Expedia plans to move its headquarters a few miles up the road to a new skyscraper under construction in downtown Bellevue, the latest business to choose downtown amid a construction boom that's transforming it into a bustling urban center.
The Internet travel-service company, based near Interstate 90 in the Factoria neighborhood of Bellevue, said Wednesday that it signed a 10-year lease for most of Tower 333, a 20-story building going up at Northeast Fourth Street and 108th Avenue Northeast. About 1,700 employees will move there in November 2008.
Expedia's move follows in the steps of retailer Eddie Bauer, which has begun moving its headquarters from Redmond to a new 28-story building at Lincoln Square. Also, Microsoft will take up some space in Lincoln Square, plus two buildings at another project, the Bravern Office Commons.
By moving to downtown Bellevue, Expedia employees will gain access to a "bevy of food options, several fitness centers, day-care facilities and retail shops," CEO Dara Khosrowshahi said in an e-mail.
But a possible trade-off is more traffic congestion. Expedia's home now in the I-90 corridor "probably is the best place to work, access-wise," said Tim Smith, a commercial real-estate broker with Grubb & Ellis.
Khosrowshahi told employees that Expedia's lease at Sunset North Corporate Campus is expiring, and he found in Tower 333 an "opportunity to have all Bellevue employees together in a single location while supporting our future growth."
Expedia decided to stay in Bellevue after analyzing employees' home zip codes, Khosrowshahi said. The company discovered that nearly half of its Bellevue employees live on that side of Lake Washington, while about a quarter live to the west, and the rest live north or south of the lake.
"While relocating is never ideal for everyone, we certainly took into account where our employees live and found that staying in Bellevue would cause the least disruption for the largest amount of employees," he said.
Tower 333 now takes on a new name: Expedia Tower. But Khosrowshahi suggested the name might only be temporary, and Expedia will finalize one closer to move-in. "Employee suggestions are welcome!" he said in the e-mail.
Expedia will occupy about 348,000 square feet on floors three through 18. The bottom two floors will go to retailers, the top two floors to other businesses. Texas-based Hines is developing the building with Washington Capital Management.
Expedia disclosed in a regulatory filing that it will pay an initial base rent of $25.85 a square foot per year, increasing to $35.85 by the final year.
That's "probably on the low end of what developers of these new buildings would prefer to get," said Oscar Oliveira, a broker with Colliers International in Bellevue. But he added that other factors, such as tenant improvements, also determine the deal's costs.
Work on Tower 333 stopped temporarily after a crane at the site collapsed Nov. 16, damaging three other buildings and killing a 31-year-old Microsoft attorney who was in his apartment in one of them.
The tower is rising in the same spot where developer Eugene Horbach planned to build the Bellevue Technology Tower. Horbach's plans ended when he lost the property in foreclosure 18 months before his 2004 death.
Commercial real-estate brokers say the Expedia deal will make an already-tight office market even tighter. A recent report by Grubb & Ellis shows downtown Bellevue's office vacancy rate fell to 4.8 percent in the second quarter, down from 7.3 percent a year ago.
"The message is loud and clear: We're going to see rents continue to go up," Smith said.
Expedia, headed by billionaire Barry Diller, has been at Sunset North since 2000. It reported first-quarter revenues of $550.5 million, up from $493.9 million a year ago. Shares of Expedia rose 22 cents Wednesday to $29.46.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org