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Shopping Centers Today -> September 2003
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KEMPER REVIVES SEATTLE-AREA MIXED-USE PLAN
BY IAN RITTER
When plans for Lincoln Square started in the late 1990s, it seemed like the project had more slam dunks than Shaquille O’Neal.
The 1.4 million-square-foot mixed-use development in Bellevue, Wash., just east of Seattle, was going up just as the area’s high-tech economy boomed. Companies needed office space, and the high-income demographics there seemed perfect for retailers. The project’s opening was set for 2002.
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But those Shaq dunks turned into air balls. The boom turned into a bust, and Lincoln Square’s main office tenant, Drugstore.com, walked away. Vancouver, British Columbia-based Westbank Properties, the project’s developer (with financial backing from Lend Lease Real Estate Investments), had broken ground in 2000, but by June last year had ceased construction. All there was to show for its efforts was an unfinished foundation in the middle of Bellevue’s downtown. Westbank sold its stake in Lincoln Square to Lend Lease later that year.
The project won’t remain this way for much longer, though. Bellevue-based Kemper Development Co. has bought a majority interest from Lend Lease and will take over the project. (The parties did not disclose the amount paid, but local media reported the total cost at $360 million.)
Kemper Development has long had more than a passing interest in the site; its Bellevue Square mall, one of the prime retail destinations in the region, stands across the street. Thus the company is taking over a project it once considered future competition, says Chairman and CEO Kemper Freeman Jr.
Now Bellevue Square, Lincoln Square and another neighboring Kemper Development-owned mixed-use project, Bellevue Place, will all be marketed together as one destination, Freeman says. The first three floors of Lincoln Square will accommodate 400,000 square feet of retail. Its two towers will comprise a hotel, 148 luxury condos and 27 stories of offices.
Instead of traditional mall anchor tenants, as Lincoln Square’s original developer had planned, Kemper Development will put in big-box stores selling home-improvement merchandise, says Freeman.
“We’ve demalled this project, and we’ve pushed the retail to the streets,” he said.
Freeman has not named any retailers for the project, but he says he met with 120 potential tenants in two days at this year’s ICSC Spring Convention in Las Vegas.
Retailers will come because consumers are still shopping in the Seattle metropolitan area, despite the tech bust, says Gregory Wendelken, regional manager for the Seattle area at Marcus & Millichap, the real estate services firm. “[Freeman] will make it happen,” he said.
Kemper Development expects to begin work on Lincoln Square in January, with a targeted August 2005 opening date.
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