wright Runstad's Johnson says Bellevue's had a vision for land use that it sustained over the long haul. "Seattle has taken a different path, first with codes that encouraged development" right up to the skyscraping Columbia Center downtown. "Then Seattle changed its mind and inhibited growth, and now just in the past three to four years has it embraced the smart growth model."
Still, business relations in Bellevue have had their ups and downs. Freeman, while admitting the city staff "starts off with a bigger smile than they used to" and that "underneath there is a pro-development attitude," believes there's still too much process. Sarkozy, the city manager, says that when he arrived in December 2000 the city was taking too long to grant permits. "We've had a major cultural shift to focus on the consumer, to change from regulators to facilitators." That shows up even in the layout of Bellevue's new City Hall, where the first thing a visitor sees walking in the door is a well-staffed help desk directly in front of a long open room dedicated to service and permits. "We got rid of the silo mentality in various city departments," says Mayor Grant Degginger. The city's management actively courts desirable companies, such as Symetra, which took a big block of downtown office space in 2004. "I was right there at the table with Symetra," Sarkozy says. He's also courting Microsoft, which already occupies more than half of Lincoln Square Tower and is expected to occupy two towers now under construction in downtown's innovative Bravern complex (where Neiman Marcus is a retail anchor tenant). Microsoft is also rumored to be the major, if not sole, occupant of another skyscraper now under construction and is slated to be the sole occupant of three seven-story buildings now going up in Eastgate.
Bill Brown, whose firm is redeveloping Bellevue's Factoria Mall, says he's had a wonderful experience with the city staff. "I don't want to say they're pro-growth. I think they're smart growth, and they're generally mindful of what the community wants as well." Brown is senior vice president of redevelopment for Kimco Realty Corp., which manages or has interests in more than 1,900 shopping centers in a number of countries. "We bought this site with an existing entitlement on it that didn't fit the market. We got it adjusted fairly painlessly, through the building department and the City Council, in a very collaborative process. That is rare."
The fabulous wealth in and around the city -- no small amount of which also comes from Microsoft -- also plays a huge role. There are reasons Neiman Marcus is coming to Bellevue, not Seattle. "The demographics are among the top 10 in the country, in terms of household income, household value," says Brown. Money Magazine last year reckoned the median Bellevue household had an income of $91,630, higher than the average in its Top Ten best cities. In 2007 the average home in Seattle was valued at $428,800; in Bellevue it was $536,800.
The city and its surrounding towns are sufficiently upscale that finding affordable housing is a real problem. "It is a challenge," says Degginger, the mayor. The city has historically participated in a local affordable housing coalition, but clearly more must be done. "One place we're looking is in the Bel-Red area, which is going from light industrial to a mixed-use land pattern."
He's talking about the Spring District, initially a 36-acre urban village that will include nearly 1,000 residences clustered around green spaces and a soccer field. Six- to 12-story buildings will house 3 million square feet of office space. Wright Runstad bought the old Safeway warehouse property last year and hopes to start construction next year. "That is a fabulous example of a project that's not going to be complete until 20 to 30 years out," says Betty Nokes, pres- ident of the Bellevue Chamber of Commerce.
Additional housing has been discussed for the Crossroads Mall area and is a major piece in the redevelopment of Factoria Mall. Besides adding 151,000 square feet of retail space, Kimco Realty is partnering to build over 400 apartments just southwest of the mall. "Even though the CBD is going gangbusters, it's really the surrounding neighborhoods that are going to grow," says Kimco's Brown. "They are now turning internal. Shopping in the neighborhood, going to restaurants there. That's why the residential units on our site are so important."
The single biggest challenge the city faces, though, is hardly unique to Bellevue. It's gridlock. Even at close-to-peak times, it can take an hour or more to commute to or from the east side of the lake. "You've got to be able to get to Bellevue, and you've got to be able to move around," says Rowe.
For its part, the city is interested in making it easier to get in and out of downtown and across Interstate 405, which divides the business district from many of the proposed new developments east of the freeway. It's now punching Northeast 10th Street across I-405 from downtown to the Overlake Hospital medical complex, which is partnering with Group Health to expand services in a medical district that will also include Children's Hospital.
Getting across Lake Washington is another story. After decades of gridlock, the state may have finally brokered a six-lane replacement for the aging four-lane State Route 520 bridge. "This design I think will be successful," says Degginger, who participated in the talks. "That corridor is one of two main ways of linking the critical components of the Puget Sound economy. We have to fix it before we have a catastrophe on our hands."
Mike Ullmann is a freelance writer based in Seattle.
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