Officials of Kilroy Realty Corp. (NYSE: KRC) this week said they're targeting a fall construction start for a two-building office/retail development on a full block in Seattle's South Lake Union neighborhood.
Kilroy's previously announced 333 Dexter project, on the site where KING 5 has operated for 64 years, will have a pair of 12-story buildings with a total of 600,000 square feet of space. KING 5 is moving to the Sodo area of Seattle "pretty close to the end of February," station President and General Manager Ray Heacox said Thursday.
The 333 Dexter project is Kilroy's first ground-up development in the Puget Sound region, where it owns and manages more than 2 million square feet of space that houses Concur, Tableau, Microsoft and other companies. Kilroy said it plans to demolish the KING building in the middle of this year.
Kilroy estimates that 5,000 high-tech and retail employees will work at 333 Dexter.
A Kilroy spokesperson on Thursday said none of the office space has been pre-leased. Asked if the company will start building before any leases are signed, the spokesperson said the company "will continually evaluate the market as the fall approaches."
The Lake Union office market is not nearly as tight as it was a year ago, when the vacancy rate for high-end space was 4.4 percent. The rate increased to 10.3 percent in 2015, when 1.5 million square feet of new space was built, according to commercial real estate services company JLL. Projects totaling an additional 1.75 million square feet are under construction.
Brokers JJ Shephard, Riley Shephard and Joe Gowan of JLL (NYSE: JLL) are marketing the office space for lease, and Damian Sevilla and Jason Miller of Colliers International (Nasdaq: CIGI) are marketing the retail space for lease.
A city board has approved the design of 333 Dexter, which will have open spaces around the buildings, mid-level terraces and roof decks. Kilroy, which is headquartered in Los Angles and has a Bellevue office, is working with Seattle architecture firm Miller Hull Partnership on the design of 333 Dexter. Another Seattle company, Hewitt, is the landscape architect. Bellevue-based GLY is doing the pre-construction work.
Kilroy officials declined to say how much the 333 Dexter project will cost.