UPDATE | Capstone Partners purchases 28-acre Group Health Redmond campus for $32.5 million
By ANDY NYSTROM
Redmond Reporter Editor
March 21, 2013 · 5:07 PM
“It is hard to imagine a better urban in‐fill site in the Puget Sound — significant density adjacent to a highway, across the street from Microsoft and within a few blocks of every major retailer a household could need,” Hubbard said.
Last Friday, Capstone and its investment partner Lionstone U.S. Land Two, L.P. announced that they purchased the campus, located between the Microsoft main campus and the 1.5 million-square-foot Overlake Village shopping neighborhood, for $32.5 million, according to public documents.
When completed, the site will include more than 3 million square feet of space including 1.1 million square feet of office and retail space, more than 1,400 residential units and nearly 300 hotel rooms.
“Our vision for Overlake to be an urban center that’s tech friendly has been in the city’s plans for at least 14 years, if not more,” Redmond Mayor John Marchione said. “It’s going to have a light-rail station in 2023. It’s exciting to see this new neighborhood start to poke out of the ground, and over the next five to 10 years, we’re going to see it bloom.”
Marchione said the area is now dominated by parking lots, which will become livable and workable spaces and spots for entertainment. He also envisions Overlake as a pedestrian-friendly village with residents walking to work at nearby companies like Microsoft, Nintendo and Honeywell.
Jeri Rowe-Curtis, the city’s chief police adviser and community and marketing administrator, said the coordination of the business community, residential space and open space will give the area a “sense of connectedness” and an environmentally friendly feel.
Bill Biggs, Group Health vice president of Administrative Services, said the sale is a “significant milestone in bringing this urban neighborhood a step closer to reality.”
And there will be trees on site. Plenty of them, note Hubbard and Marchione, who have been in contact with each other regarding the 1,000 or so trees that will need to be removed in order for Capstone to build on the site.
“We’re going to plant a forest when all is said and done,” Hubbard said.
Marchione explained that according to the sale agreement, Capstone will have to plant 3,000 trees throughout the Redmond community to replace the trees coming down. He’d like to see all 3,000 trees planted before Capstone removes one of the Group Health site trees. No final agreement has been reached, and Hubbard said he’ll discuss the situation with city officials when the permitting process begins.
Hubbard said planting new trees requires setting down undercover and other tasks, and he also stressed that the trees need to be planted at the right time of the year in order to fully thrive.
They’ll need to discuss location, as well.
“Not only do you want to do it right, but do it in the right place,” he said.
Last June, the City of Redmond and Sustainable Redmond reached a settlement agreement regarding those trees on the Group Health site. The terms of agreement ended the legal action Sustainable Redmond, a grassroots organization, had taken against the city earlier in 2012 by filing a land-use petition in King County Superior Court to block Group Health’s plans to cut down the “significant” trees.
This settlement stipulates that Group Health pay the city $20,000 “upon the first closing of a sale of all or any portion of the Group Health property,” according to the settlement document. This money will be used to transplant onsite trees to another location or to buy new trees to plant in Overlake Village.
Michael Foley of a public relations firm that represents Group Health said they “will be honoring its agreement with the city.” Rowe-Curtis confirmed that the city received the payment on March 18.
In early 2009, Group Health teamed up with city planners and community stakeholders to develop a plan for the property, which culminated in a Master Plan and Development Agreement adopted by the city in late 2011.
In the summer of 2012, to help ensure that the property was put to the best possible use for the region, Group Health and its real estate adviser CBRE selected Capstone and Lionstone to take on the project. Capstone teams have started building a design that will allow for a late 2013 or early 2014 start of building construction for all product types.
Hubbard said Capstone plans to start site demolition of the old Group Health hospital, road grading and utility construction next month.
Contact Redmond Reporter Editor Andy Nystrom at firstname.lastname@example.org or 425-867-0353, ext. 5050.