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Amazon plans a headquarters move to South Lake Union

Possible Amazon headquarters.

Amazon, the iconic online retailer, is “within days” of announcing a move of offices to Seattle’s South Lake Union neighborhood, according to sources in the company and at City Hall. The move would be staged over several years, but the end result could be nearly all of Amazon’s Seattle-area employees, estimated at about 5,000 and growing fast, working on one urbanized campus. According to a well-placed City Hall source, the new “Amazon Zone” would straddle two blocks of the Terry Avenue North stretch of Seattle’s new South Lake Union Streetcar line, extending south of Mercer Street.

No one at Amazon, or at Vulcan or Schnitzer Northwest, owners of the property expected to be the new Amazon campus, would comment about a pending deal. Questions to Amazon, the landowners, the architects, and the real estate brokers all produced a similar, brusque answer: “We never comment on rumors.” One source, while confirming the closeness of the deal, cautioned that there were still details to be negotiated.

Downtown property interests say that the Amazon move would be a blockbuster, giving a huge employment anchor to the somewhat scattered development of the emerging area. If it were to happen, remarked Kate Joncas, president of the Downtown Seattle Association, “it would turn on the switch” for other projects in the area and provide an impulse for still more startups, as well as providing needed customers for some pioneering retail concerns in the area, such as Whole Foods.

The move, if it happens, would signal a shift of the expected employers in the South Lake Union neighborhood from mostly biotech businesses and University of Washington Medical School facilities to a broader mix of technology companies. Microsoft recently leased 126,000 square feet at the Westlake Terry Building, one block south of the expected Amazon campus. The Bill and Melinda Gates Foundation is building a campus on 12 acres just east of Seattle Center, with about 420,000 square feet of space. Meanwhile, biotech growth is proving to be slightly slower than hoped, observers say. Three of the unbuilt buildings expected to be part of the Amazon project were originally planned for bio-tech firms.

The Amazon move would be large enough to cause other real-estate ripples. One likely impact would be the company’s home office in the converted PacMed tower on Beacon Hill, where it occupies 189,000 square feet under a lease that expires in 2009. Other large leases are in two buildings in the Union Station development near Chinatown, where Amazon leases 445,000 square feet, and 180,000 square feet in the 76-story Columbia Tower at Fourth Avenue and Columbia Street.

According to a City Hall source, Amazon is focused on two large parcels in South Lake Union. One is a five-building complex known as Interurban Exchange, which sits on property owned equally by Vulcan, the Paul Allen company that controls a large part of the land in South Lake Union, and Schnitzer Northwest, the Portland real estate developer. The Interurban Exchange project, once described as 572,000 square feet of bio-tech office development, began in 1999 with a small Rosen Building leased to the University of Washington for medical research. A second building of 133,000 square feet was built in 2004 and is leased by Rosetta Inpharmetrics, the bio-software company. These two existing and occupied buildings lie on Terry’s west side, where come December the South Lake Union Streetcar will rumble right alongside.

It is unclear whether the two occupied buildings will become part of the Amazon campus, as space in them may open up later. But there are three unbuilt buildings, originally designed for medical research labs, that could easily be reconfigured. One is Exchange 2, with 107,000 square feet and planned for the parking lot at Mercer and the west side of Terry. Exchange 4 and Exchange 5, pictured in a large real estate sign on the site, would occupy the entire block between Terry, Boren, Republican, and Harrison streets. An historic brick warehouse, once owned by C.B. Van Vorst Company and now boarded up, would be preserved as a 14,000-square-foot “amenity center,” with fitness and meeting facilites, fronting on an interior plaza of 24,000 square feet. Exchange 4 and 5 have 258,430 square feet of rentable space, according to the real estate broker, Pacific Real Estate Partners. It’s not known whether the Amazon proposal would follow the plans for the original buildings or significantly alter those designs.

