Bringing Up Bellevue

April 3, 2012

Kevin and his father, Wallace Properties CEO Robert Wallace.
Photo from Real Estate BISNOW

Wallace Properties president and COO Kevin Wallace knows something about timing, in life and in real estate. While timing hampered his high school basketball career—"I grew late, and really fast. My sophomore year I was 5'10" and my junior year I was 6'4"," he tells us—it has served him well in helping family-run Wallace Properties relaunch its development arm.

Here's Kevin and his father, Wallace Properties CEO Robert Wallace. [Image above.] Robert started the company in 1978 to develop the Bellevue North Shopping Center, expanded to include property management, and ultimately acquired a brokerage. After a number of successful development projects, Bob chose to pursue an acquisition strategy, ceasing development activity until Kevin rekindled it several years ago. (Some kids listen to the music their parents listened to, Kevin just took that one step forward.)

Kevin's first big project was in Northgate, aggregating seven parcels of land near Northgate Mall, which became 507 Northgate, 163 apartment units over 55k SF of retail at the corner of 5th and Northgate Way. "Northgate is an example where the existing product wasn't getting more than $1.25 per foot when we started it, so it was a big risk," Kevin says. "But we felt like because it was an urban center and it has a transit center and a mall, it was an untapped market, and we've been proven right." The property is 95% occupied and the rents are north of $2 per foot, Kevin tells us. Wallace has already started working on the design for the second phase, another 253 units and 20k SF retail. "As it starts to build out I think it's a great opportunity. The light rail station arrives in 2020, and that will make it an even more interesting destination than it already is."

Above is the Citizen of the Pike Pine, a 107-unit apartment building on East Madison opening today. Half of the 6k SF ground-floor retail has been leased to Banner Bank, and the LEED Silver property also has cool urban amenities like electric car charging stations. (Now they just need an underground skatepark and Pitchfork magazine will declare them apartment of the century.) Kevin feels the projects are a good grounding for doing more mixed-use developments in the region, which will be the focus going forward. As for Kevin, his first big acquisitions were a finance degree from Seattle U and a J.D. from Gonzaga. After law school, he worked at Preston Gates & Ellis and then Foster Pepper, specializing in—what else?—real estate. Kevin's interest in transportation, especially in making sure that Eastlink light rail came through Bellevue in a way that protected the community ("how to keep from having it screeching under somebody's home" he puts it), were part of what motivated him to run for Bellevue City Council in 2009.

What would he like to see in the future? Changes to the downtown zoning code that would make it as easy to build an office tower as it is to build apartments or condo towers will help Bellevue mature from an "adolescent city" into an adult city, Kevin says (also: Bellevue is going to be so hot when it gets its braces off). "Under the current zoning, with its penalty for building office in the MU zone and the low FAR in the OLB zone, there really isn't a place in downtown Bellevue where it makes sense to build a building between 200k and 600k SF with 30k SF floorplates—and that's what the tech companies want," he tells us. Current office vacancy in Bellevue is around 14%. "The reason you'll ultimately start to see cranes swing around—and fairly soon—is that there aren't large chunks of space left," Kevin says. "There's demand for apartments in Bellevue right now. I think there's also demand for a spec office building."

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