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June 01, 2015

Microsoft to vacate large swath of office space in downtown Bellevue

Puget Sound Business Journal

Marc Stiles

Microsoft is looking for someone to take over its lease of six floors of office space in downtown Bellevue.

Marketing materials making the rounds among commercial real estate brokers show that Microsoft (Nasdaq: MSFT) is seeking to sublease the space in the Bravern campus, 11155 N.E. Eighth St.

In addition, the company is giving back a smaller amount of space in a South Lake Union office building in Seattle. These moves follow a decision by the company to vacate space in Issaquah, where it also recently sold a large tract of land.

Microsoft officials were not immediately available late Monday afternoon. Commercial real estate broker Jeff Jochums of CBRE (NYSE: CBG) is marketing Microsoft's Bravern and South Lake Union spaces for sublease with colleague Kip Durrell. Jochums declined to comment.

The news is another blow to downtown Bellevue, which recently learned that Expedia (Nasdaq: EXPE) would be moving its headquarters toSeattle.

Meanwhile, commercial real estate developers are under construction on three large office developments in downtown Bellevue, even though tenants have agreed to lease only a minuscule amount of the new space.

At the Bravern, Microsoft is vacating floors four through 10, or a total of nearly 166,900 square feet of space. That's a sliver of the more than 2.3 million square feet of space that the company has in Bellevue. But Microsoft's decision is still a terrible sign for a submarket, where Microsoft saved the day during last decade's office development boom by leasing two full high-rises.

"It sends the message they are not going to be the white knight," said Jeff Chaney, a real estate broker in the Bellevue office of Kidder Mathews. "The concern for downtown Bellevue is who is going to save the day for developers (this time)."

Microsoft is making the six floors at the Bravern available on Sept. 1, according to CBRE marketing materials. Microsoft is on the hook financially for this space through the end of January 2018. All total, Microsoft leases around 750,000 square feet of space at the Bravern.

In South Lake Union at the Westlake Terry Building, 320 Westlake Ave. N., Microsoft is trying to sublease nearly 31,200 square feet on the third floor. The marketing flier says that space will be available Aug. 1. Microsoft's lease runs through the end of February 2019.

Microsoft laid off 18,000 people last year, including more than 2,000 in the Puget Sound region.

For the full story, go to Puget Sound Business Journal.

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