Those Vulcan-Schnitzer properties make up one full and two half blocks. The third block said to be in the Amazon deal is owned by Vulcan and bounded by Mercer, Terry, Republican, and Boren, except for three parcels in the southwest corner, which are not included in the property. A proposed development of the block is seeking design approval from the city, and the Land Use Information Bulletin describes the project as two office towers, below-grade parking for 287 vehicles, “pending street vacation” (probably the north-south alley), and 59,000 square feet of street-level retail. LMN is the architect for the project. Zoning allows a height of 65 feet, and there is no application to make the “towers” higher than the current zoning allows. Those involved in the project would not comment on who the tenant might be for the proposed project.

The area along Terry has a look of great expectations. Workers are finishing up the streetcar tracks, which run alongside relics of old railroad tracks still snaking along the roadway. Many old buildings are shuttered, and workers in some of the other worn offices say they expect to move in a year or so, but haven’t learned why. Nearby on Westlake are some venerable antique stores that will probably have a hard time holding on as rents escalate. New five-story buildings holding labs and offices and smart coffee shops resemble office-park architecture with a soft-urbanism accent.

If the “Amazone” happens, it would go a long way to solving Amazon’s problem of dispersed office locations, tied together by shuttles. Two years ago, stories began circulating about how the company was quietly talking to developers and building owners to find a consolidated campus. Landing Amazon is obviously a huge catch for any real estate concern, as well as a great prize for the South Lake Union area. The likely campus is just east of where a 61-acre commons would have gone, had voters not rejected the idea in 1995 and 1996. The area was in a kind of limbo for some years, then started filling with expensive condominiums and biomedical facilities. Just as in Portland’s Pearl District, the new streetcar is proving to be catnip to developers even before it opens in December, and rents along the route are said to be soaring.

City planners hope that if Amazon does locate there, drawing other high-tech companies, it will be a force for creating amenities like theaters and nightlife. The surge of new office workers would also have a big impact on traffic, already a problem on Mercer Street. Planners hope that the arrival of Amazon would accelerate efforts to solve the “Mercer Mess” and possibly revive talk of putting Aurora Avenue North in a trench so that it would no longer bisect the neighborhood.

Of course, Amazon and other new construction will keep driving up rents, which might price funky retail places out of the market. In-city office parks, such as the one just south of Union Station, tend to push out service retail (dry cleaners, funky bars, medical clinics), replacing them with upscale retailers. Rapid development of high-tech campuses will probably create a rather suburban feel for the neighborhood. Already, retail rents along Westlake are in the $25 to $30-per-square-foot range, which is tantamount to suburban mall rates.

On the other hand, Amazon’s move to South Lake Union could transform an area from a kind of piecemeal neighborhood into one with a dominant character. Amazon employees are likely to favor a fairly rich street life, built around the Portland-style pedestrianism that the streetcar will bring. It’s a company where many employees bring dogs to work, and it hires lots of creative eccentrics.

Nothing’s simple in Seattle development battles, and it’s possible that the Amazon move out of PacMed will reopen old wounds. The company, founded in dowdy quarters in SoDo in 1994, grew so fast that it was in desperate need of office space in the late 1990s, when there was little downtown office space to be had of that size. Then-Mayor Paul Schell pushed through a controversial deal that converted the handsome art-deco former U.S. Marine Hospital to offices for Amazon, with only the first floor kept for PacMed clinics. The pace of the deal left many advocates for community health services angry. Further, Amazon’s plans to occupy a new building to the north of the old hospital faltered as the company went into a period of layoffs in 2001.

A new Amazon campus would push at some other hot buttons in Seattle politics. Those would include the old commons war and the role of Paul Allen’s Vulcan holding company in buying up much of the land; the Mercer Mess of backed-up traffic trying to get on and off Interstate 5; and the still-simmering questions about the South Lake Union Streetcar, which some critics feel is jump-starting real estate development in an area that needs no such stimulus – much less a neighborhood emulating the famous Amazon motto: Get big fast.

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