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Originally published Friday, December 15, 2006 at 12:00 AM

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Google retreats from deal in Bellevue, may shop for office space in Seattle

It could be a while before Google takes over a major office tower in the Seattle area. A month ago, commercial real-estate brokers were...

Seattle Times business reporter

It could be a while before Google takes over a major office tower in the Seattle area.

A month ago, commercial real-estate brokers were saying they heard Google had signed a letter of intent to lease most of Tower 333, a 20-story office building under construction in downtown Bellevue.

Now, they say, Google's move to Tower 333 at Northeast Fourth Street and 108th Avenue Northeast is no longer a go.

"They're considering other alternatives," said Parker Ferguson, co-founder of Seattle brokerage Flinn Ferguson, which is working with Google. Although a letter of intent suggests a deal between Google and the Texas-based Hines development company had been imminent, it's not legally binding, meaning either side could walk away.

Google's expansion plans have been the subject of much speculation within the Seattle brokerage community for about a year. The California company reportedly requires anyone with whom it has discussed plans to sign a nondisclosure agreement. Google said Thursday there's "nothing to announce at this time."

Brokers said it's not clear why Google is looking around, but Bellevue's loss could be Seattle's gain.

Oscar Oliveira, a broker at Colliers International in Bellevue, said he believes Google has turned its attention to parts of Seattle, such as Belltown and South Lake Union, which tend to be popular with young technology workers.

"I heard they're looking for something that better fits their California tech image," Oliveira said.

Another possible explanation is last month's fatal accident. A crane working at Tower 333 collapsed Nov. 16, damaging three nearby buildings and killing a man when it crashed into his apartment.

Construction of Tower 333 restarted Nov. 27, Hines Vice President George Lancaster said in an e-mail. Completion is still set for the end of next year. Hines brought in two mobile cranes after the accident and expects to receive a permanent replacement in January, he said.

Lancaster said Hines is marketing the building to "myriad" tenants. "We've had a lot of interest and have met with several prospects in the last few days," Lancaster said.

Tower 333 will have 410,000 square feet. Google would have been its largest tenant. A month ago, Tower 333's marketing focus was on the three or four floors that Google did not plan to occupy, said Tom Bohman, a broker at Cushman & Wakefield in Bellevue.

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"Now, they're letting people know, 'It looks like the deal is not going to happen, and we've got space,' " Bohman said.

Of course, there's always the chance that Google and Hines are playing hardball with each other in hopes of negotiating more favorable terms.

"It's entirely possible that they reached an impasse and said, 'We're done and down the street,' " Bohman said. "I've seen those kinds of negotiating strategies in the past."

Google, based in Mountain View, Calif., has been advertising for workers to fill a range of engineering-related jobs in the Seattle area. About two years ago, Google opened an engineering center in Kirkland, where it has about 250 employees, up 100 from June. Also, Google in May moved its Seattle sales staff of about 30 from South Lake Union to Fremont, saying the staff could expand to 75.

At least 1,200 workers would fit in the space Google had been looking at in Tower 333, brokers said.

Google, meanwhile, is expanding in Kirkland, where it occupies two floors at Central Way Plaza, and recently took an additional floor at a nearby building, said engineering director Peter Wilson.

Google considers the Kirkland offices among its most successful worldwide and plans to hire aggressively in the next year to take advantage of the area's technology talent, said Douglas Merrill, vice president of engineering.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com

Seattle Times business reporter Kristi Heim contributed to this report.

Developer delays planned apartments

A Dallas-based developer said it is postponing plans for a new 180-unit apartment building in downtown Bellevue.

Lincoln Property had planned to buy land from three owners near Tower 333, with apartments renting for $1,800 to $3,300 a month. But the Texas company decided this week not to proceed with the project after deeming construction costs too high, said Senior Vice President Kevin Keane.

Lincoln Property called off its plans just as speculation spread among commercial real-estate brokers that Google no longer is interested in leasing space at Tower 333.

While Lincoln Property had been encouraged by Google's interest in downtown Bellevue, its decision had nothing to do with Google, Keane said. "The economics just were not there," he said.

Seattle Times business staff

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