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Originally published June 13, 2012 at 7:02 PM | Page modified June 15, 2012 at 11:49 AM

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Developers plant seeds for 'Spring District' growth in Bellevue

The first pieces of a massive proposed "urban village" in the quasi-industrial Bel-Red corridor could break ground next year, says Seattle developer Wright Runstad.

Seattle Times business reporter

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Seattle developer Wright Runstad spent five long years designing and winning conceptual approval for the Spring District, its giant proposed "urban village" in Bellevue's quasi-industrial Bel-Red corridor.

Now it's taking the first steps toward finally building something there.

"We fully intend to be on the crest of the wave" as the local economy rebounds, says Greg Johnson, Wright Runstad's president.

Earlier this month, the company submitted preliminary paperwork to Bellevue planners for the first two office buildings — one 12 stories, the other 10.

It also has put a tenth of the project's 36 acres up for sale to apartment developers. Plans call for about 300 units in 6- or 7-story buildings.

Those commercial and residential buildings could break ground in mid-2013, Johnson says.

The Spring District may blossom into much more.

Today the Bel-Red corridor links two of the Eastside's economic engines, high-rise downtown Bellevue and high-tech Overlake, but lacks the energy of either. City officials want that to change, and the Spring District is a big part of the transformation they envision.

The sprawling project's master plan, approved last month, calls for up to 4.1 million square feet of office space — nearly half as much as downtown Bellevue — plus 1,000 apartments or condos, a hotel and more than 2 acres of parks and open space.

Later phases would be built around a Sound Transit light-rail station scheduled to open in 2023. Wright Runstad and its development partner, Shorenstein Properties of San Francisco, expect the whole complex will take 15 years to complete.

What's there now? Big, aging warehouses, part of Bel-Red's unspectacular commercial landscape of body shops, utilitarian retailers, self-storage compounds and strip malls.

"You drive through here, and it doesn't really have any identity," says Rob Aigner, a senior vice president with real-estate firm Harsch Investment Properties, whose office is in the corridor.

Johnson is betting that will change. Just as downtown Seattle stretched into neglected South Lake Union and downtown Portland spilled into the Pearl District, so downtown Bellevue will reach east into Bel-Red and the Spring District, he predicts.

"The pathway of future growth is going to be in this area," he says.

Ripe for redevelopment

When Wright Runstad and Shorenstein paid Safeway $68 million for the Spring District's 36 acres in 2007 and unveiled their vision, Bellevue city officials already were eying Bel-Red as a prime redevelopment target.

But the corridor still was zoned for light industry. And light rail to the Eastside was no sure thing.

Considering those uncertainties, "it appeared to be a stretch from a price perspective," Aigner says.

Over the next few years, however, all the pieces fell into place. In 2008 voters approved taxes to fund Sound Transit's East Link line to Overlake. At the urging of Bellevue officials, the agency decided to run the line through Bel-Red to serve as a catalyst for redevelopment.

In 2009, the Bellevue City Council changed Bel-Red's zoning to encourage office and residential development, permitting buildings as tall as 150 feet on most of Wright Runstad's property.

The original plan was to start building in 2009. The recession pushed that timetable back.

But Johnson says income from warehouses on the property — tenants include Coca-Cola and Amazon Fresh — allowed the developers to stretch out the schedule relatively painlessly while designers from NBBJ completed the master plan and city officials reviewed it.

Now the time is right to build, he says. Office vacancy rates have dropped, especially in downtown Bellevue: "The market is snapping back faster than people had expected."

Even so, Johnson says, Wright Runstad won't break ground on the 490,000 square feet of office space in the Spring District's first phase until it signs a big tenant. And it's got competition for that elusive big one from at least three proposed office projects in downtown Bellevue.

How does a project in humble Bel-Red compete for tenants — office or apartment — when light rail is still a decade in the future?

"It's absolutely virgin territory for Class A office," says Steve Schwartz, managing director in brokerage Jones Lang LaSalle's Bellevue office.

"It's not as appealing in terms of having retail or restaurants or entertainment like downtown Bellevue," says apartment researcher Tom Cain of Apartment Insights Washington.

Johnson ticks off a long list of reasons why the Spring District should succeed, including its location between two big job centers.

And it's near both Interstate 405 and Highway 520; parts of the district are closer to 405's Northeast Eighth Street interchange than Bellevue Square is, he maintains.

With more land than is available in downtown Bellevue, Wright Runstad can construct office buildings with bigger floorplates — a plus for some prospective tech tenants, Johnson says.

And, while land prices in downtown Bellevue pretty much dictate concrete-and-steel high-rise construction, the Spring District's first, mid-rise apartment buildings, which can be built with wood, should be less expensive to construct.

What's more, Johnson adds, the Spring District isn't as isolated as you might think. If you cut through parking lots, it's just a quarter-mile walk from some proposed apartment buildings to the Bellevue Whole Foods.

Cain and Schwartz agree with much of this. Surprisingly few proposed apartment projects are in the development pipeline in downtown Bellevue, Cain says: the Spring District could benefit from that.

The first big office tenant Wright Runstad signs most likely will be "a young tech company with vision, that's not scared of an edgy, nontraditional environment, that wants to create its own identity," says Schwartz, whose brokerage lost out on the Spring District listing to the Broderick Group.

But for Wright Runstad to lure that tenant, "they've got to sell the dream really hard," he adds.

Harsch's Aigner agrees. "A great portion of any success they have will be from creating an identity" for the Spring District, he says.

Like South Lake Union, perhaps. A decade ago, Aigner remembers, people in real estate were wondering who'd ever want to go there.

Eric Pryne: 206-464-2231 or

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