Bellevue developer buys Lincoln Square
Bellevue's biggest developer completed what could be the biggest deal in his career yesterday, closing the $40 million purchase of Lincoln Square from developer Lend Lease.
Freeman is the third developer to try completing the two-tower, 1.4 million-square-foot project that ground to a halt a year ago amid Bellevue's worst real-estate downturn in more than a decade. What sets him apart, he said, is that this is his turf.
"I would not try to take this on if it were in Chicago, Des Moines or anywhere else," Freeman said. "Our emergence here has given people confidence that this thing will work. We have a good reputation for building quality and staying on the project."
That stability is an important boost for downtown Bellevue, where the unfinished project has cast a shadow of uncertainty over the struggling real-estate market.
"It's a real positive for the city," said Tom Bohman, director of Cushman & Wakefield's Bellevue office. "It has been a no-man's land, with everyone waiting to see who is going to buy it and what they will do, or whether we will be looking at a hole in the ground for the next five years."
If it's completed, Lincoln Square will be slightly larger than Bellevue Square, which Freeman developed. But it is also more complex, mixing high-rise condominiums, a hotel, a three-story shopping mall and a 27-story office tower. And that makes it a riskier bet, even for a conservative developer like Freeman.
Freeman plans to resume construction early next year, beginning with the project's 41-story hotel and condominium tower and the 340,000-square-foot shopping mall. But Freeman said he will hold off on the office tower until downtown Bellevue's real-estate market rebounds. Altogether, he expects it will cost an additional $300 million to complete.
Freeman and his company, Kemper Development, have spent much of the past year working on the project from the outside, pouring money into designs and business plans with no guarantee that a final deal could be reached.
For months, it looked like Freeman's luck had run out. Lend Lease passed on Freeman's initial offer and instead agreed to sell it to Opus Northwest. But a final deal with Opus was never reached, and Freeman announced his plans to buy Lincoln Square in May.
U.S. Bank and Bank of America provided financing for the purchase.
Lend Lease, which developed the project on behalf of a large investment fund, will retain a small interest in the project's office tower.
The original developer, Ian Gillespie, designed a project that could have fit in his home city of Vancouver B.C., with soaring colored glass and ultra-modern finishes. But Freeman will turn the mall inside out so storefronts face the street, and he will clad bottom-floor facades in brick and traditional materials that blend with Bellevue Square and Bellevue Place.
Freeman wouldn't name any of the potential retail stores, but he has said the mall's theme will be home furnishing and design.
The plan also calls for a multiplex movie theater and an upscale health club or spa.
Freeman also declined to talk about companies interested in operating the project's 303-room hotel.
Condo presales have remained strong despite the turmoil surrounding the project. Nearly 90 of the 148 condos are taken.
Freeman said he decided to keep the Lincoln Square moniker after learning that Bellevue Way was originally named Lincoln Avenue.
Ron Smith, former Bellevue mayor and city councilman, will work as Freeman's project manager for Lincoln Square.
Smith is a longtime residential developer who started a commercial real-estate-investment company two years ago.
J. Martin McOmber: 206-464-2022 or mmcomber@seattletimes.com