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Originally published March 15, 2014 at 8:00 PM | Page modified March 18, 2014 at 1:53 PM

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Corrected version

Boeing seeks Eastside space for engineers

Boeing could relocate several thousand engineers to Bothell and the I-90 Corridor. Also, one of Bravern’s oldest retail tenants pulls out; and Seattle group rallies e-commerce companies to grapple with credit-card fraud.

Seattle Times business staff

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Boeing is looking to lease more than a half million square feet of office space in Bothell and the Interstate 90 corridor by August, according to people familiar with the matter.

Such a move would be “game changing” for the Eastside office market, said one industry source.

The company plans to knock down the office buildings at the northeast corner of its Everett assembly plant to make room to build the giant wing of the 777X jet. It needs office space to accommodate the displaced engineers and other workers in those buildings.

Real-estate industry sources say Boeing is considering leasing between 150,000 and 250,000 square feet in the Interstate 90 corridor and as much as 300,000 square feet in Bothell.

Assuming an average 180 square feet per employee, the leased office space could theoretically accommodate 2,500 to 3,000 workers.

A Boeing spokeswoman declined to comment, saying only that the company “continually evaluates available properties ... to meet Boeing’s evolving business needs.”

At the end of 2013, the I-90 corridor and Bothell posted the highest vacancy rates on the Eastside, with 18.5 percent and 16.8 percent vacancy, respectively, according to a market report by the Broderick Group, a local commercial real-estate brokerage.

T-Mobile and Verizon moved out of nearly 250,000 square feet along the I-90 corridor last year, adding to the area’s woes. A handful of buildings there have more than 100,000 square feet of available space, including Sunset North Building 5 and Newport Tower, according to the Broderick Group’s report.

Boeing taking 250,000 square feet would single-handedly drop the submarket’s 18 percent vacancy rate to about 12 percent.

“The market on I-90 has been deteriorating with no real solid demand,” said the source. If Boeing inks a deal, “it absolutely stabilizes the market.”

Similarly in Bothell, if Boeing leases 300,000 square feet, that would knock the vacancy rate down well below 10 percent, considered the tilting point in the balance of power between landlords and tenants.

The aerospace giant has looked at Bothell office space in buildings along Monte Villa Parkway and in Canyon Park, both east of Interstate 405 and between state routes 522 and 527, industry sources say.

Along Monte Villa Parkway, there’s at least 210,000 square feet of vacant office space available across different buildings.

Canyon Park, which is owned by Arden Realty, a subsidiary of GE Capital Real Estate, offers at least 160,000 square feet across several buildings as well.

If Boeing were to lease as much as 300,000 square feet in Bothell, there would be no vacant spaces larger than 20,000 square feet, said one real-estate industry source.

“It would be pretty dramatic.”

— Sanjay Bhatt:

Braven losing longtime tenant

The Red Door Spa has occupied its third-floor location at The Shops at The Bravern, the posh shopping complex that opened in 2009, even as other shops have cycled through its less-than-full corridors.

However, on March 22 the Elizabeth Arden-owned chain will close the doors of its only Northwest location, according to Bravern spokeswoman Torie Rynning.

“It was a mutually agreed upon departure,” Rynning said. “Red Door Spa did not break their lease in leaving, nor were they asked to leave.”

The Red Door Spa’s closure is part of a continuing redevelopment and re-merchandising effort for the luxury shopping destination that Ashkenazy Acquisition bought from Seattle-based developer Schnitzer West two years ago.

Ashkenazy’s portfolio also includes Union Station in Washington, D.C., and the Barneys New York building in Beverly Hills, Calif.

In May, Gucci will open a 8,000-square-foot location in the space formerly occupied by Piazza Sempione, Brooks Brothers and DNA 205, Rynning said.

The Gucci lease puts The Bravern at 80 percent occupancy; and with two other still-undisclosed leases in the works, the shopping center will be 84 percent occupied.

Neiman Marcus, which has a 125,000-square-foot store at The Bravern, takes up 40 percent of the shopping center, which has never been full.

According to Red Door Spa website, customers holding gift certificates or gift cards are encouraged to use them before the closure.

Otherwise they’ll need to travel to Phoenix to find the nearest Red Door location.

— Coral Garnick:

Seattle group helps tackle fraud

Joe O’Konek, head of the Seattle-based trade group for about 400 e-commerce companies grappling with credit-card fraud, knows personally how the effects of a data breach ripple far beyond a single company.

The recently installed chief executive officer of the Merchant Risk Council says that after Target’s massive loss of consumer-credit information last year, he got an email from the local charity World Vision, advising him that the credit-card number through which he makes recurring donations was no longer valid.

Multiply that by tens of millions of affected consumers, each with numerous merchant relationships, and you have an industry with a problem.

E-commerce players from Amazon and Air France to Victoria’s Secret and Walmart will be tackling that problem at the coalition’s annual meeting this week in Las Vegas.

“Look what’s happened to the brand equity of Target — it’s been damaged, unfortunately. So now that’s a conversation every boardroom is going to have,” says O’Konek.

The discussion will be more nuanced than simply how to completely eliminate fraud, he says.

“I could take fraud to zero, but it’s like stepping on a hose — no water would get through,” O’Konek says.

Instead, e-commerce companies balance the risk and reward of fraud-prevention measures.

They may trade tips on whether loosening their standards — for instance, shifting the rejection rate of suspicious transactions from 5 to 3 percent — could result in more revenue gain than fraud loss.

Still, they’ll be more focused than ever on new technology for reducing the potential for fraud.

The standard European technology for embedding a smart chip in a credit card and a pin number to authenticate it is coming to the U.S. after card issuers, banks and merchants resolve their differences over who pays for the new systems needed.

However, that won’t necessarily help companies that handle card transactions online or on the phone — what the industry calls “card not present” sales.

A LexisNexis report posted on the coalition’s website says introduction of the smart-chip technology “may prove to be a double-edged sword,” reducing fraud at the checkout counter “while (card not present) fraud skyrockets after (it) is widely adopted in the U.S.”

O’Konek doesn’t buy that particular point, saying his group hasn’t seen an increase in online fraud in Canada since it adopted smart-chip cards.

Still, he concedes, “You plug one hole and another hole is going to pop up somewhere else ... It’s a matter of shifting where the bad guys are attacking.”

— Rami Grunbaum:

Information in this article, originally published March 15, 2014, was corrected March 18. A previous version used an incorrect name for the Merchant Risk Council.

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